Hi, and welcome back to our Pro Masterclass on property investment through limited companies. In this lesson, we're covering a topic that's essential for every business owner, getting money out of your limited company. Whether it's taking a salary, drawing a dividend, or repaying a loan, there are several ways to do it, but each has their own rules, tax implications, and best practices. So let's break it down. When it comes to taking money out of your limited company, you have several options. The most common methods include repaying your director's loan account, your DLA, paying yourself a salary, taking dividends, and even contributing to a pension. Let's start with a director's loan account. If you lent money to your company, for example, to cover a deposit for property purchase, that money is recorded in your director's loan account. This means the company owes you money and you can draw it back out tax free as long as there are sufficient funds available in the company. This is one of the most straightforward ways to get money out of your business because it doesn't have any immediate tax implications. Next up is paying yourself a salary. You can set up payroll for your company and pay yourself a regular salary, just like any employee. The salary is a tax deductible expense for the company, which reduces your corporation tax bill. However, you'll need to pay income tax and national insurance on your salary, and the company may also need to pay employer's national insurance contribution. It's important to consider how much salary you pay yourself as this can impact your personal tax situation. Another option is to take dividends. Dividends are payments made to shareholders from the company's profits after it's paid corporation tax. The main advantage of dividends is they are taxed at a lower rate than salary. However, dividends can only be paid out of profits, so if your company hasn't made a profit you can't take dividends. You'll need to pay income tax on dividends, but at rates lower than income tax on salaries. And finally, let's talk about pension contributions. Your limited company can pay directly into a pension on your behalf. These contributions are considered a business expense, reducing your company's taxable profit. Pension contributions are an effective way to save retirement while enjoying tax benefits both personally and for your company, And advanced property investors often reinvest their pensions tax efficiently in commercial properties. So how do you actually go about paying yourself from your company? For salaries, you'll need to set up payroll within your company. This involves registering for PAYE with HMRC and then making sure you're handling the necessary income tax and national insurance contributions correctly. There is extra admin involved. You'll need to file regular payroll returns and pay any income tax and national insurance due to HMRC. If you do decide to set up a PAYE scheme, we can enable payroll in our app for your company. When it comes to dividends, there are a few key steps to follow. First, you'll need to check your company has sufficient profits available to pay dividends. Then you'll need to create a dividend voucher, which is a document that shows the amount of the dividend, the date, and who received it. You'll also need to record the decision to pay dividends in the company's board meeting minutes. This might sound like a lot of admin, but our app simplifies it with just a single click, generating all the necessary documents to keep everything lawful. Repaying a director's loan account is as simple as transferring the money back to yourself when your company has enough funds. There's no tax to pay on this as it's simply repaying the money you lent to the business. If you're considering pension contributions, these can also be managed through your company's accounts. It's important to ensure the payments are made directly from your company to your pension provider as this qualifies the contribution as a business expense. Now let's talk about the tax implications and potential pitfalls of withdrawing money from your company. One of the key things to understand is double taxation. This happens when the same income is taxed twice. Once when the company pays corporation tax on its profits and again when those profits are distributed as dividends and taxed as personal income. If you or your shareholders receive dividend payments, you'll need to report these on your personal self assessment tax returns and pay any income tax that's due. While dividends are generally taxed at a lower rate than salary, it's important to plan your withdrawals carefully to avoid unexpected tax bills. It's also worth thinking about how to give money to your children. You can do this through your salary or dividends, but be aware there are tax implications to consider. For example, if your children are shareholders, they can receive dividends, but HMRC might scrutinize this if they believe it's a way to avoid tax. So to sum up, there are several ways to withdraw money from your limited company, each with its own set of rules and tax implications. Whether you're paying yourself a salary, drawing a dividend or repaying a loan, it's important to understand the process and keep everything above board. With the right approach you can maximise your income while staying compliant with HMRC. And remember, the Provestor app can make managing all of this much easier, from handling payroll to generating dividend vouchers with just a click. In our next and final lesson, we'll explore what happens at the end of your company's financial year, including year end accounts, tax returns, and paying your corporation tax. Thanks for joining me, and I'll see you in the next lesson.