Business
6 min read
How to pay yourself from a limited company
Salary, dividends or pension contributions: how directors of small companies usually combine them, and the mistakes that cost the most.
A small salary first
Most directors take a modest salary through payroll. It keeps their State Pension record intact and is usually deductible for Corporation Tax.
Dividends from real profits
Dividends can only be paid from profits after tax. Paying them without enough profit creates a director's loan, which brings its own tax charges if it is not repaid in time.
Pension contributions
Company contributions to your pension are often the most tax-efficient way to extract profit you do not need today. They are worth considering every year.
Plan before the year ends
We review your figures before the company year end, so the decisions are made while they can still make a difference.