I just set up a company — how do I pay myself?

What changes for you

1. The company's money is not your money

   This is the change everything else follows from. Profit belongs to the company until it is paid out as salary or a dividend, and taking it any other way creates a director's loan with its own tax charge.

2. Profit is taxed twice, at lower rates

   Corporation tax first — 19% to £50,000, 25% above £250,000, an effective 26.5% in between — then income tax on whatever you take out. The total can still be lower than sole trader rates, mainly because dividends carry no National Insurance.

3. A dividend needs reserves and paperwork

   A dividend can only be paid from accumulated post-tax profit, and needs a board minute and a voucher dated before the payment. A dividend without reserves is unlawful and repayable, whatever it was called at the time.

4. You now have filing deadlines in two places

   Companies House wants accounts and a confirmation statement; HMRC wants a corporation tax return and payment. The dates are different, and the penalties are automatic.

The decisions this opens up

Each works on your own figures and shows every option with the workings. Free, and no sign-up.

Dates this puts in your diary

• Within 3 months of starting to tradeRegister the company for corporation tax
• 9 months and 1 day after the year endPay corporation tax
• 12 months after the year endFile the company tax return

Run the numbers