October 13, 2026
Most founders pay themselves nothing until the company raises money, then a modest salary that covers their living costs without setting a high ceiling for everyone else. Whatever you choose, the board should approve it, it should run through payroll as W-2 wages, and if you can’t pay yourself yet, set your salary to zero in writing rather than letting unpaid salary build up.
Key takeaways
Before a priced round or a meaningful SAFE raise, most founders take no salary and live on savings. After a seed round, investors expect founders to pay themselves enough to stay focused, typically below what they could earn elsewhere. Recent payroll data from one startup accounting firm puts the average seed-stage CEO salary at about $150,000 in 2026, and about $200,000 after a Series A. Treat those as reference points, not targets.
Your salary sets the ceiling for everyone else and drives your burn rate. A salary well above the market for your stage will draw questions from investors. One well below it can also be a problem if it leaves you distracted by personal finances. The right number covers your actual living costs in your city and leaves the company the runway it needs. Expect to revisit it after each round, usually with the board.
Yes. Officer compensation is a board decision, and once you have outside directors it matters more, because a founder setting their own pay is a conflict of interest. The board should approve your salary by written consent, and if the board includes anyone other than the founders, the founder whose pay is being set should abstain. See Startup Board Consent and What Does My Startup’s Board of Directors Need to Approve?
Sign a simple offer letter or employment agreement, plus the same CIIAA your employees sign, and run the salary through payroll as W-2 wages with withholding. A C corporation founder shouldn’t be paid on a 1099 or through informal “draws.” Bonuses tied to revenue or other goals should be written as bonuses, not as a variable base salary.
We recommend against it. An accrued but unpaid salary is a real debt of the company. It shows up in diligence, investors don’t want their money used to pay it, and depending on how it’s structured it can raise tax issues under the deferred compensation rules. If an employment agreement promises a salary, it keeps accruing whether or not it’s paid.
The cleaner approach is to set your salary to zero, in writing and approved by the board, until the company can pay it. If you already have an agreement with an unpaid salary, amend it in writing going forward rather than silently not paying. For anyone who isn’t a founder, deferral isn’t an option at all: employees must be paid at least minimum wage when the work is done. See Can Startup Workers Be Paid Only in Equity?
Once you’re on payroll as an employee, wage laws apply in principle. Federal law treats an employee who owns at least 20% of the company and actively manages it as an exempt executive, regardless of salary. State law may not follow that rule, so check your state before putting a founder on payroll at a salary below the state’s exempt minimum. A founder at zero salary who isn’t on payroll avoids the question. Talk to your payroll provider and an employment lawyer before setting a low but nonzero founder salary. See Exempt vs Non-Exempt Employees.
Put it in writing when it goes in. Founder money can be documented as an equity investment, such as a SAFE alongside your other investors or a stock purchase, or as a loan with a written promissory note. Equity is usually cleaner for future investors. A note is repayable, but investors often ask that it convert to equity or be forgiven at the next round. Expenses you paid before the company existed are handled separately. See How Does My Startup Deal with Founders’ Expenses Prior to Formation?
The tax treatment of each option is different, so talk to your tax advisor before you choose.
For related reading, see How Much Should I Pay My First Startup Employees? and Startup Compensation Mistakes to Avoid. If you’d like help papering founder compensation, see our General Counsel service or contact us.
