Reply to: getting money from account

[TheFaQQer]

I've been told the best thing to do is:
1. expenses
2. monthly pay (£750 net)
3. dividends up to higher rate tax payer.
Leave a bit spare for interest on accounts.
The rest leave in account - after 2 yrs = taper.

If possible do 1 and 2 and after 2 yrs taper the lot.

However, taper is now gone and replaced with CGT. Might still be an advantage to leave it in the account and pay CGT instead of higher rate tax.
Is this true?

Sounds fair to me.

[RightLaugh]

I've been told the best thing to do is:
1. expenses
2. monthly pay (£750 net)
3. dividends up to higher rate tax payer.
Leave a bit spare for interest on accounts.
The rest leave in account - after 2 yrs = taper.

If possible do 1 and 2 and after 2 yrs taper the lot.

However, taper is now gone and replaced with CGT. Might still be an advantage to leave it in the account and pay CGT instead of higher rate tax.
Is this true?

[[email protected]]

If you get a new accountant, l recommend you ask the question before signing up as to what experience they have dealing with contractors. The questions you are asking should present no problem for any accountant with experience in this field, and you need to be confident that your accountant is filing the neccessary returns when they should be to ensure you don't end up with late filing penalties arising on the company.

If you email me [email protected], I'd be happy to discuss further, or l can send you a comprehensive guide to running your ltd co to put your mind at rest.

[Bluebird]

If you take money as Expenses - you need reciepts to back it up.
If you take money as Salary - you need to record it and pay PAYE on it.
If you take money as Dividend - you need to back it up with Shareholder minutes and ensure you pay tax if you break the threashold.

You can only pay yourself dividends out of PROFIT - that is after VAT, Corp Tax, PAYE [ both employers & employees ] has been taken.

By the way, if your asking this sort of question - get a new accountant, or go brolly.

[xoggoth]

Transactions in bank account should all match up with something elsewhere in the accounts, either income, payments to director, tax etc. or expenses. That's what the balance sheet is useful for, to detect discrepancies. Timing and number is not really relevant as long as there are proper records of what's what.

[Cooperinliverp00l]

I've set up a standing order for X amount going to my personal accountant at the end of each month. This covers me for both salary and expenses.

My accountant said come end of year once all final tax has been calculated and withdrawn i will then take the rest as dividends. This seems to work for me i have enough money in my personal account and business account and come next april i will have a final one-off lump sum that covers the previous 12 months.

If you don't feel confident with what your accountant is telling you then you need to move as these will be the people that will help you with your tax or help you get into the sh1t.

[vhadiant]

But do you not need to back up the annual returns with your bank statement at year end? If you take out money as and when you like is it not going to make it very hard to justify why you made these payments to yourself?

Regards.

I'd say they mean taking it out as dividend. All will be recorded. The company money is not your money until you take it out as divi.

[conqurer]

But do you not need to back up the annual returns with your bank statement at year end? If you take out money as and when you like is it not going to make it very hard to justify why you made these payments to yourself?

Regards.

Nearly. Take it all... only leave money to keep the business running, pay your VAT liability and your PAYE/NI/Corp Tax liabilities.

Otherwise, you may find you've a large tax bill, and you've no money left to pay it, cos you've spent it all.

[NotAllThere]

Take it all....only leave money to keep the business running.

End of year accounts will sort out the tax...

Nearly. Take it all... only leave money to keep the business running, pay your VAT liability and your PAYE/NI/Corp Tax liabilities.

Otherwise, you may find you've a large tax bill, and you've no money left to pay it, cos you've spent it all.

[max]

Any tips..

Take it all....only leave money to keep the business running.

End of year accounts will sort out the tax...

[vhadiant]

I'd change accountant mate.

Basically you have money into the company bank account. Minus that to your salary, *legitimate* expenses and other pre-tax outgoings. Whatever left is the profit before tax. Apply company tax, whatever left from this one is the company profit after tax.

You take this profit out as dividend which will be taxed again, but this is your personal tax nothing to do with your company. That's generally the way to do it. There are of course other way to get money out from the company account to your personal account.

[xoggoth]

As long as you account for it properly as one of the above and pay any necessary tax there are no particular rules as to when and how much you make a withdrawal. Simplifies the accounts if you do not make lots of small withdrawals though, I prefer to use it for VATtable company and major transactions only. You can keep a petty cash account to cover minor expenses.

[TheFaQQer]

how can i do this? surely i can treat my company account like my personal account and randomly start taking cash from it

I'll hope that's a typo and should read "Surely I can't treat..."

I have no idea what kind of accountant you are using, but he sounds a bit of a cowboy. You can take out expenses by taking the money out. You can take a salary, that you pay PAYE on. You can take dividends out, but need to declare these and pay all shareholders.

You could take a loan from the company, but there is an annual limit on this.

I'm not aware of any other ways to take money out of the company legitimately. Sounds like you need to ask your accountant - although if this is the advice you are getting, I'd ditch them pretty quick and move onto someone else.

[dude69]

Well my company bank balance has finally money in it.
I emailed my accountant to ask whats the process of getting money out from the account..

He advised me on claiming for expenses etc.
Do i just add up over the last month, the cost of the train and tube to and from work and is that my expensis. Lets say that comes to 100 pounds. do i just write my self a cheque for 100 pounds and keep the receipts?

Also he said

"I would also suggest that you draw sufficient additional funds as you deem necessary to enable you to meet all your personal commitments. "

how can i do this? surely i can treat my company account like my personal account and randomly start taking cash from it

Any tips..

Bit confused mate, you're paying him to answer these questions, send him this email instead.

[oracleslave]

Any tips..

Never chase busses or women, you always get left behind.

HTH.