How to draw cash from a ltd account

[antonellaz]

We formed a ltd company in january. We are 2 directors and business is doing well. How do we draw money from our business account? We have always paid back director expenses until now, and would like to pay us dividends or a small salary or bonus from next month. What are the options available? How often can you pay dividends and how much taxes are they subject to?

Thanks in advance

 

[Fernhurst Solutions Ltd]

Hello and welcome to the forum ... do you not have an Accountant that you can discuss this with? Are you drawing a Director's Salary (circa £5700 pa)? Are you aware that the company must be showing a net profit before the Directors are allowed to draw a dividend?

 

[elaine@cheapaccounting]

Do you have any other income or is this your sole source of income.

If sole source then you would pay a mix of salary and dividends.

The company would need to register as an employer (for max tax benefit) and then you have dividend vouchers to complete. See here for an example:

http://www.cheapaccounting.co.uk/fivedivs.php

If the business is doing well now may be the time to get an accountant as I am sure you will need to discuss things like vat reg etc at some point.

Good luck.

 

[antonellaz]

Thanks for the answer, we are not receiving any salary yet...and our account is positive. We have paid an accountant but not very happy because he did not explain us anything.

 

[elaine@cheapaccounting]

the Directors are allowed to draw a dividend?

Should read shareholders are allowed to draw a dividend?

 

[elaine@cheapaccounting]

Thanks for the answer, we are not receiving any salary yet...and our account is positive. We have paid an accountant but not very happy because he did not explain us anything.

well you can guess my reply to that one!

 

[MyAccountantOnline]

Thanks for the answer, we are not receiving any salary yet...and our account is positive. We have paid an accountant but not very happy because he did not explain us anything.

I would definately advise you go back to him and ask for advice. If you arent happy their are many accountants that can help.

Its all very straightforward advice for any good accountant but its how they explain it that makes all the difference.

Good luck.

PS As well as dividends and salary dont overlook small things like claiming mileage allowance (40ppm for the first 10,000 miles) for business trips if use your own car for company business.

 

[antonellaz]

Thank you everyone. I will try and get more info from our accountant. If he doesn't help, we will need to change as it is very complicated.

 

[KM-Tiger]

I wouldn't "try and get information", I'd change accountant to someone who can advise you properly, and do it soon to get yourselves on the right track.

You mentioned repaying Director's loans. That might well not be the best strategy, and depending on your personal circumstances, you may well have lost the benefit of tax-free salary that could have been drawn in the tax year ending April 09.

 

[antonellaz]

We paid for his service already...so have to stick for the year. Next year we'll change for sure.
I have read a lot of posts now, and everything is a bit clearer...