We all deserve to enjoy the rewards of our hard work, don’t we? A family holiday, a nice meal, the latest smartphone or gadget?
But, the best reward for business owners is becoming financially sustainable and turning a profit.
Enjoying your hard-earned profits isn’t as easy as logging into your business banking app and making a quick transfer into your personal account. There are only a few ways you can legally transfer money from a business into your private funds.
So what’s the best way to get profit out of your business while keeping the amount of tax you pay to HMRC to a legal minimum?
Extracting profit can be done in several ways. Taking advantage of pension contributions, for example, will benefit your personal finances in the long run and can lower the amount of corporation tax you pay.
Paying dividends after corporation tax on the other hand needs to be carefully managed. Dividend payouts up to £2,000 are tax-free, and paying yourself a lower salary coupled with a dividend can be tax-efficient – but please do talk to me first so I can help you make the right choices.
For example, if you’re married, you could consider making your partner a shareholder in your business and pay them dividends.
You could even use MULTIPLE profit extraction strategies at once! But – and this is an important ‘but’ – it is worth consulting a tax advisor or accountant to see if that’ll do more harm than good. I can help assess your situation to find the best process for profit extraction to fit your circumstances, helping you extract your profits in the most tax-efficient way possible.
Drop me a line, and let’s see how you can enjoy the benefits of your hard work in building a business.
All financial advice is subject to individual situations – please discuss your plans with a financial professional before putting them into effect to make sure they’re right for you.
