Guide · EasyCofounder
Founder salary: how and when co-founders pay themselves
Founder pay is a sensitive topic that teams often avoid until it becomes a source of tension. This guide covers the usual stages, the trade-offs between salary and dividends and how to agree on pay between co-founders. Tax and social security rules differ widely by country: check your own situation with an accountant.
Updated on 6 min readBy the EasyCofounder team
In short
Most startup co-founders take no salary or a very small one at first, living on savings or other income while the company finds customers. They usually start paying themselves once revenue or funding allows, often at a modest level below market rates. Salary is generally preferred to dividends in a growing startup, but the right structure depends on your country’s tax and social rules.
Contents
- Do startup founders get paid at the beginning?
- Salary or dividends: how should founders pay themselves?
- When should a founder start paying themselves?
- How much should founders pay themselves after raising money?
- Should all co-founders be paid the same?
- What other forms of compensation can founders receive?
- Frequently asked questions
- Glossary
- About this guide
Do startup founders get paid at the beginning?
Usually not, or very little. In the early months, every euro or dollar goes into the product and customers. Founders typically live on savings, a partner’s income, part-time work, unemployment or start-up support schemes where they exist, or occasional consulting.
Before committing, each co-founder should be clear about their financial runway: how many months can they go without a salary, and what happens if that runway ends before the company can pay them?
Salary or dividends: how should founders pay themselves?
Founders can generally receive money from their company in two ways: a salary (or management fee, depending on the legal form) for the work they do, or dividends as shareholders when the company distributes profits.
| Salary | Dividends | |
|---|---|---|
| What it rewards | Work done for the company | Ownership of shares |
| Requires profit? | No, it is an operating cost | Yes, distributable profits are generally needed |
| Regularity | Monthly, predictable | Occasional, after the accounts are approved |
| Social protection | Often gives access to social security rights, depending on the country | Often gives fewer or no social rights |
| Fit for an early startup | The usual route once there is money to pay people | Rare: most startups reinvest profits or have none |
In practice, a startup that is growing or burning cash rarely pays dividends. The optimal mix between salary and dividends is a tax question that depends on your country, legal structure and personal situation: ask an accountant before deciding.
When should a founder start paying themselves?
There is no fixed milestone, but a few triggers often come up:
- Recurring revenue covers the company’s essential costs with a margin left over.
- The company has raised money and the plan budgets for founder salaries.
- A founder’s personal runway is running out and losing them would hurt the company more than paying them.
- The company starts hiring: it becomes hard to justify founders earning nothing while employees are paid.
How much should founders pay themselves after raising money?
After a fundraise, founders typically pay themselves a salary that covers their living costs, usually below what they could earn on the job market. Investors generally expect the funds to go mainly into growth, and they look closely at founder pay in the budget.
- Base it on real living costs in your city, not on what a large company would pay.
- Keep it consistent with what you pay your first employees.
- Write it into the budget you share with investors.
- Agree on when and how it will be reviewed (next round, revenue milestone).
- Check whether your shareholders’ agreement or investment terms require approval for founder pay.
Founders are mainly rewarded through their equity: if the company succeeds, the value of their shares far outweighs the salary they gave up. That trade-off is the logic behind the equity split between co-founders.
Should all co-founders be paid the same?
Many teams choose equal pay among co-founders: it is simple, signals that everyone’s contribution matters and avoids comparisons. Others adjust according to role, commitment or personal circumstances.
| Approach | Advantages | Watch out for |
|---|---|---|
| Equal pay | Simple, perceived as fair, avoids negotiation | Can ignore very different personal situations |
| Pay based on role or commitment | Reflects a full-time vs part-time difference | Needs clear, agreed criteria |
| Pay based on personal needs | Keeps everyone financially able to continue | Can feel unfair if not discussed openly |
Three co-founders raise a first round. Two are single and one has two children and a mortgage. They agree on an equal base salary and a temporary supplement for the third founder, reviewed after twelve months. The rule is written down and approved by the board, so nobody discovers it later.
Whatever you choose, record the decision and the review rules, ideally alongside your shareholders’ agreement.
What other forms of compensation can founders receive?
Besides salary and dividends, some arrangements are used by founders depending on the jurisdiction: reimbursement of business expenses, pension or insurance contributions paid by the company, or the sale of a small portion of shares during a later funding round.
Frequently asked questions
How long do founders usually go without a salary?
It depends on the project, its funding and each founder’s means. Some go a few months, others longer. What matters is that each co-founder knows their own runway and shares it with the team.
Is it normal for a founder to earn less than employees?
In an early-stage startup it is common, because founders are mainly rewarded through their equity. Over time, as the company grows, founder salaries tend to move closer to market levels.
Can a co-founder be paid while another is not?
Yes, if all the founders agree, for example when one works full-time and the other part-time. Put the arrangement in writing and plan when it will be reviewed to avoid resentment.
Are dividends better than a salary for founders?
It depends on your country’s tax and social rules and on whether the company makes distributable profits, which is rare in early-stage startups. An accountant can tell you which mix suits your situation.
Do investors control how much founders are paid?
Investors often review founder pay as part of the budget and, depending on the agreement, may have to approve changes. They usually want salaries to be reasonable so that funds go into growth.
Should founder pay be discussed before partnering?
Yes. Talk about expectations, personal runway and when each founder hopes to be paid before you commit. It is one of the most common sources of tension between co-founders.
Glossary
- Runway
- How long a person or company can keep going with the money available before running out.
- Salary
- Regular payment for work done for the company, treated as an operating cost.
- Dividend
- A distribution of profits to shareholders, generally only possible when the company has distributable profits.
- Burn rate
- The amount of money a company spends each month beyond its revenue.
- Secondary sale
- The sale of existing shares by a shareholder, for example a founder selling a small portion during a funding round.
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Further reading
- Equity splitSplitting equity between co-founders: criteria, worked reasoning, vesting, cliff and common mistakes. Pointers to start the conversation on the right foot.
- Shareholders’ agreementShareholders’ agreement: what it is for, how it differs from the articles of association, common clauses between co-founders and when to sign it.
- Co-founder vestingCo-founder vesting: the 4-year schedule with a 1-year cliff, good and bad leavers, acceleration and how to set it up in a shareholders’ agreement.
- Find a co-founderHow to find a co-founder for your startup: CTO, CEO and COO profiles, where to look, how to choose, equity and the mistakes to avoid.
About this guide
This guide was written by the EasyCofounder team — a platform that connects founders, talents and startups (a service by IRPEA) — and was last updated on November 4, 2026. It draws on common startup practice and on the questions our members ask.
It provides general guidance and is not legal, tax or financial advice. For your own situation, consult a qualified professional (lawyer, accountant) and the official resources available in your country.