So you have a steady flow of income but you’re stuck on how to pay yourself? First it’s important to understand what structure your business is operating under, and this will impact how you can pay yourself.
In this tax tip, we will look at three of the common business structures, being; sole trader, partnership and company, and how you can pay yourself under each of these.
As a sole trader you are the individual operator and from the tax office’s viewpoint, there is no distinction between you and the sole trader – your sole trader is attached to your own personal tax file number. All the money that you make from your business (less tax) is yours. Continue reading “#TaxTipTuesday: I have my own business. How can I pay myself?”
In this Tax Tip Tuesday, we look at a question that all business owners ask. How do I pay myself a salary?
This is part of our three part series on how do I take money out of my company?
Pay myself a salary?
One way to take money out of your company is to pay yourself a salary, so essentially you are now an ‘employee’ of your company. Although you may be a Director, the same rules here apply whether you’re a Director or an employee.
As an employee, tax will need to be taken out of your salary on pay day. A good tool to work out how much tax to take out is to use the ATO Tax calculator.
As an employee, there are also other on-costs you need to consider. The two main ones are superannuation and worker’s compensation insurance. Generally speaking (although, there are some exemptions), your company will need to pay superannuation when you earn at least $450 per month. The current rate of superannuation is 9.25%. Continue reading “Tax Tip Tuesday: How do I pay myself a salary?”