At this time of year there are some common questions we get asked, like ‘I have drawn out some extra money over Christmas for private use’.‘Will this increase my tax’?
Short answer NO.
You are taxed on the profit in your business, not on the amount that you draw out for personal use. Regardless of whether you are taking regular drawings or large one-off amounts, this will not affect your tax position only your cash-flow
If you have your financial information up to date it is easy to make estimates of your tax liability. It is important to monitor this as it can change from year to year and you could be paying too much tax or not saving enough.
Concerned about cashflow, drawings or tax? Give us a call, we’d love to help.