Investment vs Director wages take out

[Rockey]

Hi Gurus ,

Hope you all will be doing well..

Just little confusion regarding investment.. I invested £52000.00 till May 17 , no director wages taken during that time..I started taking wages of 800/month from June 17 to date.

So my query is : do i need to invest more money becz the wages i have taken so far will be deducted from my investment by HO?

Some people argue that wages will not be counted to wards your investment !!!

I m totally confused..

Your reply will highly be obliged..

[bizman]

Ordinarily there is nothing wrong with a director paid wages. However the T1E rule states that the investment should not be used for Directors renumeration. So if your business is in profit, there should really be no problem about paying directors wages, however if your business is in loss, it will mean you are paying the wages from the investment.

[marcnath]

Ordinarily there is nothing wrong with a director paid wages. However the T1E rule states that the investment should not be used for Directors renumeration. So if your business is in profit, there should really be no problem about paying directors wages, however if your business is in loss, it will mean you are paying the wages from the investment.

A correction - it does not matter if your business is in profit or loss. If you have revenues, that can be used to pay the Director's salary

[Rockey]

Thankyou mate.. thats true but i dont know why I heared that if i am taking director salary that could be subtracted from my investment by Home office !!!

[marcnath]

Thankyou mate.. thats true but i dont know why I heared that if i am taking director salary that could be subtracted from my investment by Home office !!!

If your business does not have any other income, then yes.
Two conditions you need to meet
1. Personal investment >= 50K/200K
2. Personal investment + other income - director remuneration >= 50K/200K

[Rockey]

i am absolutely confused to be frank..


My sales turnover in 3 years £70000 , investment £60000 in three years and i took as wages £6000 to date in three years , employees wages so far £60000 in 3 years..

Could you shed some light on it please , do i still need to invest to remain on safe side?

[bizman]

Ordinarily there is nothing wrong with a director paid wages. However the T1E rule states that the investment should not be used for Directors renumeration. So if your business is in profit, there should really be no problem about paying directors wages, however if your business is in loss, it will mean you are paying the wages from the investment.

A correction - it does not matter if your business is in profit or loss. If you have revenues, that can be used to pay the Director's salary

Its always better to make things easy for CW. If the revenue is not significant, its risky to draw salary. You can make revenue and still make a huge loss.

[bizman]

i am absolutely confused to be frank..


My sales turnover in 3 years £70000 , investment £60000 in three years and i took as wages £6000 to date in three years , employees wages so far £60000 in 3 years..

Could you shed some light on it please , do i still need to invest to remain on safe side?

Whats your balance sheet like mate.

[Rockey]

mate already mentioned as above in three years you can say..

[marcnath]

i am absolutely confused to be frank..


My sales turnover in 3 years £70000 , investment £60000 in three years and i took as wages £6000 to date in three years , employees wages so far £60000 in 3 years..

Could you shed some light on it please , do i still need to invest to remain on safe side?

Assume you are on the 50K route, even if the 6000 was deducted entirely, you don't have a problem. And with 70K sales, you definitely don't need to worry. Relax

[natsha]

Business point of view you can take salary and not an issue, but why you forget you under tier-1 entrepreneur, at the end of day HO need to check your documents and some CASEWORK not understanding business rules.

Case=1

If you invested 52,000 and taking salary 800£ they will be minus in your investment but monthly if you getting profit 800£ then automatically your director salary adjusting.

Case=2 If you taking salary 800£ and your profit monthly 600£ then 200£ difference you need to put back before you yearly accounts ending.

Case=3 if you talking 800£ salary and no profit and company in lost monthly 500 then you need to put back 800£ only not 500£ lost amount.

Very careful this all point HO refusing because of this salary issue.

In my case first two years I didn't take salary but 3rd year I took as director around 15000£ so
50-15k=35k HO WILL think invested.

Before submitted Application, I put back 15k and on Director loan agreement and company accounts we mentioned investment 65k.

If any question you can.

[Rockey]

i am absolutely confused to be frank..


My sales turnover in 3 years £70000 , investment £60000 in three years and i took as wages £6000 to date in three years , employees wages so far £60000 in 3 years..

Could you shed some light on it please , do i still need to invest to remain on safe side?

Assume you are on the 50K route, even if the 6000 was deducted entirely, you don't have a problem. And with 70K sales, you definitely don't need to worry. Relax

£70000 turn over were in 3 years , not in one year..lets see what happens .

[Rockey]

Business point of view you can take salary and not an issue, but why you forget you under tier-1 entrepreneur, at the end of day HO need to check your documents and some CASEWORK not understanding business rules.

Case=1

If you invested 52,000 and taking salary 800£ they will be minus in your investment but monthly if you getting profit 800£ then automatically your director salary adjusting.

Case=2 If you taking salary 800£ and your profit monthly 600£ then 200£ difference you need to put back before you yearly accounts ending.

Case=3 if you talking 800£ salary and no profit and company in lost monthly 500 then you need to put back 800£ only not 500£ lost amount.

Very careful this all point HO refusing because of this salary issue.

In my case first two years I didn't take salary but 3rd year I took as director around 15000£ so
50-15k=35k HO WILL think invested.

Before submitted Application, I put back 15k and on Director loan agreement and company accounts we mentioned investment 65k.

If any question you can.

Thanks Natsha
My 52000 investment was already done then i started taking salary..
My business earning double than my salary taken out per month , i m getting averagely 2000 per month but taking only 800...And last year end account showing just about 500 net profit, less profit becz i was paying to employees..

[natsha]

that's fine if you are profit every month.