Salary and dividends question.

[Contreras]

I prefer to keep company and personal (but still business) expenses separate, so I would:

* Pay for your own out of pocket business expenses (travel, subsistence, accommodation etc.) and do an expense claim once YourCo has the funds to pay you back

* If there are things you need to buy for YourCo or other company expenses (equipment, accountancy fees, admin expenses etc.) then I'd transfer the money to YourCo as a director's loan - this means you can pay for your company expenses from the company bank account - and again pay it back when there are funds to do so.

I can see the thought process behind this but with respect there is no logic to it. Any of the above could be either paid out-of-pocket and reclaimed, or paid direct by the co. All you are doing by categorising expenses in that way is pandering to the whim of HMRC that certain business costs are a personal benefit.

Debz, You have a choice - it comes down to personal preference and you do not even have to be consistent - just make sure you keep good records!

Personally I would: Introduce capital to whatever the value of shares that issued (say £100) plus a directors loan (say £1k) to cover immediate costs. All expenses paid from the company debit card wherever possible. This keeps company and personal business separate, and the company bank statement itself can count as a record (useful if receipts are ever mislaid/forgotten). The loan can be repaid when cash flow allows, the capital is left in the business.

Others prefer to pay everything out-of-pocket and then reclaim. There is nothing wrong with that either. Do whatever makes sense to you and keep records that you can understand.

As for the best salary/dividends this would depend on personal circumstances including previous salary for the tax year. Ask your accountant to explain their reasoning.

[pmeswani]

I prefer to keep company and personal (but still business) expenses separate, so I would:

* Pay for your own out of pocket business expenses (travel, subsistence, accommodation etc.) and do an expense claim once YourCo has the funds to pay you back

* If there are things you need to buy for YourCo or other company expenses (equipment, accountancy fees, admin expenses etc.) then I'd transfer the money to YourCo as a director's loan - this means you can pay for your company expenses from the company bank account - and again pay it back when there are funds to do so.

There are no tax implications to the latter at all and no tax implications to the former so long as they are wholly, exclusively and necessarily for business purposes (you'll need to enter these on your tax return and P11D though).

Strange as it may seem, my Accountant has suggested things like accommodation (e.g. hotel stay) and travel (e.g. flights and trains) where it is not something you would normally incur should be paid from the company accounts directly and the receipts (not as a personal expense) are put in accordingly. I don't know if is against the grain or not.

[Jessica@WhiteFieldTax]

I don't know if is against the grain or not.

Honestly it's as broad as its long.

It comes down to convienance for you and acct.

[stek]

Honestly it's as broad as its long.

It comes down to convienance for you and acct.

I have a Cater Allen Visa debit, and all the transactions are debited (or is it credited, from my accountancy days ISTR banks do it the other way round) individually, so you can go over the 30 transaction limit and that last £1.99 Subway can end up costing you £8.99 with the seven quid charge....