If you run your own business then it’s very likely that you’ll want to pay yourself at some point! The way that you do this depends on what type of business structure you have, for instance if you’re a sole trader, or if you operate a limited company.
Use the links to jump to the relevant section, or start with our video below to learn more about the basics of taking money from your business to pay yourself.
Rather like in a sole trader business, the profits that a business partnership generates belong to the partners, rather than to the business as an entity. The profits are normally shared between the partners according to how much of the business they own, although some businesses might have a partnership agreement which means they do things differently.
Whilst the partnership must submit a Self Assessment tax return in its own right, it doesn’t actually pay tax as an entity. Instead, each partner is responsible for submitting their own tax return so they can pay tax on their share of profits.
How do I pay myself from my limited company?
Limited companies are a bit more complicated, because the company is a separate legal entity to you as the owner and director. Any money that the company has or receives belongs to the business, so you can’t simply take money out of the company without following strict procedures.
The company has different methods of paying the people involved in the business:
Company directors can receive a salary
Shareholders can take dividends (a share of the company’s profits)