Ltd Company, How do I go About Paying Myself as Director?

optimusgrime

Hi Guys,

I own a ltd company (proprietary director, 100% of shares) that has been trading since just the end of 2010. At the end of 2010 the company had made a slight loss but my the end of 2011 there will be a decent enough profit.

I have yet to take any salary from the company and basically wish to take out all the profit as a salary before the end of the year.

I don't really know about how to go about doing this, was hoping someone could provide me with a link to the relevant department/info, can't find much on the Revenue site.

I'm going to me the only person being paid by the company for the foreseeable future so I'm hoping it's something I'd be able to do myself assuming it's not too tricky.

Just want to make sure that I'm doing everything right in terms of withholding tax, levies etc!

And advice on where to start would be much appreciated:)

Thanks

dbran

Hi

A director of a limited company must be paid via the payroll as a salary.

You will need to register the company as an employer and register yourself as an employee of the company using Form TR2. You then operate PAYE/PRSI/USC on the amount you pay and return the relevant tax to the revenue every month via a P30. The company files a P35 at the end of the year declaring the salary that it has paid to you. You as a director are also required to file a personal return (Form 11) of your income on the 31 October every year.

This is the very short version of it. You should discuss this with your accountant as there can be savings to be made in certain circumstances.

Kind Regards


dbran

deman

@dbran

Is it not possible to pay out a dividend bonus to the shareholders, or in this case, the shareholder? He wouldn't need to be an employee.

dbran

Hi Demon

Yes it is. But there is no benefit to doing it this way. Dividends attract PAYE/PRSI and USC however they do not give a deduction for corporation tax as with a salary.

Kind Regards

dbran

TheCostumeShop.ie: Ronan

As always Dbran is on the money.

It is worth talking to your accountant for sure though. For example if you have no other source of income it might be worth paying yourself a wage on the books and just paying out the taxes and accumulating up the net pay within the company. The advantage being that you can use up your annual tax credits and take the money out of the company at a later stage when it can afford it, but at the lower or nil rate of tax. Down side to this is you pay the taxes in advance of getting the actual cash but it does make sense.

*Unlike Dbran I'm not an accountant; and I don't pretend to be one on the internet, my posts are not intended to replace professional advice.*

Trojan

The guys said everything above on the technical details. What I'd emphasise is the importance of getting a good, reliable account who you like and trust. If you're not sure, shop around - arrange meetings with a few and go with someone you're comfortable with. There are all kinds of payment options - my preference is once a year, with me able to pick up the phone any time without worrying about ticking clocks

optimusgrime

Thanks for the advice guys.

I'll need to find an accountant quick enough, I've had a friend who is one help me out but I think it might be worth finding someone who specialises in the area.

With regards to your suggestion Ronan, the money that's there isn't really needed for anything so I figured I might as well take it out, be taxed on it and put it into savings, a pension plan etc rather that just pay corporation tax on it at the end of the year and having it sitting there in the business account.

If anyone would like to recommend an accountant by PM preferably based in the Dublin area I'd appreciate it. My business is a web based store so someone with experience in that kind of area would be much appreciated!

Thanks again

TheCostumeShop.ie: Ronan

optimusgrime wrote: »

Thanks for the advice guys.

I'll need to find an accountant quick enough, I've had a friend who is one help me out but I think it might be worth finding someone who specialises in the area.

With regards to your suggestion Ronan, the money that's there isn't really needed for anything so I figured I might as well take it out, be taxed on it and put it into savings, a pension plan etc rather that just pay corporation tax on it at the end of the year and having it sitting there in the business account.

You need to do this very quickly then with the Nov 19th deadline looming for online filing, that way you can get the 2010 credits allocated. (Again I may be subject to correction - Dbran?)

optimusgrime

Thanks Ronan,

I already filled in my return for 2010, I was a full time employee for the year and the company was only just trading by the end of the year so a lot of it did not apply.

Hopefully I can find a suitable accountant/financial advisor to steer me in the right direction with this stuff.

I'll also need to speed up in terms of registering the company as an employer etc if I want to pay myself by the end of the year!

TheCostumeShop.ie: Ronan

Filled in doesn't mean submitted. Talk to an accountant, if you have any unused tax credits from 2010 you may be able to use them beneficially. Welcome to the world of the self employed entrepreneur, it's up to you to make the most of opportunities like this, if you don't there's no social welfare, help or second chances.

dbran

Thanks Ronan:)

I think the urgency now is that it is getting close to the end of 2011 and time is getting short to register the company as an employer and then get a certificate of tax credits issued for the director.

I presume OP has filed his tax return. If not he has until 16 November to pay and file.

Kind Regards

dbran