One of the biggest challenges most small businesses owners face at some point in time is working out how and when to extract money from the business itself. Also important to think about is how to record any personal withdrawals you make in the best and most tax-efficient way.
If you are unsure as to how to do the above, the best thing to do first is estimate how much cash your business is likely to make in the next year. This can be incorporated into your business plan and is done by looking at expected revenue and then deducting any operational costs and any corporation tax you may need to pay. Remember to take into account any interest on bank debts you will pay too and any inventory costs if you are a retailer or manufacturer.
Once you have worked this out, then the easiest way to take money from your business is by paying yourself a salary and any balance as a dividend. If you set the salary you take to your personal tax-free earning allowance, then you can use a dividend for any extra you take to make up the overall balance.
To be able to take money out like this, you will need to be registered officially as an employee if you aren’t already. Once this is done, you can work out the proportion of the overall yearly figure that you will take as a monthly salary according to your tax-free allowance and use a dividend for the rest each month as described above.
If you need any more advice on this or general information on how to pay less tax, then we are the best accountant in Melton Mowbray to call. Let our professional team guide you and help resolve your query fast.