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Join Date: Jul 2012
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| | Re: Self Owned Business and Personal Income
Originally Posted by JamesJJ
Thanks for your reply.
Three of us went partners and invested some cash to start a business three years ago. It's a pty ltd company, the three of us are equal shareholders and work there fulltime. We've only started drawing wages this financial year, and have been taking an equal amount each week.
The wages are paid like regular employment - with PAYG's and superannuation etc with tax withheld based on the weekly pay rates.
All the other profits from the business are reinvested.
Any advice would be appreciated, thanks!
With Company set up, you have to be very careful in relation to funds that are being paid out to Directors. There are Tax Laws which strictly govern the same.
If you pay salary to directors like any other employee, then that would not change your initial capital which all three of you have invested. But if any director/s takes excess funds out from the Business then the directors have an option to either reduce capital balance of the concerned director or they have to pay PAYG & Superannuation on that amount and have to add that amount as salary.
At any point of time if the Balance of the Director Capital Account becomes Debit ( overdrawn ) , then Div 7 A will apply.
Hope that helps