Paying Yourself

[BGD]

I'm a recently created limited company whose first year will likely be taken up with one (possibly two) events. To be specific some firms will pay to exhibit and some others will pay to attend on one day and in one location.

The first event is going well BUT it's not going to be the most lucrative job of my life and consequently I'm keeping a sensible grip on cashflow.

I do though need to pay myself something out of my current gross (or the profits really) as my personal current account overdraft grows ever larger. I know that I can pay myself a small salary and a larger dividend from a BusinessLink course I participated in -- provided that I calibrate it so that Mr HMRC doesn't come banging on my door for tax avoidance but how do I determine this level?

actually, more generally for right now - how do I figure out how to just pay myself a certain sum and calculate my tax etc??

Obvious answer I guess is to get an accountant but as mentioned above I'm trying to sort as many of the various tasks out for my company personally (website, marketing, sales, database etc) and hence I'd rather avoid if possible due to an assumption of a fair chunk of my profits.

Anyone who has gone through similar able to point me in the right direction?

Thanks in advance

B

 

[dp0848]

The small salary / large dividend route is probably the correct one for you though I can't be precise about this without knowing a lot more about your specific circumstances.

Dividends can only be paid out of distributable profit. Dividends paid over and above this figure are illegal and could lead to tax implications. You need to be keeping you accounts up to date so that you can at any point see what your distributable profit is and declare a dividend accordingly.

You also need to ensure that the paying of the dividend is correctly documented with minutes of the directors meeting and dividend vouchers etc.

David.

 

[elaine@cheapaccounting]

Have a read here on salary and dividends:

http://www.franklyaccounts.co.uk/fivesalary.php

If you pay above the LEL (see the link) you will need to register as an employer, do an employer annual return etc.

 

[BGD]

The small salary / large dividend route is probably the correct one for you though I can't be precise about this without knowing a lot more about your specific circumstances.

Dividends can only be paid out of distributable profit. Dividends paid over and above this figure are illegal and could lead to tax implications. You need to be keeping you accounts up to date so that you can at any point see what your distributable profit is and declare a dividend accordingly.

You also need to ensure that the paying of the dividend is correctly documented with minutes of the directors meeting and dividend vouchers etc.

David.

Thank You David. I will be leaving some money in there anyway God-willing but I will Google the term distributable profit (assume it's something like minus costs + corp tax).

BUT if I am working for two months of the year effectively on this event (and then perhaps having regular employment with another firm to top me up) I can't pay a regular salary to myself can I (or I could but..) I only work for two months p.a. on my own company until I get more events in the pipeline..

BRs

Ben

 

[BGD]

Have a read here on salary and dividends:

...

If you pay above the LEL (see the link) you will need to register as an employer, do an employer annual return etc.

Thank you Elaine, I will read that.