How to take money from your business
The difference between a Sole Trader and being a Director really kicks in when you withdraw money from the business. As a sole trader you can take whatever money you want from the business as it is all yours to do with as you wish.
It is more complicated to extract money from your Limited Company as the money does not belong to you, so you need to follow official HMRC approved methods.
As a Director your job is to run the Company. The Director is normally appointed by the shareholder(s) and is therefore employed by the Limited Company to fulfil this duty. As most Directors of small Limited Company’s are also the shareholders, it is often not tax efficient to take a full salary.
We recommend that you take a nominal salary, through an official PAYE scheme, and normally to a level that uses up your personal allowance.
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