You will now invoice your agency or client from your Limited Company and they will pay directly to the business bank account however it is important to understand that the business bank account should not be treated like another personal bank account. At your initial meeting we will advise on the best way to draw money from the Limited Company bank account to your personal bank account.
3 ways to pay yourself
There are normally 3 payments you will make from the business bank account to your personal bank account on a monthly basis. These are:
At your initial meeting we will have discussed a salary to pay yourself from your Limited Company. Shortly after we will send you a monthly payment schedule which shows how much you need to pay simply log in to your business bank account and make an online transfer to your personal bank account for that amount.
Also at the initial meeting we will have discussed the main method of paying yourself from the Limited Company. This again is simply a transfer from the business bank account to your personal bank account. This should be done as a separate transaction to the salary but can be done at the same time or any time you want. Most contractors find it easiest to pay the dividends at regular monthly amounts. It is important to remember that dividends can only be paid out of the after-tax profits of the Company, so ensure you have left enough in the bank account to pay your VAT, PAYE and Corporation Tax in the future.
3. Expenses claim
It is likely that you will have paid for some business expenses personally e.g. you paid cash for your train ticket or bought a new laptop from your personal bank account. As with any other employer, your Limited Company should reimburse you for these expenses. The easiest way to do this is to record the business expenses paid personally and your mileage claim on your monthly spreadsheet, then reimburse yourself the total calculated at the bottom of the sheet. It is best to do this as a monthly payment and reimburse is on the January expenses in February by again simply transferring the amount from the business bank account to your personal account.
If you have a spouse or partner involved in your business then these 3 payments may be made to them also. We will discuss this with you when setting up the Limited Company.