# extracting money from small limited company for salary



## Galwaygirl (1 Jan 2012)

Hi
Husband has small limited company and up until now has made hardly any money so any money extracted has been for repayment of loans (company set up money he financed from personal savings) and travel expenses.

He now has a small contract with reasonably steady income for the next few months and as my own pay is due to drop by a considerable amount next month we need to draw a salary from the business. He is also in receipt of some PAYE income and is taxed etc on this.

My question is really how to draw down a salary and do the necessary returns without having to pay an accountant to do it monthly - when he originally set up the business he payed his accountant to do monthly returns but had to reduce that to paying for yearly accounts /tax returns as the business wasn't even making enough to cover that cost! and he still won't be making that much - 2k a month before tax max so not really in a position to pay an accountant to do payroll. He is currently only doing VAT returns as he deregistered from sending back the other empoyee forms with zeros in them every month (on advise of accountant)

If he draws salary each month does he (I am guessing yes!) have to return TAX /PRSI etc on a monthly basis or is there some way of  balancing off at the end of the year tax return? Any advise most welcome

I will call the tax office on this as well but just throwing it out to the AAM experts!
Thanks!


----------



## STEINER (1 Jan 2012)

In two different jobs I've had in the recent past, I've done the payroll, companies with 15 and 60 EE'S (employees).

The PAYE/PRSI returns are monthly with an annual P35 return.  With ROS its very easy to do returns online, and no need to pay someone to make these simple (in your case) returns online.

Your issue is how to calculate the salary each month and if you know the correct tax credits/cut-off etc and have the same gross pay each month, the Jan to Dec figures will be the same.  You have 3 choices.

1. learn how to manually calculate gross to net salaries, won't cost you anything and its not hard really

2.  buy a payroll package, does all the calcs for you, but it will cost you a small sum. 

http://www.thesaurus.ie/PayrollManager.aspx
that one is 140 euro nett of vat .  SAGE do one for 149 euro  nett.



3.  pay book-keeper/bureau to do the calcs each month but even 30 euro a month for this is 360 a year.  I don't actually know how much a book-keeper/payroll bureau would charge for this simple calculation every month, its only ten mins work.

SAGE have a free payroll software download for < 5 EE'S, but the link doesn't seem to work, maybe there is free payroll software out there.

http://sage.ie/store/payroll.aspx


----------



## mandelbrot (2 Jan 2012)

He needs to know exactly how much money he has advanced as loans to the company, and ensure that he doesn't start to draw a taxed salary until he has been repaid all of the loan.


----------



## Pipeman (2 Jan 2012)

*Is he an employee?*

Hi Galwaygirl,

You haven't said if your husband is an employee of the company? If he is, you are probably already making P30 and P35 returns. But you said that he deregistered? So, if he is not an employee, there is a possibility that he can make drawings from the company and return them on a P11 each October.


----------



## mandelbrot (2 Jan 2012)

Pipeman said:


> Hi Galwaygirl,
> 
> You haven't said if your husband is an employee of the company? If he is, you are probably already making P30 and P35 returns. But you said that he deregistered? So, if he is not an employee, there is a possibility that he can make drawings from the company and return them on a P11 each October.



NO!!! 

A director absolutely can't do that! If they draw money from the company, as income, then it must be taxed through PAYE. The alternatives are a dividend, or, as was already mentioned, repayment of loans due to them by the company.


----------



## Galwaygirl (15 Jan 2012)

Hi, thanks for all the responses, I have beem laid up sick since new years so no chance to respond until now. Can I be tiresome and ask a few more questions as either the advice our accountant is giving is confusing or my OH isn't relaying it back to me properly! My question I guess are twofold, what to do about monies in account relating to 2011 and what is best to do going forward.

2011 - until Q4 company income didn't even exceed allowable expenses & repayments of set up loans.
He then got this small contract and we have ended up with about 10 k in the account at year end, without any salary having been drawn down. bearing in mind that it is now 2012 what is the least expensive way of accessing this money? he was rubbish at expenses claiming as travel expenses more than covered what was coming in but we have personally paid for expenses like website hosting, am I correct in saying that he should take such expenses from the company now? I have done the website maintenance myself so no expense incurred there. 
Once all expenses/loans extracted is it now too late for 2011 salary? If it is and corporation tax is paid on the 10k how can we then access the money left over? Will further charges be incurred? Someone sugested paying dividends but from what I can see dividends are an expensive option. Not that I can find much information on how to even do that. 

2012 - with the muddle above in mind I want to make sure that 2012 starts off on a better track. I have told him to ensure he keeps note of all company expenses down to the last stamp & including mobile phone costs which he never tracked up until now.
He is re registering for tax and I will do my best to work out what we owe revenue each month - if I get it wrong can it be balanced in the 2013 oct tax return?

Thank you so much for taking the time to read this, the whole thing has me stressed as it seems that a small business is a shockingly expensive way of earning a living - he is doing 14 hr days 6 days a week and will have so little at the end of it all so is not happy. And I am petrified we will accidentally fall foul of the tax man.


----------



## T McGibney (16 Jan 2012)

Sorry, you need proper specific professional advice if you want to avoid making expensive mistakes. Some of the 'advice' above is shocking. The fact that you have even thought about paying dividends to yourselves would indicate to me that there is a high risk that you may make such a mistake.


----------



## Galwaygirl (16 Jan 2012)

We do have an accountant - I am just trying to understand options in advance of their opinion as sometimes I feel like they treat us like a multinational instead of a one man professional services company! 


Husband is seeing the accountant tomorrow so will see what he says - annoyed that after 10.5 months of very little money coming in a reasonable amount came in to the account the week before Christmas and is sitting as profit when it should have been wages. 


Thanks


----------



## T McGibney (17 Jan 2012)

Galwaygirl said:


> We do have an accountant - I am just trying to understand options in advance of their opinion as sometimes I feel like they treat us like a multinational instead of a one man professional services company!



If you can't understand their advice, ask them for clarification. If they're not willing to explain, go elsewhere to someone who will explain. 



Galwaygirl said:


> Husband is seeing the accountant tomorrow so will see what he says -  annoyed that after 10.5 months of very little money coming in a  reasonable amount came in to the account the week before Christmas and  is sitting as profit when it should have been wages.




Why is this annoying you? There is no reason why you can't vote yourself or your husband an additional salary, or claim additional (legitimate) expenses at year end.


----------

