Income tax from own Ltd Company

durkin01

Registered User
Messages
8
I established a limited company and have been personally funding the expenses.

I'm interested in compensating myself through the limited company and curious whether the incurred expenses can be deducted from the taxable amount?

Thanks in advance.
 
If they are allowable business expenses they can be claimed back from the revenue the company has received.
 
You should probably operate as follows to keep your personal affairs separate from the company.

1) Give a loan to the company.
2) The Company pays the expenses in the normal way and calculates the taxable profit in the ordinary way.
3) When the company has adequate finance, it repays the loan to you. The repayment of this loan is not subject to tax.

If the company gets an invoice and you pay it, it's ok, but a bit messy.
If the invoice is made out to you and you pay it and charge it to the company, it's messier again.

That is why a company loan is the simplest and cleanest.

Brendan
 
Brendan Burgess said:
If the company gets an invoice and you pay it, it's ok, but a bit messy.
If the invoice is made out to you and you pay it and charge it to the company, it's messier again.
Click to expand...
Hi Brendan, it's not at all messy once he keeps proper and coherent records and raises valid expense claims for outgoings incurred on behalf of his company.

More generally, he should be equipping himself with at least introductory level professional or other advice on the basics of small business tax and administration. Perhaps a course run by a local enterprise board would fit the bill at very modest cost.
 
T McGibney said:
Hi Brendan, it's not at all messy once he keeps proper and coherent records and raises valid expense claims for outgoings incurred on behalf of his company.
Click to expand...

Sorry to quibble but the situation Brendan set out re invoices is definitely 'messy'. If a company is invoiced then the company should pay - @durkin01 is a third party here and if he's paying them from his own pocket, this is a disbursement not an expense.

If these are VAT invoices made out to the individual and not the company then the VAT cannot be reclaimed.

If these are day to day expenses, then there's no issue with @durkin01 paying them and then expensing the company for the cost. Best to get a good system in place and use an app like Expensify.

Without cash flow, the loan is a great option. Just don't charge interest unless you want a significant headache around close company rules - you'll need to talk to an accountant if you want to go down this route.

Best option for me would be to get a company credit card and use that for all expenses and they then stay 'within' the company. And to come full circle, this is 'clean' rather than 'messy'.
 
?
finbarrmc said:
If these are VAT invoices made out to the individual and not the company then the VAT cannot be reclaimed.
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There is no indication that the company is registered for VAT. If it is, the OP is playing with fire and needs proper professional advice more urgently than indicated earlier in this thread.
 
Aren’t people confusing this issue?

Refunding the OP isn’t an expense. It’s repayment of Directors Loan. You just take all of your money back and the expense becomes deductible in the company.

Bookkeeping services may be needed given the pitfalls.
 
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