How soon can I start withdrawing Dividends?

[SimonMac]

If I have covered my VAT and CT Liabilities, how soon can I start withdrawing my first Dividend?

[DaveB]

If I have covered my VAT and CT Liabilities, how soon can I start withdrawing my first Dividend?

As soon as you want, just do the appropriate paperwork.

There are a number of schools of thought on how often to declare them, some do it monthly, some quarterly or every 6 months. It's entirely up to you as director of the company.

[Moscow Mule]

It's entirely up to you as director of the company.

I generally do it when either;

I'm skint

or

the company is minted.

[Wanderer]

If I have covered my VAT and CT Liabilities, how soon can I start withdrawing my first Dividend?

You can take dividends as soon as your company gets some money!

[MarillionFan]

You can take dividends as soon as your company gets some money!

WHS. You could even take the whole lot in the first month if you wanted. If you get paid £6000 for the month and £1200 for VAT, giving you a balance of £7200, if you wanted to you could pay yourself all of it , all £7200.

Remember you don't pay VAT until the end of the quarter and corp tax is after the year end.

Up to you how you manage your finances. You are the financial director as well after all!

[Waldorf]

WHS. You could even take the whole lot in the first month if you wanted. If you get paid £6000 for the month and £1200 for VAT, giving you a balance of £7200, if you wanted to you could pay yourself all of it , all £7200.

Remember you don't pay VAT until the end of the quarter and corp tax is after the year end.

Up to you how you manage your finances. You are the financial director as well after all!

My accountant has always told me that dividends should only come from profits, so on the above example the profit would be £6000 assuming you have no expenses, and don't forget corporation tax at 21% so this effectively reduces the dividend to about £4800

[Sockpuppet]

You can take dividends as soon as your company gets some money!

Wrong. You can take dividends as soon as there is profit to do so.

[Wanderer]

Wrong. You can take dividends as soon as there is profit to do so.

Yes, you are right. I should have said: "You can take dividends as soon as your company makes some profit!". Presuming that his expenses are low compared to his turnover, he can probably just take all the money after tax as dividends and balance it up later.

Simon, consider getting a copy of SJD Spreadsheet to track your accounts with. You have to sign up, but I think it's free.

[MarillionFan]

My accountant has always told me that dividends should only come from profits, so on the above example the profit would be £6000 assuming you have no expenses, and don't forget corporation tax at 21% so this effectively reduces the dividend to about £4800

Correct.

What I mean is, if you're on a 6 month contract, when the first payment comes in if you want to take it knock yourself out. As long as there is more money coming and you know the profit from that, then pay yourself a cheque.

In truth, I don't know what the rest of you do, but as self assessment is only once a year, and the accounts are only done once a year, I don't work out my exact dividend/salary until the end of the year. I pay myself cheques when and as and at the end of the year just square it off with the accountant.

I do of course never ever touch the VAT and I work out the corp tax at the end of year ensuring that there are funds for it.

If of course you take too much, we put that down as a directors loan and I either roll it over or pay it back.

[VectraMan]

My accountant has always told me that dividends should only come from profits, so on the above example the profit would be £6000 assuming you have no expenses, and don't forget corporation tax at 21% so this effectively reduces the dividend to about £4800

OTOH, if you're paying yourself a salary of £12K, then you haven't made a profit until you've earned at least £12K (i.e. you have enough to cover the salary and other expenses for the rest of the year). Profit isn't calculated per month; it's the yearly picture that actually counts. That's being a bit paranoid, but it's still best not to help yourself to absolutely everything every month.

I tend to pay myself dividends as and when I need cheering up. Nothing like a £10K tax free lump sum to help get you through the day.