Best Accountants in Stourbridge

Read Our New post: What happens when you pay out more dividends than your company profit? Running a limited company comes with its challenges and responsibilities, not least managing the company's profits and finances. Whilst one of the most tax-efficient ways of paying a company director is through a small salary and dividends, it is important to remember that dividends are a distribution of company profits and continually paying more dividends than company profits can lead to serious consequences further down the line. If a company pays out more dividends than it can afford, the excess amount must be returned to the company or be added to the director's loan account as a debt from the shareholder to the company. Having an overdrawn directors loan account can result in both income tax and corporation tax consequences. In this blog post, we will look at the potential pitfalls of overpaying dividends and what best practices to adopt to avoid financial difficulty...