Resources

How should you pay yourself?

Blog, Cash flow
How should you pay yourself?

Annual income is always a taboo topic when speaking to friends, but it can also feel like a taboo for freelancers! If you are new to contracting and freelancing, one of the most confusing matters you need to confront is how much you should be paying yourself at the end of each month versus how much you should be investing back into your business.

How much are you worth?

It can be incredibly difficult to determine where you draw the line between the money that should stay in your business and the money that is yours to spend at will. In the past, you will have been used to being able to spend all of the money in your account, but now you need to keep your wage and your business income separate.

The number that you ultimately determine as your wage is highly variable, and will depend on a whole host of factors including your official title, your industry and your annual income. A qualified contractor accountant can help you to assess your situation and determine a salary that is suitable.

Tax efficiency

Paying yourself in the most tax efficient way is a challenge which we all want to conquer. Most will advise on taking a small salary with the rest coming in way of dividends. You should consult with your accountant before making any decision as you may have additional income, which will affect these methods.

How should I transfer my pay?

Now that you have determined the amount that you are going to pay yourself on a monthly basis, you may be wondering how to actually transfer your salary so that you can get paid! It is actually quite simple – pay yourself just like you would pay an employee or a vendor – set up your monthly wage as a recurrent payment from your business bank account into your personal bank account.

To book in a FREE consultation, contact us today on 0161 669 4221 or info@biaccountancy.com.

Stay up to date on what’s new at Bright Ideas.

    Step 1 of 3

    Thanks for choosing Bright Ideas!

    Let’s get started with a few details…

    (*) Required field
    The field is required
    The field is required
    Email address is invalid
    The field is required
    By submitting you agree to our Privacy Policy

    How can we help?

    I need accounting support for…

    (*) Required field
    The field is required
    The field is required
    The field is required
    The field is required
    The field is required
    £The field is required
    The field is required
    The field is required

    When’s good for you?

    Pick a slot…

    (*) Required field
    The field is required
    The field is required
    The field is required
    BACKLet's get started
    This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

      Step 1 of 2

      Become a client

      Let Bright Ideas take care of your accounting. We’re guaranteed to have a solution here that suits your needs. Simply pick the package you like best and we’ll take care of the rest.

      You can sign up for our services right now. Complete the form below and we’ll be in touch the same day (if received before 4pm).

      (*) Required field
      The field is required
      The field is required
      The field is required
      The field is required
      Email address is invalid
      The field is required
      The field is required
      The field is required
      The field is required
      By submitting you agree to our Privacy Policy

      Let’s talk about your business

      Setting up a new business? Already trading as a Limited Company? No matter what your circumstances, Bright Ideas can help.

      (*) Required field
      The field is required
      The field is required
      The field is required
      The field is required

      Included in our company formation service is:

      • Limited Company name of your choice
      • Memorandum and articles of association
      • VAT, PAYE and Corporation Tax registration
      • Certificate of incorporation and Share certificate
      • Companies house registration
      (*) Required field
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required

      Director/Shareholder

      (*) Required field
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required

      Additional director or shareholder (Should only be completed for an additional person)

      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required
      The field is required

      Declaration acceptance *

      The field is required
      The field is required
      BACKLet's get started
      This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

         

        Request a Call Back

        (*) Required field
        The field is required
        The field is required
        Email address is invalid
        The field is required
        By submitting you agree to our Privacy Policy
        This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

        Pin It on Pinterest

        Shares
        Share This

        Share This

        Share this post with your friends!