Private withdrawals and deposits: how money moves between you and your business
Written by Ilias Aarrass5 min read · Published on · Last reviewed on 
In short
A private withdrawal from your sole proprietorship is neither wages nor a cost: you pay income tax on your profit, regardless of how much you withdraw or leave in.
- Private withdrawals are not business costs and thus not deductible; private deposits are not business income and do not count in profit.
- Withdrawals and deposits run through equity, not your profit and loss account; you keep an annual total for the equity reconciliation.
- The income tax assessment is a private debt too: paying it from the business account means booking a private withdrawal.
- Taking goods or stock for personal use is a withdrawal at that moment's value, with a VAT correction for the private use.
Nearly every starting freelancer asks: how do I actually pay myself a salary? The answer is surprisingly simple: you don't. As owner of a sole proprietorship there is no salary; you withdraw money from your business whenever you like. Those withdrawals are not costs and do not lower your profit, just as deposits are not revenue. Tax settles on the profit you make, entirely separate from what you withdraw. Once you see that principle, the money flows of a sole proprietorship suddenly make sense.
Tax on the profit, not the withdrawal
Your profit is revenue minus business costs. On that profit you pay box 1 income tax, whether the money stays in the business account or moves entirely to private. Withdraw 30,000 euros from a 60,000 profit and you pay tax on 60,000. Leave everything in place, still 60,000. This also explains why 'paying myself a salary' cannot be a deduction: the money was already yours.
Worked example: profit € 60,000, withdrawn € 35,000
- Revenue minus business costs
- € 60,000 profit
- Private withdrawals through the year
- € 35,000
- Basis for income tax
- € 60,000, after entrepreneur allowances
- Effect of the withdrawals on the tax
- none
Result: The € 35,000 of withdrawals changes nothing about the assessment; it only determines what remains in the business account for tax payments and investments
How to book withdrawals and deposits
In your books, withdrawals and deposits run through equity, often on an account called private. A withdrawal lowers equity, a deposit raises it; your profit and loss account stays entirely out of it. Accidentally pay a private expense with the business card? Book it as a withdrawal and nothing is wrong. The reverse holds too: a business expense from your private account becomes a deposit plus a cost entry, so the deduction is not lost.
Withdrawals in kind count too
Not only money can leave the business. Taking stock or goods for personal use is a withdrawal at their current value, and you also adjust VAT for the private use. The best-known example is the company car driven privately: the addition is essentially a mandatory withdrawal, and VAT gets an annual adjustment, see private car use and VAT.
Still give yourself a fixed monthly amount
That withdrawals are formless for tax does not mean random is best. A fixed monthly transfer to private works like a self-chosen salary: you get used to predictable spending money, the business account keeps buffer for VAT and the assessment, and you see at a glance whether you structurally withdraw more than you earn. How much to set aside for tax is in how much to reserve for tax; the ground rules for separate accounts are in keeping private and business apart. Only bv owners have a truly mandatory salary: the customary salary for directors.
Frequently asked questions
May I withdraw unlimited money from my sole proprietorship?
Legally yes: the assets are yours. Practically the limit is the buffer needed for VAT, the income tax assessment and running costs. Structurally withdrawing more than profit erodes the business and pinches at the next assessment.
Is negative equity a problem?
It is allowed, and common among investing starters. But structurally negative equity usually means withdrawing more than you earn, a signal to revisit your withdrawals or your rate; see also setting your hourly rate.
Must I create a payslip for myself?
No. Without staff a sole proprietorship has no payroll; your withdrawals are not wages and nothing is withheld. If a landlord or another party asks for proof of income, use your tax return or annual figures instead of payslips.
How do I record withdrawals without bookkeeping software?
At minimum: give every transfer to private a clear description like private withdrawal, and keep an annual total of withdrawals and deposits; you need it for the equity reconciliation in your profit return. Simple bookkeeping software takes this off your hands, see choosing bookkeeping software.
Sources
- Private deposits and withdrawalsBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
