corporation tax

Hi, i've set up a company with a friend which we are running part time away from our day time jobs. We are both directors.
We are now in a position where we can start taking money from the company.
How do we do this without paying the full whack tax...ie, PAYE and PRSI.
Can directors take profits less corporation tax? Is this still liable for PAYE and PRSI?

Thanks.

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Brendan
Administrator

No the directors can't simply take any net profit of the company and avoid paying PAYE/PRSI. The company is separate legal entity and the profits belong to the company and not the directors personally until such time as the directors extract the funds from the company. This is one of the consequence of incorporating a business. There are a number of ways of extracting profits from the business. The main two are through the payment of salary etc which will be liable to tax as normal. Alternatively, the company may be able to make a distribution to its shareholders. Again these would be taxable in the hands of the recipients. The main difference between these two options is that a deduction will be avilable for the salary amounst when calculating corporation tax (this is not the case for distributions).A third option would be to make a loan to the directors. However there are restrictions on when loans can be made and also there are close company tax rules that will apply. Sometime, the liquidation of a company provides the most tax efficient means of extracting profits however I assume this is not an option in your situation.

thanks Breninio,
very informative. as its a start up business, we are learning the ropes.