Payment advice (sorry newb)

[Gahoo]

I am a contractor (LTD Company with me as the sole shareholder) undertaking my first contract.

My accountant has set me up a spreadsheet which works out my divs + expenses ensuing in a transfer from my business account into my personal account.

Do I have to make the transfer of Dividends in one go i.e. at the end of the month or can I draw out divs weekly?

[NotAllThere]

Ask your accountant why even monthly divs are potentially a bad idea.

[TheFaQQer]

I am a contractor (LTD Company with me as the sole shareholder) undertaking my first contract.

My accountant has set me up a spreadsheet which works out my divs + expenses ensuing in a transfer from my business account into my personal account.

Do I have to make the transfer of Dividends in one go i.e. at the end of the month or can I draw out divs weekly?

I take mine annually at the start of the end of the tax year, then offset my mortgage for the year. I don't like the thought of a weekly or even monthly dividend - looks too much like a salary to me.

Plus, dividends can only be paid against company profit, so make sure you get your calculations right about how much you're going to make in the year.

[FiveTimes]

I take mine annually at the start of the end of the tax year, then offset my mortgage for the year. I don't like the thought of a weekly or even monthly dividend - looks too much like a salary to me.

Plus, dividends can only be paid against company profit, so make sure you get your calculations right about how much you're going to make in the year.

The thing is, as he is a newbie then he won't have built up a pile of cash and might need the divs monthly while he builds up a stock.
Maybe he needs to take 1/4 payments.

[Crossroads]

The thing is, as he is a newbie then he won't have built up a pile of cash and might need the divs monthly while he builds up a stock.
Maybe he needs to take 1/4 payments.

Or, as the owner of a fledgling business, he should cut his cloth accordingly. Use savings, spend less, whatever.

[TheFaQQer]

Or, as the owner of a fledgling business, he should cut his cloth accordingly. Use savings, spend less, whatever.

That's what I did - lent the company money until it could afford to pay me back, rather than pay dividends out of profit that hadn't been made yet.

[Crossroads]

That's what I did - lent the company money until it could afford to pay me back, rather than pay dividends out of profit that hadn't been made yet.

Too right. I'll bet that most of the "I've been contracting x years and now I'm on the bench and can't pay my mortgage / taxman is after me / what do I do" brigade are the ones who have been paying monthly dividends from day one.

[monkeyBoy32]

Well I'm inside ir35 at the moment so it doesn't affect me but, if I was outside ir35 and paying dividends, how often would you reccomend taking them?

As mentioned, it takes a while to build up enough cash not to rely on a decent monthly salary.

I cetainly couldn't live off a minimum wage salary at the moment..

[VectraMan]

I don't like the thought of a weekly or even monthly dividend - looks too much like a salary to me.

The accountants will tell you it doesn't make a difference though.

When I started I waited until the company had enough money to cover its costs for the rest of the company year (i.e. my salary + accountancy fees) before paying any divs. If you stop paying salary because you've paid too much in divs already, I think that looks very dodgy, though as a director you probably don't need to keep paying your own salary.

These days I don't follow any pattern. It's more as and when I feel like I need to cheer myself up.

[Crossroads]

As mentioned, it takes a while to build up enough cash not to rely on a decent monthly salary.

I cetainly couldn't live off a minimum wage salary at the moment.

How long have you been contracting? What happens if you suddenly find yourself on the bench for a couple of months (or perhaps much longer?)

When I started contracting, despite the fact I had savings in the bank, my first priority was to build up a healthy bank balance to cover any unexpected time out of contract.