Business owners ask us quite regularly how they can extract value from their company.
Along with how they can potentially save more on tax payments.
There are many ways you can do this, however what works for one business, may not work as effectively for another. It will all depend on your company size and the sector you operate in.
It can be challenging to know if you are extracting the maximum amount of value from your business, but there are several things you can check.
Salary
You should be taking a salary, but not an extortionate amount. Taking a salary allows you to retain access to state benefits like a pension.
If you’re involved in Research and Development, you may qualify for enhanced relief against corporation tax on your salary.
Dividends
A dividend, for those of you who don’t know, is a payment a company can make to its shareholders if it has made a profit.
Taking dividends is another effective method of taking cash form your company. The first £2000 of your dividends are tax free.
Shares
You can set up shares for many members of your team and family if you’d like to. If you do this you should be mindful of your capital gains tax position. The amount of tax you’re charged on shares will depend on the income tax band you fall into.
You can also consider giving shares to your spouse/civil partner if they pay tax at a lower rate than you. This will benefit you both.
Business Expenses Paid for Personally
If you’ve personally paid for a business expense, you may be able to take reimbursement from the company and it could be deductible from corporation tax.
There are a few different rules you need to be aware of when claiming reimbursement so be sure to read up and ask an expert if you’re unsure.
Employee Benefits
There are many great employee benefits, including trivial benefits and the cycle to work scheme. Both trivial benefits and the cycle to work scheme could result in cost saving opportunities.
We’ve covered employee benefits historically, along with their tax benefits in greater detail. It’s something that can have a big impact on your team and finances.
Why Extract Value?
Maximising all the ways you can tax efficiently, put things through the business, or take value out of the business, can benefit you, your family and your employees overall.
Are you getting the maximum value out of your business?
We can analyse your business and personal circumstances to help you understand if you’re getting the maximum value from your business. Give us a shout and we can get started!
