Advice needed

[DeeDee]

Hi,

I am new to the business world and was hoping to get some advice. Myself and my husband have a small IT consultant business and we have decided on paying ourselves £20,000.00 and £5,000.00 p.a. respectively.

We generated money as a business in April 2007 and so we received salaries in that month and the company made a profit of £4,000.00. However in May and June, the company made no money so we did not take any salaries and have left the profit generated in April in the company. We are due to recieve income for the month of July and we will be paying ourselves salaries.

My query is this:
Should I be paying each of us salaries every month even if in some months we do not generate income but there is money in the company? Or could I legally pay out money in dividends in months that we do not receive salaries in this situation?
Basically I want to find the most tax efficient way of taking money out of a company, bearing in mind that potentially it will not be making money in some months.

I hope I have explained my situation clearly and look forward to any advice.

Thanks and kind regards,

[mark611]

i think you should take salaries. you have an untaxed allowence of £4000, so in the case of £5000 you'd only be taxed on the £1000.
you may pay yourselves even in the months that the company hasn't made money.