Expenses and after profit divis

[Jog On]

I've worked out my salary, other expenses, tax (corp/employers NI on salary etc) and how much company profit is left over for divis.

The figure is after company expenses which include travel, food, broadband - which I'm paying for out of my personal finances and keeping receipts.

So the question is when I pay out divis do I only pay out the after expenses profits - or divis + operating expenses or make a separate payment for expenses or add expenses to salary payments?

This will be a whole lot easier when I've been trading over 6 months and can use a company card to pay for stuff - until then (another 2 months) I'm paying for my oyster card, lunch, mobile phone, broadband out of the personal account.. .

I'm tempted to just make 2 payments of salary and divis - but if divis have to be paid out of profit after corp tax and expenses, then should I make a 3rd 'expenses' payment until I get a company card?

[malvolio]

It's entirely up to you, actually, as long as there is a clear audit trail - but it is good practice to keep salary/expenses separate from dividends. I usually issue a combined salary and expenses payment each month and a separate dividend payment as and when. However, all three are shown separately in the books.

[Dark Black]

Keep all mine separate - usually expenses first then salary then divi's (as an when).

[Maxamus]

Keep all mine separate - usually expenses first then salary then divi's (as an when).

likewise

[Xenophon]

likewise

Me too...

[FiveTimes]

It's entirely up to you, actually, as long as there is a clear audit trail - but it is good practice to keep salary/expenses separate from dividends. I usually issue a combined salary and expenses payment each month and a separate dividend payment as and when. However, all three are shown separately in the books.

So do people draw expenses every month ?

Say I do 1200 miles/month which is ~ £480 vaid expenses, can't I just keep this and ofset it from my corp tax at year end ? Or should I be making a payment for this amount ?

Also, other expenses like broadband, I have coming out of the business account as a standing order ? Is this standard practise ?

[malvolio]

So do people draw expenses every month ?

Say I do 1200 miles/month which is ~ £480 vaid expenses, can't I just keep this and ofset it from my corp tax at year end ? Or should I be making a payment for this amount ?

Also, other expenses like broadband, I have coming out of the business account as a standing order ? Is this standard practise ?

You don't have to move money around to offset it against profits, that's why we use General Ledgers and P&L accounts. You do have to keep track of it all though so you don't take out more than you put in...

You can take expenses as they are incurred, or monthly, or annually, as long as they are logged and provable. As I said, I do it when I pay salary as a single transfer to my personal a/c

I'm also an advocate of as many business expenses as possible coming out of the business bank a/c, rather than paying for it and getting it back, so paying broadband directly is a good idea, as are rail fares, hotels and anything else that is totally business-related.

[Bluebird]

I make 4 payments from my company a/c each month..

1. Salary
2. Reimbuse Expenses
3. Divi for Me
4. Divi for other shareholder to cover cost of shoes