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General Chat Thread, Starting your own business in General; Originally Posted by contink . - The limited company MUST stay in profit, so there's no drawing out cash in ...
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    Quote Originally Posted by contink View Post
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    - The limited company MUST stay in profit, so there's no drawing out cash in a hurry because you need to pay the rent when the business is showing a loss.
    I don't know where you heard that, but it isn't true.

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    Quote Originally Posted by Flatpackhamster View Post
    I don't know where you heard that, but it isn't true.
    Ok... perhaps clarification...

    You cannot draw a dividend (usually the most tax efficient way to receive any income from your Ltd company) if the company is not in profit. Wages are obviously different but as a director you are charged with keeping the company in profit.

    That's probably a simplistic explanation but that's what I've been told by my accountant and I suspect he might be somewhat qualified to know.

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    Quote Originally Posted by contink View Post
    Ok... perhaps clarification...

    You cannot draw a dividend (usually the most tax efficient way to receive any income from your Ltd company) if the company is not in profit. Wages are obviously different but as a director you are charged with keeping the company in profit.

    That's probably a simplistic explanation but that's what I've been told by my accountant and I suspect he might be somewhat qualified to know.
    No, you can't draw a dividend. You can still pay yourself a salary and you can still receive a bonus. But they're both taxable at a higher rate than the dividend.

    So if you urgently need to pay the rent, you can do it. But you can't do it tax efficiently.

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