Getting paid as an SMB owner

Thursday 29 November 2012

Small and medium-sized businesses (SMBs) have three options for paying themselves out of company funds.

According to public information portal, SMB bosses can claim salary, benefits and expenses, pay shareholder dividends or take out a directors' loan.

"If you want the company to pay you a salary, expenses or benefits, you must register the company as an employer with HM Revenue & Customs (HMRC)," the website explained.

"The company must take income tax and National Insurance contributions from your salary payments and pay these to HMRC."

Dividends are also an option for SMB bosses - these can be paid to all shareholders if the company has made enough profit.

However, small businesses cannot count dividends as business costs when they work out corporation tax.

"Your company mustn’t pay out more in dividends than its available profits from current and previous financial years," noted.

Directors’ loans are an option if SMB bosses want to take out more money from a company than they have put in.

"If your company makes directors’ loans, you must keep records of them," the information service stated.

"There are also some detailed tax rules about how directors’ loans are handled."

Posted by Steve Williams