Paying Salary

[SueEllen]

Complicated stuff indeed...the jargon isn't all to clear but it was a question as to what the consequences could be. Safe to say the majority here are saying its not what should be done. I thought it would be easier for self accounting having two accounts linked to the business and paying and drawing salary from one, but if its easier to pay into my personal account then thats fine and what I will do. Can't understand why its a problem as its still going to be drawn from my personal account. Ones a business account, ones a business savings account. I keep funds for corporation tax etc in the business account and take a salary from business savings account....still don't get why its a problem really (forgive me but I am new to all this) apart from the terms Business and Personal account. To me it simplified matters from an accounting perspective as agency pays into one, the taxman sees it go to Business account as salary and i take it as cash...maybe I should get an accountant as...if only I could afford one as not having been able to find a job for 12 months leaves one in a skint state...then when i start I have to wait to get paid anyway.

The reason it is a problem is that the business is legally a separate entity from yourself.

HMRC can investigate how you operate the business if they think it isn't run properly and will fine you personally if it isn't. If you get an accountant you should be able to stay out of HMRC's radar as you will be running things properly.

[Brazilian]

Thanks to everyone for answering my questions, as I said I would love to get an accountant but finances deem otherwise currently but I am taking the advice given and will be transferring money to my personal account when i pay myself.

[malvolio]

I think you need to look at the guides over there --> and download the Guide to Freelancing from www.ipse.co.uk and read it properly. You have no idea how much you don't know.

As has been said already, you and YourCo are two entirely different legal "persons". You wouldn't expect to use Tesco's bank account to buy your groceries, would you? That's exactly the same thing.

Both you and YourCo also have taxes to pay at various points. You can't mix and match, they have to be treated separately. Doing that efficiently is not all that easy so get an accountant (there's a thread on recommendations if you have a look around). A good one is essentially free in the early years since they will stop you making expensive mistakes.

And yes, there are clear laws around how it all works. You do not want to break them.

[MrMarkyMark]

Thanks to everyone for answering my questions, as I said I would love to get an accountant but finances deem otherwise currently but I am taking the advice given and will be transferring money to my personal account when i pay myself.

Just be aware that it is quite likely to cost you more in the end doing it yourself.

Unless you really know what you are doing, this initial post suggests not

[kaiser78]

Hi, My first contract starting soon so have a very simple question as a the only director and employee I have setup a Business account for my limited company and also a Business savings account. My intention was to pay my salary into the Business savings account and then withdraw when required from there for day to day personal usage. Is that allowed or is it something that would contravene any regulations that I am not aware of?

I was planning to do it that way as it seemed simpler as the bank i have opened a business account with is different from my personal one.

Anyway simply put, will it cause problems?

Short answer is yes you can do that as long as the funds come out of retained profit, ie after funds have been set aside to pay taxes, but you shouldn't. It is better to take a monthly salary, pay into your personal account and draw down from that. And be aware of the various tax thresholds, hence everyone suggesting to speak to an accountant.