How you take money out of the company depends on what it’s for and how much you take out.
Salary, expenses and benefits
If you want the company to pay you or anyone else a salary, expenses or benefits, you must register the company as an employer.
The company must take Income Tax and National Insurance contributions from your salary payments and pay these to HM Revenue and Customs (HMRC), along with employers’ National Insurance contributions.
If you or one of your employees make personal use of something that belongs to the business, you must report it as a benefit and pay any tax due.
Dividends
A dividend is a payment a company can make to shareholders if it has made a profit.
You cannot count dividends as business costs when you work out your Corporation Tax.
Your company must not pay out more in dividends than its available profits from current and previous financial years.
You must usually pay dividends to all shareholders.
To pay a dividend, you must:
- hold a directors’ meeting to ‘declare’ the dividend
- keep minutes of the meeting, even if you’re the only director
Dividend paperwork
For each dividend payment the company makes, you must write up a dividend voucher showing the:
- date
- company name
- names of the shareholders being paid a dividend
- amount of the dividend
You must give a copy of the voucher to recipients of the dividend and keep a copy for your company’s records.
Tax on dividends
Your company does not need to pay tax on dividend payments. But shareholders may have to pay Income Tax if they’re over £500.
Directors’ loans
If you take more money out of a company than you’ve put in - and it’s not salary or dividend - it’s called a ‘directors’ loan’.
If your company makes directors’ loans, you must keep records of them. There are also some detailed tax rules about how directors’ loans are handled.
FAQs
Powers and responsibilities of the management of a limited liability company. The company management's duty is to promote the interests of the company through prudent action. This involves both the duty to be loyal and to take care of the company and act in its best interest.
Who is responsible for the limited company? ›
Simply put, limited liability is a layer of protection placed between the company and its individual directors. This means the directors cannot be held personally responsible if the company becomes insolvent and is unable to pay its debts.
What are the roles within a limited company? ›
There are two distinct bodies of people in a limited company. The members (shareholders/guarantors) who own and control the company; and the directors who manage the activities and finances of the business on a day-to-day basis. Directors are chosen and appointed at the discretion of company members.
What is the main purpose of a limited company? ›
A limited company (LC) is a general form of incorporation that limits the amount of liability undertaken by the company's shareholders. It refers to a legal structure that ensures that the liability of company members or subscribers is limited to their stake in the company by way of investments or commitments.
Who owns and controls a limited company? ›
Who owns a limited company? Private limited companies are owned by one or more individuals (human or corporate) known as 'members'. The members of limited by shares companies are called shareholders. The members of limited by guarantee companies are known as guarantors.
Who owns the assets of a limited company? ›
Who do the assets of my company belong to? A limited company is classed as its own legal entity; this means it is responsible for any liabilities it accrues, and likewise, it is the legal owner of all its assets.
What is the difference between a Ltd company and an LLC? ›
Both LLC and LTD are similar in some ways yet different in others. One of the main differences is that LTD companies pay corporate taxes on their profit, unlike LLC entities where taxes are passed on to the members to pay on their personal income, and both are common for founders around the world.
What is the highest position in a limited company? ›
The chief executive officer (CEO) is the highest-ranking individual in a company. Every company differs but CEOs are often responsible for expanding the company, driving profitability, and improving share prices in the case of public companies. CEOs manage the overall operations of a company.
Who is the manager of a limited company? ›
A limited company director is legally responsible for the day-to-day management and running of a limited company. A limited company can have more than one director. The director and the company are separate entities, they incur debts and pay bills in their own right.
Can a limited company be a director? ›
A company director can be a person or corporate entity (e.g. another company).
For example, allocating too many shares to an individual with views sympathetic to the director may not be in the company's best interests. In addition, they may not exceed the limits of the powers and authority given to them.
Is a director an owner? ›
While directors take care of the general day-to-day running of a company, shareholders still have a significant say, especially when it comes to any large decisions about the business. In simple terms: Shareholders own (part of) the company. Directors manage the company!
What is the difference between LLC and LTD? ›
In an LLC, there are no shares for the owners to buy, but in an LTD, every shareholder can purchase shares to own the business. The company determines the price of shares in an LTD, whereas in the LLC, they're determined by market forces. Opening LLCs is simple and flexible since they don't need much paperwork.
What is a limited responsibility? ›
Limited liability is a form of legal protection for shareholders and owners that prevents individuals from being held personally responsible for their company's debts or financial losses.
What are the responsibilities of a public limited company? ›
A public limited company can offer shares to the public. There are also other obligations that a PLC must meet due to being public, including further admin regarding tax, and making their financial reports public so would-be shareholders have all the information they need before investing.
