Writing in my monthly contribution to Shoestring, I put myself in the position of a startup founder and asked the question, “How can I pay myself from my business?”. There are different ways that a startup founder can pay themselves but it all depends on the type of business structure that they have:
A sole trader is where an individual operates a business and there is no distinction between them and the business. And this means that all money made from your sole trader business is yours. You just need to be careful as this means that all money you make in your sole trader business is taxed in your personal tax return. And personal tax rates can get quite high. Up to 45% + the medicare levy of 1.5%.
A partnership is similar in many respects to a sole trader. Except that you are working with others, called the Partners, and you share the profits with them based on your share of the Partnership. Although a Partner may want to pay themselves a salary, this is effectively the same as them receiving a share of the profits and that is how the ATO views it.
There are different ways you can pay yourself from your company. As the company is a separate entity to you, you need to ensure that you don’t draw down money from the company as if it is your personal bank account. Ways you can pay yourself include:
And you can read the article in full at Shoestring.
To understand more about how you can pay yourself from your business, get in touch on 1300 068 343.