As a Director, you are responsible for managing your company, and as a Shareholder, you own part, or all of, the company, entitling you to company profits.
However, as a limited company is an entity that is separate from yourself, the money earned through the company belongs to the company, and not yours to take as and when you please. You can only take business money out of the company in an appropriate way.
Crunch allows you to extract money in two ways - the director’s salary and/or dividends.
Typically a combination of salary and dividends will be more tax efficient than using either of the methods separately.
We recommend you pay yourself a salary, if appropriate, and a dividend once a month.
Once you have recorded a salary or dividend, the money has not left the company. You still need to record a directors withdrawal. This is the physical movement of money out of the company bank account. You can do this at the same time as taking a salary within the Payroll tab by checking the ‘Pay’ box, or when recording a dividend by checking the ‘Create withdrawal’ box.