Business cost

[navjott1]

If i own a Pvt, do i have to pay income tax and corporation tax for my company

 

[Rudi]

I assume you mean Private Limited Company as opposed to 'Pvt'?

If so, then you pay tax on your profits. Wages (ie. Your salary including income tax etc) are classed as an operating expense and thus you do not end up paying the equivalent of 42% (22% corp 20% inc) tax, if that's what you're asking.

For more advice I would seek an accountant, as there are different ways to get money out of a limited company if you are on your own (dividends for example).

Most basic example I can think of is that you earn £100 for the tax year.
£80 of that is your salary. YOU pay £16 in income tax (80 * 0.2).
The company profits £20 (assuming there are no expenses) meaning it would pay £4.40 tax.

That's a very basic example and of course there are other things involved.

 

[navjott1]

thank u for ur answer ....
But Mark Zuckerberg has a salary of $1 PER YEAR .....
does he have to pay income tax or not ???

 

[Rudi]

Well in the UK you have a tax-free allowance, so if you paid yourself under £7k/year then no, you would not pay income tax.

 

[s168]

thank u for ur answer ....
But Mark Zuckerberg has a salary of $1 PER YEAR .....
does he have to pay income tax or not ???

He pays himself a dividend which is usually taxed at a much lower rate than had he taken a full salary for $millions. The way taxes work on salaries, the more you earn, the more you tend to get screwed over by the taxman. That's why you hire accountants!

 

[aashmin]

Well,he denotes himself with a salary of $1 per year in order to get exempted by the tax payments as it could be lowered by doing so.

 

[AshleyWhiteBusiness]

and will going to have a big penalty if this will be discover.

 

[Rudi]

and will going to have a big penalty if this will be discover.

I'm pretty sure people know about this... Why is he going to have a big penalty?