Ltd Company Dividends

Moobag

I have a client who has just set up a ltd company. He wants to pay himself a weekly wage, he hasn't said how much yet, but I wanted to know the best way around it.

Should he pay himself PAYE so that he will qualify for NI or should he just pay himself a weekly dividend?

If he does pay himself a dividend will there be paper work to fill out each week or once a year. I am unsure and any help would be appreciated.

Moobag:thumbup:

deanshepherd

It really depends on the clients circumstances.

Do they have other income?
Do they qualify for NI elsewhere?
Are they a higher rate taxpayer?

Whether you pay salary or a dividend you need to prepare the proper paperwork each time a payment is made. This will either be a payslip for salary or dividend voucher/board minutes for a dividend.

Be careful about advising your client if you are unsure yourself.

Moobag

They have no other income, does not qualify for NI anywhere else and is not a higher rate taxpayer.

Obviously I was aware of the payslip if he is employed but just wasn't sure about the dividends. If he can have dividends is it worth get him to pay himself on PAYE up to the threashold for NI purposes?

I do the books for a number of clients and each one does it differently!

deanshepherd

I would generally advise paying a salary sufficient to qualify for NI benefits but without actually having to pay any NI or tax.

Further profit extractions can then be done via divided, provided there is sufficient accumulated profit to do so.