ltd turnover less than �5k

[dubhsan77]

I am the sole director of a Limited Company. The Company has only turned over approx �5000 this tax year. This has been my only source of income. In October 2008 I transferred �3000 to my personal account. How should I represent this transacton when completing my accounts - a dividend or a salary?

Also, when I have paid my taxes etc with the money remaining in my Companys bank account, if there is still a surplus how do I pay myself this money before closing the Company, which is my intention?

Thank you.

[buildersmate]

Regarding the winding-down of the company, see here - and in particular the reply from Nick Dyer, who seems to know what he is talking about.
http://forums.teneric.co.uk/legal-forum/windin g-up-ltd-company-partnership-9471.html

I'm somewhat bemused about the first part to your question. If you've been dealing with your affairs of your limited company to date then you know that salary is taken out as part of Personnel Expenses, and, as an employee of the company you pay HMRC for PAYE tax and NI as you go along.
Dividends are declared out of profits.
To a certain extent you have an element of control over what you do - bearing in mind the tax advantages of the latter over the former.

[Skyline D]

You can do either, though technically if you're declaring it as salary then you should have dealt with it before now. In practice it happens all the time though.

Without knowing the full circumstances of you and the company it's impossible to advise on which is the "better" option. It will be cheaper to pay it as a dividend (no National Insurance) and you don't have to pay the tax until much later but there may be reasons why you would want to show you earned a salary in the year and you may wish to contribute NI. Also, the company will (I presume) have corporation tax to pay on the �5k (less any expenses) if you pay a dividend but can claim the �3k plus NI and tax as a deduction. It's all swings and roundabouts.

You would normally just pay yourself a dividend to clear out any assets over liabilities if you close the company down. It's very easy unless you have more debt than you can pay of course. If there is more debt than assets and you've taken �3k out knowing that then you'll almost certainly be required to make good on the debts personally.