Best way to draw a salary?

Best way to draw a salary?

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Hi
 
There are two directors, my business partner owns 100% of the shares at the moment, this will be changed to 50% 50%.
 
He is providing £50k in the form of a loan to the company from his own existing company. 
 
I will be drawing a salary and I need to setup a payroll. What is the best way to draw a salary? Is it to use the NIC personal allowance and then the business loans me a further figure? 
 
The loan would be repaid when the company is paying dividends. Any advice would be great.

Replies (12)

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By WhichTyler
27th Jul 2015 10:24

Why...
... Would it pay you dividends when you don't own any shares?

Please talk to your accountant. And you might want to talk to a lawyer too so that your employment contract is appropriate

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By cheekychappy
27th Jul 2015 10:24

Another DIY [***] up.

You are not eligible to receive dividends from this company.

Please do yourself a favour and seek professional advice.

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By The Innkeeper
27th Jul 2015 10:30

employ

an accountant ASAP

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Portia profile image
By Portia Nina Levin
27th Jul 2015 10:36

I am unsure why you are asking

When you could simply just carry on doing whatever you think is best, as you have thus far.

Incidentally accountants are engaged, not employed.

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By johngroganjga
27th Jul 2015 10:40

Entitlement to dividends

But the OP says that the existing sole shareholder is about to transfer half his shares to someone - perhaps he means to himself.

So perhaps that is why he refers to the possibility of receiving future dividends.

But yes I agree that he needs to take advice asap - preferably before the shares are transferred in case the transfer itself has any tax implications.

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Replying to Paul Crowley:
Portia profile image
By Portia Nina Levin
27th Jul 2015 10:42

Oh!

johngroganjga wrote:

But yes I agree that he needs to take advice asap - preferably before the shares are transferred in case the transfer itself has any tax implications.

There could not possibly be tax implications? Surely not? Say it is not so John?

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Replying to Paul Crowley:
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By WhichTyler
27th Jul 2015 12:35

More professional advice...

johngroganjga wrote:

But the OP says that the existing sole shareholder is about to transfer half his shares to someone - perhaps he means to himself.

So perhaps that is why he refers to the possibility of receiving future dividends.

If that's the case, you'll need a shareholders agreement too...

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RLI
By lionofludesch
27th Jul 2015 11:45

New

Is this pretty much a brand new company or one that's already trading ?

Either way, an internet forum is probably not the place to be taking advice on this.

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By andy.partridge
27th Jul 2015 11:45

Best way to draw a salary?

I use an HB pencil. Portia has to use a crayon (no sharp edges or points allowed).

Sorry, Monday morning, couldn't resist.

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By User deleted
27th Jul 2015 11:53

I agree with Andy - if you use a pen, you may inadvertently create a tax charge that you can't wiggle out of! Pencil is by far the best option!

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By The Innkeeper
27th Jul 2015 12:08

Personally

I think one of those HB pencils with a rubber on the end is best - you don't have to go hunting for a rubber after you have realised the mistake that you have just made !!

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By pauljgoodman
29th Jul 2015 23:44

Sarcasm bites

Oh dear, another new member discovers that AccountingWeb is not the place to get cheap advice.  Who could have known?  Would it not be kinder to this OP and those who succeed him, to post a standard paragraph to the effect that, although not obvious, this forum is mainly for practising accountants to discuss matters of interest, and not to dispense advice, free of charge, to unrepresented businessmen?  And I assumed that the OP meant that he would shortly be the owner of 50% of the shares, and thus would be eligible to receive dividends. I think the early responders overlooked this fact, or ignored it. 

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