Limited Company. Dividend or Salary? Advice Needed

[Praveena1]

Hi,

I am an Tier 1 visa holder, due for extension in December 2012.

I am employed and earn around 35 K and work as self employed as well. Recently in November, I have started a limited company with four partners and we have equal shareholding partnership.

Since I do take care of the major responsibilities and day-to-day running of the company, I am just wondering whether I take major part of dividends or paid salary. Can anyone please advise the best course of action? Much appreciated

Thanks
P

[AccountantMatthew]

Hi Praveena1 - I'm not sure if I'm losing the plot with preparing lots of tax returns or whether you put some edits in the post(!) but I think you mentioned that you had spoken to your accountant about this and he mentioned that you should go the salary route(?) Did you also mention that you were thinking about whether you could get more in dividends than the other directors? Obviously if I'm wrong then apologies!

It is possible to take dividends where the other directors do not but it does involve executing dividend waivers. This can be a complex area and HMRC could become interested but is possible depending on the circumstances surrounding it. However whether it is advisable is another matter - really it's between you and your accountant. For more information on dividend waivers, just type it into your relevant search engine.

Obviously going the salary route will not bring any of this into play. Any questions that may be raised by UKBA about the day to day active management will also be bypassed.

However it is best to consult further with your accountant on this.