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    Default Paying Salary

    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?

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    northernladuk is a fount of knowledge

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    1. Welcome
    2. Get an accountant
    3. Ask them

    Hope that helps.
    Last edited by northernladuk; 17th May 2017 at 15:32.
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    You can't do that. Salary belongs to you, business savings belong to the Ltd company. Do what NLUK suggests....

    Quote Originally Posted by Brazilian View Post
    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?

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    Transferring money from business current to business savings takes the same time to transfer from business current to personal current. So not sure what the problem is. With faster payments these days it is usually in your account in minutes.

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    Lol, thanks. Get an accountant and ask them..I was expecting that as an answer!

    I am only going to be working as a 2nd line engineer and the rate of pay is nowhere near some are probably getting on here so I wanted to save money on an acountant and ask for advise her with those with experience.

    Thanks Gomez for saying it shouldn't be done and Andy O for pointing out its same to transferring to personal.

    Is it something the HMRC would consider illegal or something like that?
    Last edited by Brazilian; 18th May 2017 at 20:05. Reason: typo

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    You can't empty the business account without taking Corporation Tax into account (VAT liability depends on your turnover). Doing that WILL get you into trouble.

    You are running a business, not a piggy bank.

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    Default Paying Salary

    And the advice here is worth what you pay for it.

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    Quote Originally Posted by Brazilian View Post
    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?
    Hi and firstly congratulations on your new contract.

    Now to your question, in theory that is what everyone does i.e. the company will receive the funds and then the directors/shareholders extract the funds from the business via dividends or salary.

    Although you can extract the funds from the business, I would recommend that you find an accountant who can advise you on the most tax efficient manner of withdrawing the funds. Essentially, i think there are 3 pitfalls;

    1) Taking the funds via a salary would mean additional PAYE/NIC liabilities,
    2) Taking the funds in the form of dividends could result in additional corporation tax, and;
    3) Borrowing money from the business could result in a section 455 tax charge.

    Hope it helps.

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    Quote Originally Posted by cojak View Post
    You can't empty the business account without taking Corporation Tax into account (VAT liability depends on your turnover). Doing that WILL get you into trouble.

    You are running a business, not a piggy bank.
    Hmmm, I don't agree with the above, if the business account is empty, surely the person will pay any tax bills from their personal funds.

    For arguments sake, if the company had a CT liability and the director decided that he wasn't going to pay the bill, then I can see a case for the company being struck off and the director being disqualified for misusing the companys funds. That said, any sensible person would not go down this route.

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    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.

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