{"id":1620,"date":"2023-02-09T14:50:58","date_gmt":"2023-02-09T01:50:58","guid":{"rendered":"https:\/\/marketingwebsite.afirmo.com\/nz\/?p=1620"},"modified":"2023-05-25T14:17:50","modified_gmt":"2023-05-25T02:17:50","slug":"how-to-get-money-out-of-your-company","status":"publish","type":"post","link":"https:\/\/www.afirmo.com\/nz\/resources\/how-to-get-money-out-of-your-company\/","title":{"rendered":"How to get money out of your company"},"content":{"rendered":"

In this section, we look at the more complex topic of paying yourself when your business is a registered company. There are three ways to do this, and each has different tax obligations and each impacts the company\u2019s taxable income in different ways. It\u2019s possible to use a combination of these if you wish. Have a look at the Afirmo <\/span>company tax tool<\/span> to play around with what a good mix might look like.\u00a0<\/span><\/p>\n

When taking money out of a company or putting it in, the most important thing is to keep clear and accurate records. These records\u00a0 \u00a0 \u00a0 should describe the purpose or intent of the transactions, not just the amounts. It should also be done in a reasonable\/normal way, so Inland Revenue doesn\u2019t think you\u2019re just trying to avoid paying tax.<\/span><\/p>\n

\n\tDownload the Small Business Guide to Tax<\/a>\n<\/div>\n

Repaying a shareholder loan<\/b><\/h3>\n

Most small businesses are started with money from the owner. This should be recorded in one of two ways. Either it was money paid to buy shares in the company (share capital) or it was a loan.\u00a0<\/span><\/p>\n

If it was a loan, it should be recorded in a shareholder\u2019s loan account in the company\u2019s accounts (books). Any further personal money you invest as a loan to the company adds to the total in this shareholder\u2019s account. When the company makes sufficient profit, it can choose to repay some of this loan to you, which would then reduce the balance in the shareholder\u2019s account. Since these payments are simply returning money you lent to the company, they are not subject to income tax.<\/span><\/p>\n

If a shareholder current account develops a negative balance the shareholder is effectively borrowing from the company. As a result, the company has to pay fringe benefit tax on the negative balance or charge the shareholder use-of-money interest at the IRD rate. A negative balance can be avoided or brought back to zero by the shareholder repaying the company. If the company makes a profit, other options include making a shareholder employee salary payment (non-PAYE) or declaring a dividend.\u00a0<\/span><\/p>\n

Paying yourself a PAYE salary<\/b><\/h3>\n

Since you probably started your business to earn an income, the company can take you on as an employee. For record keeping, this should include an employment agreement, signed by you as the company owner and as the employee. The company can then pay you a regular PAYE salary, which needs to be an amount that\u2019s consistent with the type of work you do.\u00a0<\/span><\/p>\n

Benefits\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n