Our response to COVID-19 Events Careers 0800 434 6460 Who we are Business challenges Services Sectors Content Hub Contact us How do I extract money from my business? The efficient ways to draw money Your business is growing, your order books are full, and everything is going well. But what’s the best way to draw money out, so you can feel the benefit of your success? There are several options, but withdrawing money tax-efficiently takes a little planning. Director’s Loan When you started out, you might have provided a loan to the business before you began making sales, and your cash flow was low. Just like any other loan, it’s payable back to you, and the repayments you receive aren’t subject to personal tax. Salary As the boss, you can earn a salary from your business, just like any other employee. However, as you have other earning options from the company, you might want to keep the salary part of your income low, to reduce the tax you pay. Your salary is seen as a tax-deductible cost to your business. Reimbursable expenses As long as your expenses are only for work, you can claim them back from the business. HMRC also allows other options for using personal assets for business. For example, if you’re travelling in your own car on business, you can claim 45p per mile (for the first 10 000 miles) without incurring income tax. As an added bonus, there’s no personal tax to pay on this, and you get a reduction in corporation tax. Pension Both employers and employees can contribute towards a pension fund set up by the business. This is an allowable expense against personal tax, and your company can save corporation tax on the amounts paid. (But if your business is growing and needs to maintain cash flow, you might not want to be paying out money you can’t access until you retire.) Dividends Once your company has paid corporation tax on its profit, you can pay what’s left to shareholders as dividends. This way, you can keep salary costs low and pay your shareholders after earning actual profits. This is the most tax-efficient way for owners to earn from a business. Each of these options has pros and cons, which you’ll need to consider before going ahead. We can help you navigate through them, to ensure your business continues to grow, and you continue to earn. "We were impressed by the breadth of the advice Price Bailey was able to provide through its teams of specialists. Despite their different specialisms, we felt that every person had a clear view of the overall situation and that created the feeling of a single unified entity working for our benefit." Sue Eales WBMS Related services Personal tax services Cash flow modelling Financial planning Investment management Pensions for employers Pension trustee advisers Bookkeeping services More business challenges Helping you to run a better business. How can I save personal tax? When it’s done properly, tax planning can really help you How do I manage VAT? VAT is complex, but there are steps you can take to help How do I prepare for my retirement? A pension is just one part of your retirement planning View all business challenges Back to top Useful Links Careers Work Experience Contact us Events Employee directory Media and press enquiries Online payments Press releases Client identification and verification Legal information Privacy & cookies Locations Bishop’s Stortford Cambridge Channel Islands City of London Dubai Eastern Caribbean Ely London Mayfair Newmarket Norwich Sawston Latest Content You’ve sold your business to an Employee Ownership Trust – now what? 7:00 AM - 1 Dec 2021 Read more Video: The importance of a rolling 13-week cash flow 12:32 PM - 29 Nov 2021 Read more Latest Tweet 8:30 AM - 30 Nov 2021 Connect with us © Price Bailey LLP 2021