Getting paid. Shareholder Salary or PAYE?
06 Oct 2022
In an ever-evolving business landscape, ensuring proper compensation for shareholders and employees remains crucial. This article explores the two primary payment methods for business shareholders: shareholder salaries and PAYE (Pay As You Earn). It outlines the advantages and potential challenges of each approach, helping you determine which option best aligns with your unique circumstances. By understanding these payment structures, you can make informed decisions that optimise both compliance and financial benefits for your business.
Despite our struggles with uncertainty in recent years, one thing that never changes is the need to pay our workforce and shareholders. Shareholder and pay as you earn (“PAYE”) salaries are two primary ways to pay a shareholder of your business. Finding the method for you ultimately comes down to what method best fits your unique situation. This article provides insight into the challenges and problems you could encounter, and which method could help combat those scenarios.
PAYE
Paying shareholders via a PAYE salary is a quick and simple method. The benefit of this method comes in the form of its ease of paying tax on your earnings. Taxpayers receiving PAYE salaries can rely on their income tax being paid on a monthly basis at the same time the business files its monthly employer deduction forms with the IRD. This eliminates the risk of provisional tax compliance issues and simplifies one’s tax position by ensuring up-to-date tax payments to minimise income tax liabilities. Any PAYE salary pa
Our Latest Insights
Preparing Your Business for an Exit: A Financial Checklist
Preparing your business for exit takes more than good timing. This financial checklist outlines the key steps to maximise value, streamline due diligence, and ensure a smooth transition.
How Accurate Bookkeeping Simplifies Tax Preparation for New Zealand Businesses
Accurate bookkeeping is the key to smoother tax preparation and IRD compliance. Discover how strong financial records help New Zealand businesses reduce errors, claim deductions confidently, and prepare for tax season with ease.
Understanding the Shareholder's Current Account
The shareholder’s current account is often one of the most important financial accounts in a company, yet many business owners are unsure of how it works. This guide simplifies the key concepts and provides clarity on how to manage your account effectively, especially in cases where the company owes you money or you’ve withdrawn funds.
Using KPIs to Drive Financial Success
Key performance indicators (KPIs) give business owners a clear view of financial health and direction. This article explores how tracking the right KPIs can simplify decisions, prevent costly mistakes, and drive lasting success.