How to pay myself from a Limited Company

You might be wondering if you have started a new company, and turned it into a limited company, how much money you can take out for yourself. Operating via a limited company has many advantages, but there are effective ways through which you can pay yourself. Some of the points are noted below:

Paying Yourself a Salary

Salaries are widely recognized as the source of the remuneration if you own a company. For those companies operating through a limited company, they can take out a salary as the package from remuneration. It is essential to remember you can pay yourself from the profits, not the revenue generated. Because, certain things like tax deductions, payrolls, everything needs to be considered before you decide to take out your cut.

Paying Yourself through Dividends

When a limited company has earned money by paying income tax, then this can be paid in the form of dividend payment to the company’s shareholders. It is tax efficient. Then the dividend payment recipients would have to pay their taxes on their dividends. You might be liable for the tax free income exemption, based on the sum of the dividend income.

Tax Efficient

After you have consulted with your accountant, it is essential to note how you can remain tax efficient while taking out money from your business? Tax rates will be dependable on the legal structure of your business. Some things you should keep in mind are:

• Cutting out salary for yourself every month as you do with other employees.
• When a limited company has earned money by paying income tax, then this can be paid in the form of dividend payment to the company’s shareholders. It is tax efficient.
• You can choose to take salary in stock.

Paying yourself as expenses

There might be occasions when you have had to pay for the business costs from your pocket, so by holding receipts and submitting claim forms you can claim money from your company, only if the cost was for purposes of business only. The different kind of tax deductible cost you may claim for are:

• Car and mileage costs.
• Equipment expenses (Computers, laptops, etc.)
• Travel and Stay expenses.
• Meals.
• Health costs. 

It is important to keep the receipts on you as records. You can take out money out of the limited company, as when you collect your payment, the company will repay you for your expenditures per month, or whenever. If you are confused over how you can do this, then it is essential to consult with your accountant first to avoid confusion.

Final Words

Taking out pay for yourself is only beneficial for you and your company when business is soaring. The money you take out from the company will be taxed, that’s why even if you choose to invest it into your company, and then there are increasing chances of your company to grow. So these are some of the ways you can pay yourself from a limited company.