You've worked hard, investing your time, energy and talents into your business. Now perhaps either you need to extract money for the first time, or you feel it's just time to reap some of the rewards of your hard work.
Whatever the reason behind why you need or want to get money out of your business, profit extraction takes careful planning to make sure it's as tax efficient and well timed as possible.
Profit Extraction can be carried out in many ways. For instance:
Salaries & bonuses
Business owners extract a regular income from the limited companies as salary. We assess the optimum salary & bonuses structures with market competitive rate. Salaries, bonuses and associated national insurance are tax deductible for the limited company.
Dividends are distributed after paying off corporation tax. Dividends are relatively taxed lower for owners and are efficient for the small sized business and large businesses. We structure salary and dividends so that you make the most out of our tax planning expertise.
Rent & Interest
Rent and interest are tax deductible for the tax purposes for limited companies. Depending on size of business, structure, and future planning, sometimes paying rent and extracting interest still could be option in your tax planning journey.
Pension contribution by the limited company to its employees is tax deductible. Pension contributions are a tax efficient way of extracting profits from a company, as long as immediate access to the funds is not a priority.
Full relief is available for corporation tax There are a range of benefits which are tax-free and if used efficiently, can be used for income extraction and employee motivation..
Paying for your employee's gym memberships, medical insurance etc are taxable benefits for the employee but does not incur national insurance for the employer.
The owners of the small companies can extract income as capital and pay lower tax on income with the correct planning. See exit planning for more information.
Company restructuring or reorganisation
Companies are re-structuring and reorganised for various tax planning reasons. For instance, it might be beneficial to organise your corporate structure to extract income or assets so that you pay little or no tax on distribution.
Require more information?
If you would like more information or would like to speak to us, then call us on 0208 050 0025 or if you prefer to contact us.