7 Ways To Get More Money Out Of Your Business

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If all the hard labour is paying off and your business is raking in the profits, you might be looking to treat yourself and your family. However, this can be tricky with limited companies as essentially, any profit belongs to the company. Here are some legal options that will enable you to withdraw some of that hard-earned money. If you need to generate more profit, check out three, five and seven.

 

  • A Director’s Salary

As a director, you can pay yourself a salary just like any employee. As an employee receiving a wage, you will have to register with the tax office first. It is wise to maintain a salary just above the threshold of qualifying for a state pension while keeping within a minimum tax bracket – this means you will get the benefits of a state pension but not pay more tax then you have to.

  • Dividends

If you are a shareholder and a director in a profitable company that pays taxes, you can take income from the company in dividends. There is more wriggle room with dividends than a salary. Dividends are paid out of profits that have already been company taxed. Shareholders are not taxed again on the same profits and receive a rebate for the tax paid by the company on profits distributed as dividends. 

 

FYI: Taking out dividends if you cannot afford to pay taxes could lead to an unviable, insolvent company.

  • Reverse Mortgage

Suppose you have done all the hard work and are looking to retire with a bit more money than your pension can provide. In that case, a reverse mortgage will let retired homeowners tap into the savings that have accumulated their homes by releasing the equity – without the need to sell it.

  • Directors’ Loans

If you handle the process correctly, a directors’ loan is an efficient way to get money out of your business. A directors loan is any money taken out of the company that is not a salary or a dividend. It is important to note that you must record all directors’ loan transactions in a directors’ loan account. You can either be ‘in credit’ or overdrawn, depending on the account balances.

  • Consulting Fees

If you are an expert in what you do, you can teach others your specialties for a fee. You can speak at seminars, webinars or offer meetings – all of which can increase your business profits, creating opportunities to reward yourself financially. 

  • Bonuses

You can add bonuses on top of the salary you get paid. At the end of the financial year or even halfway through it, you can pay yourself an employee bonus, a directors fee or a fully franked dividend. It is recommended to consult with an accountant to assess financial tax before giving yourself that reward.

  • Put up prices

A simple yet effective way to increase profits is to increase your prices between two and five per cent. You can then put the extra profit aside for a rainy day.