Hi, Would appreciate any experience or thoughts ahead of speaking with our accountant on this. Been running business about 6 months now. We have taken a few dividends from available profits (net income less assumed corp tax) as well as relatively low salaries for me and OH with whom I own the business 50/50.
What I want to ask is this - I appreciate you cannot and should not take a dividend unless the business is showing a profit as above. However can you still take salaries and pay other bills even though the business would be effectively eating into the "set aside" corporate tax? Obiously every time you pay a salary or make another allowable purchase you are effectively lowering your overall tax bill anyway, but I wanted to be sure whether I can eat into the set aside CT throughout the year if necessary, or whether businesses need to have that money locked away on a real time basis.
Our business account is always in the black, it's not that I'm talking about borrowing from the bank to pay wages, but rather borrowing from the corporate tax set aside and sitting in our account. Should also say that we are on flat rate VAT scheme and the relevant percentage due (currently 13.5% of gross earnings) is locked away in a separate business bank account to be taken by Revenue Direct Debit each quarter and does not in any way form part of the above equation.
Any thoughts folks?
What I want to ask is this - I appreciate you cannot and should not take a dividend unless the business is showing a profit as above. However can you still take salaries and pay other bills even though the business would be effectively eating into the "set aside" corporate tax? Obiously every time you pay a salary or make another allowable purchase you are effectively lowering your overall tax bill anyway, but I wanted to be sure whether I can eat into the set aside CT throughout the year if necessary, or whether businesses need to have that money locked away on a real time basis.
Our business account is always in the black, it's not that I'm talking about borrowing from the bank to pay wages, but rather borrowing from the corporate tax set aside and sitting in our account. Should also say that we are on flat rate VAT scheme and the relevant percentage due (currently 13.5% of gross earnings) is locked away in a separate business bank account to be taken by Revenue Direct Debit each quarter and does not in any way form part of the above equation.
Any thoughts folks?
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