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You do have to have a limited company, but no one forces you to pass the earnings as a salary subject to payroll. You can simply take the earnings out as divide
by Roark66 7y ago
You do have to have a limited company, but no one forces you to pass the earnings as a salary subject to payroll. You can simply take the earnings out as dividend, but then you would be taxed twice on those earnings. So there is tax incentive to pay yourself a salary and not to report any company profit at the year's end, but it is not compulsory.
- vfc1 7y agoTaking the whole earnings as a dividend is not advisable, because this means that you would have no salary and therefore no retirement pension at all. Governments usually incentivize entrepreneurs to have a reasonable salary, and to not take a lot out of the company as dividends, by providing beneficial profit tax brackets if these conditions are met. This incentivizes the entrepreneur to have a pension, which means less people living in poverty over time as they hit the retirement age. It also means that more money will stay in the company, incentivizing investing in the company via equipment and employees for example.