[Question] I am new to being a business owner

[Cheery]

Hey there,

I hope I am posting this in the right section.

I would like to find out how can I take money out of the business to pay the directors of the company?
How do I pay them? what are the pitfalls I should be aware of?
Also, how can the business pay the director back for investments made?

Thanks

[Blurock]

Is this a start-up business?
The biggest mistake people make is to start "milking" the business too early.
Ever heard of "cash flow is King"? A business needs money to run on.
Being able to pay suppliers on time or even cash to get a settlement discount, builds reputation.
Having money for R&D or new products and advertising is very important.

Be patient, just like a farmer sow seeds and wait for it to grow and ripen, a business must establish itself .
Only when it is sustainable, can you start sharing profits and repay loan accounts.

In our previous business, the shareholders waited 18 months before we started drawing salaries, and then only the bare minimum.
Your short term goal should not be to make money, but to create customers who can pay you, so that you can achieve your long term goal of making money.
The reward may come from increased growth and income, or from eventually selling a successful business which gave you a good return on investment.

[Cheery]

It is a entertainment software company (game dev studio).
We have some start up capital and have made provisions for paying a small salaries.

All I want to know is how can I pay the director a salary from the company?
What are the steps needed to be legit and not get in trouble with the taxman.

[adrianh]

We have some start up capital and have made provisions for paying a small salaries.

So the start up capital is going to salaries - Some Kickstarters never seem to get beyond that.....Salaries expand proportionally to scope-creep and before you know it all the money is gone and nothing has been delivered...

An interesting thing that I was told whilst looking for money in IT is "We don't finance your lifestyle"

Anyway, I understand that you need to eat while you develop the product - I'm just being a hard@ss~

[Derlyn]

Be like me. Stick what you earn in your pocket.

[Krithico]

It is a entertainment software company (game dev studio).
We have some start up capital and have made provisions for paying a small salaries.

All I want to know is how can I pay the director a salary from the company?
What are the steps needed to be legit and not get in trouble with the taxman.

Hello

The director must be included in your payroll as with any other employee. His/her salary will be taxed according to the tax rates applicable to individuals and you will have to declare and pay PAYE, UIF and SDL to SARS monthly.

Annually an IRP5 tax certificate will be issued to the director, and he/she can include it in his/her personal income tax return.

Outside of payroll, if the director is also a shareholder, then any payments to him/her will be treated as a dividend and dividends tax must be paid to SARS on such.