• Home
  • About
  • Services & Pricing
  • What Our Clients Say
  • Blog
  • Contact
  • Xero
  • Request a Call

Call FREE on 0800 689 3084

[email protected]
Accountants Wimbledon - Paul Marks & Co Chartered AccountantsAccountants Wimbledon - Paul Marks & Co Chartered Accountants
  • Home
  • About
  • Services & Pricing
  • What Our Clients Say
  • Blog
  • Contact
  • Xero
  • Request a Call

Small Company Owners – Make Sure You Pay Yourself Properly

Home General TaxSmall Company Owners – Make Sure You Pay Yourself Properly

Small Company Owners – Make Sure You Pay Yourself Properly

April 11, 2015 Posted by Paul Stankiewicz BSc(Hons) FCA General Tax, Uncategorized

Accounting & Tax WimbledonIf you run a small owner managed Limited Company it is not a good idea to mix your business and personal expenses and payments

A company is a separate legal entity even if you own all the shares and is governed by company law.

Director/owners of Limited Companies can pay themselves remuneration either via a dividend or a salary or a combination of both.

If you want to pay a dividend Company law dictates that the directors should declare an interim dividend (this should be in the directors minutes) and then propose a final dividend which needs ratifying by an ordinary resolution of the members (shareholders). This should be done and recorded even if you are the only shareholder and director.

It also must be remembered that dividends can only be paid if there are sufficient distributable reserves in the company to pay them. I have come across many small sole contractor business owners that take out more money than the distributable reserves left in the company which makes the dividend illegal.

The company has to treat this deficit as a director’s loan and therefore subject to withholding tax.

It is also not wise to pay personal expenses out of your business bank account and then declare these later as a dividend.

HMRC may claim that these are not dividend payments but disguised remuneration and thus attract national insurance contributions.

You will also have a weakened argument if there are no directors minutes or shareholder resolutions.

It is important to make things straightforward and transparent so that there only three amounts that you pay yourself out of the company bank account.

1) Your net salary

2) Lump sum interim dividend payments (can be paid monthly but should be the same amount monthly and should be minuted at the directors meetings). The final dividend for the year must be ratified as an ordinary resolution of the shareholders

3) Any expense claims for expenses that you personally incurred on behalf of the company, properly documented with receipts

If you need futher help and advice please contact me on [email protected] or call me on 0800 689 3084

Disclaimer:

Paul Marks & Co Chartered Accountants is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645). This article is designed for the information of readers only and readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.

 

0
Share

About Paul Stankiewicz BSc(Hons) FCA

This author hasn't written their bio yet.
Paul Stankiewicz BSc(Hons) FCA has contributed 52 entries to our website, so far.View entries by Paul Stankiewicz BSc(Hons) FCA

You also might be interested in

Dividend Or Salary

Aug 24, 2014

If you run a small family run business you can[...]

Your Home & Tax

Aug 24, 2014

The general rule is that your Principal Private Residence is[...]

Build A Better Business – Market Using A Range Channels

Dec 3, 2014

For fledgling businesses you may have a great product or[...]

Paul Marks & Co

Chartered Accountants

 0800 689 3084

 [email protected]

Paul Marks Limited trading as Paul Marks & Co, registered in England and Wales No: 4487685, Appt 1, 3 Lansdowne Road, Wimbledon SW20 8AP

Director: Paul Stankiewicz BSc(Hons) FCA

 

Merton

Contact Us

We're currently offline. Send us an email and we'll get back to you, asap.

Send Message

Contact Info

  • Paul Marks & Co
  • 3 Lansdowne Road, Wimbledon SW20 8AP
  • 0800 689 3084
  • enquiries@pmarks.co.uk
  • www.pmarks.co.uk
  • paulmarksco

chartered accountants wimbledon

Disclaimer
xero advisor wimbledon
quickbooks advisor wimbledon
bookkeeping wimbledon
member of business advice service

We were recently listed in the Sunday Times as one of the top 200 accountants in the UK for receiving the highest volume of positive client reviews in the last two years on vouchedfor.co.uk the ratings site for financial & legal professionals

© 2017 Paul Marks & Co. - Paul Marks Ltd trading as Paul Marks & Co are ICAEW Chartered Accountants | Registered in England and Wales number 04487645 | 3 Lansdowne Road SW20 | Director Paul Stankiewicz BSc(Hons) FCA

Prev Next
Request a Call
eBook Download Link

Click the link below to download our free eBook ‘Survival Tips For Small Business’

Download

Get a FREE Trial
Book a FREE Consultation
Get a FREE Quote
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.Ok