Dividends is this week’s topic of I Hate Numbers.In this podcast I am going to chat to you about the whys and what of dividends, plus the correct and legal way to pay yourself with dividendsPaying yourselfIf you are your own boss, there are two main business structures that you can have. You can either be a sole trader or a company.In both cases you need to pay yourself, but no dividends if you are a sole trader. Listen to find out more.Dividends are your company profits that you are paying yourself. Tax, or reducing tax plays a big part behind why owners pay themselves dividends. Company tax, personal tax and national insurance are all part of that balancing act in deciding how much you should take.Add to this your personal tax situation, from basic rate taxpayer and beyond. You’ve a heady cocktail of thought processes going around. Your dividend will be part of your personal income, with tax rates being as low as 7.5% to a 38.1%, it’s all about tax status.Tax is not the only thing to consider. Control plays a part in how much dividend you pay. If you’re the director, you decide when you pay your dividend. This could be a big deal when you’re looking to keep your personal income and tax bill to a modest level.Procedure, there are rulesOne thing often forgotten by company owners is that are rules governing how companies are run. It may seem like jobs worth talk, but there’d a sound reason to have these rules. Running your business through a company protects you. If things get messy your personal assets are protected. Any responsibility for company debt normally is your company's shoulders, not yours.Illegal DividendAbove all, follow the required due legal process in paying yourself a dividend, otherwise it's illegal. You will not go to prison, it will be a civil offense. As a result, an illegal dividend will be classified as a director's loan, and that's a whole different rabbit hole.RulesFirstly, prepare accounts showing that profit is being made. Profit is after all all your business expenses, including company tax.Have a board meeting, it could be at your kitchen table, but have a meeting.Pass a resolution as to what will be paid, and keep a record.Prepare a dividend voucher – we’re not talking Amazon voucher by the wayWhat NextGrab a coffee, make yourself comfortable, sit back and listen.I love doing this podcast and sharing my love of Numbers with you. Check out the link to subscribe and do not miss an episode, contact me for help with Number love in your business .In This EpisodeUnderstand what dividends areAppreciate why you pay yourself dividendsHow the dividend rules and regulations apply to you paying dividendsDeveloping your own Numbers confidence and decisionsTake more control of your numbers to help make you money, survive and thriveLinkshttps://podcasts.apple.com/podcast/proactiveresolutionss-podcast/id1500471288

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“What did the council decide on item 42?” — answered with the speaker and the moment.

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