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ahh but you can't pay yourself entirely from dividends. at least, if you are speaking form the standpoint of a US citizen/tax payer. there is a vague but very w
by pyvpx 11y ago
ahh but you can't pay yourself entirely from dividends. at least, if you are speaking form the standpoint of a US citizen/tax payer. there is a vague but very well litigated stipulation that your wages must be "fair" and commensurate with the work you do for the corporate entity you own. if not, they'll just say your dividends were wages and you owe back taxes + interest and penalties.
- Doctor_Fegg 11y agoI'm in the UK (hence the reference to National Insurance). The (roughly) equivalent legislation here is IR35 [1]. But it's not too onerous and there are plenty of people who successfully pay fairly minimal tax while complying with IR35. [1] https://www.gov.uk/guidance/ir35-find-out-if-it-applies https://www.gov.uk/guidance/ir35-find-out-if-it-applies
- gsnedders 11y agoIn the UK you pretty much can pay yourself entirely in dividends. What many people do is pay themselves over the National Insurance threshold (£8064, which nowadays essentially matters only for being able to claim a state pension eventually) but below the personal allowance (£10600, below which you don't pay any income tax), and then the remainder in dividends. Note as of the 2015 UK Budget the law relating to dividends has changed which makes the tax due far closer, and that comes into effect for the 2016/2017 tax year.