How much should you pay yourself as a group practice owner?
By Emily | Focal Point Bookkeepers
If you've ever compared notes with another group practice owner about what you each pay yourselves... you know how much that number varies. Some owners take a modest salary and pull big distributions around tax time. Others do the opposite. A few genuinely aren't sure what they paid themselves last year until their accountant tells them.
None of that is really an answer to the question. It's just what happened.
Here's the short version, if you just want the number: total owner compensation — your W2 salary plus distributions, combined — should typically land at 20 to 25% of revenue in a well-run group practice.
If you run a group smaller practice (with 5 or less clinicians) your pay will typically be on the higher side of that range. As revenue grows toward seven figures, the percentage you pay yourself naturally drifts lower, not because you're earning less, but because the business is growing.
If that raises more questions than it answers, good! That's kind of the point :)
Let's get into it…
Two numbers, not one: your W2 salary and your distributions
If you've read our post on what your profitability numbers should actually look like, you probably already know this…Your total pay as an owner isn't one line on a report. It's two separate things, one of which doesn’t show up anywhere on the P&L.
Your W2 salary shows up in an expense account, right alongside payroll for your clinicians and admin staff. It's visible, it's predictable, and it hits your bank account every payroll run.
Your distributions are different. They're the additional transfers you take that make sense from a tax perspective if you're structured as an S-corp, and they happen AFTER operating profit is calculated... not before.
They don't show up as an expense anywhere!
Which means if you're only looking at your W2 number, you're only seeing part of what the business is actually paying you.
You can learn more about S-corp structures and when it is beneficial to your practice in this article: Should I be an S-corp?
Why group practice owners pay themselves such different amounts
The reality of your life and your business goals differ wildly from another practice owner. Even if they are in the same area and are roughly the same size, the deeper context matters. Here are some things that typically change the owner compensation percentage:
1) How far along the practice is
Newer practices often need the owner to take more of the total revenue, simply because there isn't a large team yet absorbing the workload or generating enough in profits to cover much more than overhead and a modest salary for the owner.
2) How much the business needs to reinvest
A practice pushing toward a new location or a bigger clinical team needs to retain more, which usually means owner pay sits lower as a percentage, even if the dollar amount is growing.
3) What the role would cost to replace
If you're doing clinical work, supervision, and running the business, your pay should reflect closer to three jobs than one.
4) How much risk you're carrying
Owners personally guaranteeing a lease or covering payroll gaps out of pocket are taking on something a benchmark percentage doesn't capture on its own.
None of that means the range is meaningless... It means the number that's right for you depends on where your practice actually is, not just what feels fair.
What owner pay looks like in a $665,000 practice
Here's a simple example. A group practice bringing in $665,000 in revenue, aiming for owner comp at the top of the benchmark range, might land somewhere like this:
W2 salary: $85,000
Distributions: $81,250
Total owner compensation: $166,250 (about 25% of revenue)
That's not a formula to copy exactly... your split between salary and distributions depends on your accountant's guidance and your own tax situation. But for practices we work with we usually see this split near the 50/50 range.
If your total comp is well below that, either the practice can't support paying you more yet, or you've been underpaying yourself without realizing it. Those are two very different problems with two very different fixes.
Two mistakes that make owner pay confusing
#1 Paying yourself whatever's left over.
This is the most common version we see. There's no target, no plan... just whatever's sitting in the account after bills get paid. Some months that's generous. Other months it's nothing, and you're at the mercy of any changes and anything unexpected that happens in the business. This is usually a stressful place to be.
This is the problem Profit First for Therapists tries to solve, and we've written up where we think it works and where it doesn’t.
#2 Treating the W2 number as the whole story
An owner might look at a $70,000 salary and think they're underpaying themselves, without ever adding in the distributions they've also been taking. Or the reverse: distributions have grown large enough that they're pulling more cash out of the business than it can comfortably support, and this presents a cash flow shortage that also adds stress.
How to calculate your owner compensation percentage
You don't need a complicated process for this. You need three things.
1) What you're actually taking home now
Salary and distributions, added together, for the last twelve months. Not what you meant to pay yourself. What actually happened.
2) How that compares to revenue
Divide that total by revenue for the same period. That's your real percentage, and it's usually a number no one has ever considered.
3) What target makes sense for where you are
Not just the benchmark range in isolation, but weighed against how much the practice needs to reinvest or reserve right now, and what your needs are on the personal financial side of things.
Once you have those three, you have something to work toward instead of a number you're guessing at every few months.
What changes when you pay yourself on purpose
This is one of the five benchmarks built into The Practice Profit & Paycheck Assessment, the free tool we put together for group practice owners. You enter your numbers, including both salary and distributions, and it shows you where your total owner comp actually sits against the benchmark, alongside the other four numbers that make up a healthy practice.
If you'd rather talk it through with an actual person first, that's what a complimentary Practice Profitability Review is for — a focused conversation about what your numbers are telling you and where a reasonable target sits for your practice.
Common questions about group practice owner pay
How much should a group practice owner pay themselves?
Total owner compensation, W2 salary plus distributions combined, typically runs 20 to 25% of revenue in a well-run group therapy practice. Smaller practices tend to sit toward the higher end of that range. The percentage comes down as practices grow much larger, though not as early as most owners expect.
What's the difference between W2 salary and owner distributions?
W2 salary is a fixed, scheduled payment that shows up in overhead on your P&L. Distributions are additional transfers taken for tax reasons if you're structured as an S-corp, calculated after operating profit and not shown as a P&L expense at all.
Does owner pay change as a group practice grows?
Yes, though not as early as most owners expect. In benchmark data for mental health practices, those between $1 million and $3 million aren't meaningfully less profitable than smaller ones. The drop shows up well past that, once running the practice is a full executive job and owner pay starts to look like a salary for that role rather than a share of what the practice produces.
What if I can't pay myself more right now?
That's useful information, not a failure. It usually means the practice needs to address overhead, pricing, or clinician compensation structure & capacity before owner pay can grow, rather than the owner simply deciding to take more.
