The first way to pull money out of a company is to pay yourself a salary. It is the context in terms of pulling money out. So, how do you put food on the table through a profit you generate in your company or trust?
There are two things to keep in mind with paying a salary. We’ve moved to single touch payroll over the last couple of years as a requirement for businesses. Once you set your salary, it is kind of locked in and if you want to change it, increase it or decrease it massively. You want this strategy set with your accountant from the start, because of that single touch payroll or what we call as STP.
In terms of salary, the things you have to consider are Pay As You Go tax withholding. There’s a couple of different Pay-As-You-Gos. The W or withholding is the tax that you have to take out of your gross salary which you have to do for your own pay and you’ve got to do that for your team’s pay as well if you’ve got employees and you pay that to the ATO on your BAS. If you take money out through a salary, you have to do the same thing for yourself. And then you also have to pay superannuation on your salary as well.
Need to speak to an accountant? Book a ZERO cost 20 minute strategy call with an Inspire Accountant.
Select your desired option below to share a direct link to this page.
Your friends or family will thank you later.