Running a limited company: your responsibilities
Taking money out of a limited company
How you take money out of the company depends on what it鈥檚 for and how much you take out.
Salary, expenses and benefits
If you want the company to pay you or anyone else a salary, expenses or benefits, you must register the company as an employer.
The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HM Revenue and Customs (HMRC), along with employers鈥� National Insurance contributions.
If you or one of your employees make personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.
Dividends
A dividend is a payment a company can make to shareholders if it has made a profit.
You cannot count dividends as business costs when you work out your Corporation Tax.
Your company must not pay out more in dividends than its available profits from current and previous financial years.
You must usually pay dividends to all shareholders.
To pay a dividend, you must:
- hold a directors鈥� meeting to 鈥榙eclare鈥� the dividend
- keep minutes of the meeting, even if you鈥檙e the only director
Dividend paperwork
For each dividend payment the company makes, you must write up a dividend voucher showing the:
- date
- company name
- names of the shareholders being paid a dividend
- amount of the dividend
You must give a copy of the voucher to recipients of the dividend and keep a copy for your company鈥檚 records.
Tax on dividends
Your company does not need to pay tax on dividend payments. But shareholders may have to pay Income Tax if they鈥檙e over 拢500.
Directors鈥� loans
If you take more money out of a company than you鈥檝e put in - and it鈥檚 not salary or dividend - it鈥檚 called a 鈥榙irectors鈥� loan鈥�.
If your company makes directors鈥� loans, you must keep records of them. There are also some detailed tax rules about how directors鈥� loans are handled.