I don't agree that it's this black and white, but it's likely to be true for most small-scale companies. The way I always describe it to people is that salary

I don't agree that it's this black and white, but it's likely to be true for most small-scale companies. The way I always describe it to people is that salary != profit. Let's say that you are making $100k a year running your company. How much would you have to pay someone else to do your job with the same level of effectiveness? If it's $50,000, then you're making $50k a year in profit for being the owner. If it's $150,000, then you are actually giving up $50k per year for the privilege of being your own boss. It's certainly possible to be a non-participating owner and make a good profit on a business. This is what Warren Buffett does with Berkshire Hathaway -- he buys profitable, well-run companies and usually keeps the former owners on to continue operating them. Doing it from the other direction is much tougher, because you either need to make yourself redundant or hire your replacement.