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Nimac


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Directors salary
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Hi everybody.

I have recently taken over the payroll for a dental practice from a previous bookkeeper and am starting the year end process now.

The owner of the practice pays himself a certain salary every month, i can see this from the bank statements however it is not showing in the sage payroll package, just employees are showing.

I have phoned the accountant to get clarification but is off on holidays for 2 weeks and the previous bookkeeper is not contactable.

Does anybody know why he would not be processed through ordinary payroll because as he is the director, then technically he is an employee.

The accounts for the business do show that he is owed money by the business in the directors loan account - could he be withdrawing money from this, why would he not be paying paye/nic on this?

Any help appreciated.

Nigel.

-- Edited by Nimac on Wednesday 8th of April 2009 02:46:09 PM

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Alison


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Hi

If a Director loans company money then when it is repaid there is no PAYE or NIC on there. The Directors Loan should not work the other way ie Director cannot be owing the company.

Also with Directors they can pay Dividends as long as there is retained profit in the company and the correct paperwork is completed when dividend is paid.

Alison

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Nimac


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Thanks for replying so quickly.

He actually has several practices and pays himself from them all.

In one he has a substantial amount that the business owes him so i guess this is ok however for the other one, i think he owes the business money.

What are the implications of this? Corporation tax issues??

I will check with the accountant when he comes back from holiday but just wanted a heads up from the knowledgable people here!!

Thanks.

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Alison


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With him owing the business money think you should check with the accountant as soon as you can. 

I changed from being a Sole Trader to a Limited Company so went on  a Limited Company course (from what I understood from it you MUST not have a Directors Loan account the opposite way ie Director owing company money because the Inland Revenue think this is tax avoidance. 

Alison

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Nimac


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Thanks Alison

I will give the accountant a call when he comes back from holiday.

Nigel.

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