What are the tax implications of drawing profit from your company?
People run businesses for a variety of reasons from passion to pride, but making a living is high up the list for most people.
How do you go about drawing profit from your business, and doing so efficiently?
If your business operates as a partnership or sole trader, the profits it makes are what you are taxed on, subject to any expenses which are not deductible for tax purposes.
It makes no difference to your tax bill whether the profits are held within the business or extracted for your personal use.
When you work through a limited company, the total tax paid by the company and the shareholders will depend on the methods used to extract profits from the company and the amount withdrawn.
This guide discusses some of the common ways in which you can extract profits from your own company. The tax rates and thresholds quoted apply to 2018/19. – Download it here.
