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Paying yourself

Paying Yourself

One of the frequently asked questions we get from existing small business clients and also potential new clients, is how do I pay myself. Now I would have thought that this would be one of the first questions that gets asked & answered when starting a business, but unfortunately that is not always the case. The answer to this conundrum is not always straightforward either and can depend on the legal structure of your business and your overall financial situation. Ideally, you should first determine your own personal budget to see how much you need to live on. This becomes your net wages to be paid to you from your business on a regular cycle. If the business can’t temporarily afford this then still record the wages and allocate any unpaid amounts to a director’s loan account. By doing this you can then draw down on the loan in future years and not pay tax again.

To summarise the best strategy for all small businesses is simply not possible as each has its own unique circumstances, but the lesson is clear, you may be in business because you were inspired to create something that is uniquely you, but at the end of the day it needs to make money and reward you for your hard work. If not, then you really need to be clear on why you have a small business at all.

For more information on the best way to pay yourself from your small business why not contact us, mas accountants, the original accountants for small business.

 
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