Salary vs dividends - have i got this right?
Hi - would really appreciate a bit of short sage advice please, - I know that some of you are likely to say that I should go and see a professional, and I will, but, I'd just like to get a feeling for if I am already in the wrong, and what the suggested route would be.
I have a ltd co, of which I am the sole director. Income is sporadic, and tends to come in lump sums. Thus far I have withdrawn about 70% of the income received on the basis that I would claim this as a dividend, - and these payouts have been irregular in both timings and amounts.
I also have a paid, separate, employment that utilises my personal allowance and puts me in the higher PAYE tax bracket.
What would be the general recommended course of action? Of course I would like to minimise, legally, my tax liability. Should I start paying a salary from my ltd co, but that would obviously attract EE/Eer NI, and PAYE at 40%, which seems inefficient. Can I withdraw the money from the business, and declare the dividend in one go at the end of the year, or should I declare a dividend every time I draw money? the business is being run on a very prudent basis, and will declare sufficient profits to cover the dividends drawn (only asset in the business is a £800 laptop), and I presume this falls into the annual investment allowance and therefore 100% writedown in year 1?
Any thoughts appreciated
- Halloween - do you celebrate it? 965 30
- Accounting for VAT not yet paid in year end 389 11
- Interflora florist 192 3
- Sole trader hid directorships. 29 1
- Goods Purchased for Rental 647 32
- More HMRC on gov.uk 437 9
- VAT on finance leases 82 1
- Friendly Pensions 203 1
- Online Timesheet Facility 67 1
- Problem ex client...again.. 1,633 15
- Company Reorganisation 301 4
- CONVERSAION OF DIRECTOR LOAN INTO EQUITY 171 5
- CGT on second home? 251 4
- Clearing payments on account/ Sage 50 218 8
- Double tax agreement - do you show income on UK return even if the DTA says it is taxed in the other country? 144 2
- Audit procedures on a dormant company 251 3
- Cash withdrawn and not accounted for 383 5
- Completing RP1 form in re Redundancy /Insolvency 249 8
- VAT in Sage 178 3
- Recommendations for payroll/AE software? 499 10
- NOVA 495
- Bonus Bonds 384
- Insolvency and whistle blowing 365
- Transfer of funds into recently set up company 280
- TPR imposes first penalty notice fines 246
- Box 8 VAT Return - deposit payment 168
- Husband proposes to buy the car as Director unable to acess finance 155
- Finance Lease 147
- Company Car Lease 146
- Form 42 133