Taken cash from the business

Taken cash from the business

A) Director’s Loan
B) Salary
C) Reimbursable expenses.
D) Dividends
E) Pension

Director’s Loan:
When starting a new business, you usually give a loan to the business before it starts making sales, and when cash flow is low.
This is considered a loan like any other loan, and as such it’s payable back to you.

Salary:
As a director, you are allowed to earn a salary from your business as any employee should. However, since you have other earning options from the company, you may not want to give yourself a higher salary to lower tax costs.
Rimbursable expenses:
As long as any expenses incurred are exclusively for work, you can claim these back from the business. There are also other options allowed by HMRC for using personal assets for business. For example, if travelling in your own car for business purposes, you are allowed to claim 45p per mile compensation without incurring income tax.

Dividends:
Once a company makes a profit, it will pay 20pc corporation tax. What’s left is available to distribute to shareholders as dividends. The company does not have to pay the whole amount to shareholders. Retained profit is often reinvested in the business.

Pension:
Both employer and employee can contribute towards the pension fund set up by the business.

2017-05-06T15:53:21+00:00