If i was the sole owner and director/shareholder of my company- how do i pay myself any money ???

Question

When you own your own company in a tax free place - Cayman, BVI etc - how do you pay yourself?

If i owned a pte ltd company in a tax haven- BVI /Caymans, & i was the sole share holder / director, & my company made money, how does one pay oneself?

a. Do i just dip into my corporate account & help myself to whatever is in there? Is my company money automatically MY money since i am the only sole share holder and beneficiary? Is it totally legal to dip into my company's money and use it as i see fit?

b. Or is money generated by my company not to be touched at all, unless paid to me via salary/ dividend? Do i have to pay myself a salary/dividend in order to enjoy my company's profits?

c. If i HAVE to legally pay myself a salary or dividend in order to enjoy my company's profits, and i CANNOT dip into company's profits and spend from that-- then WHO do i pay personal taxes to!?! Since I myself won't be working in Cayman/BVI, i don't owe them tax & my tax resident country has no ta

Answer 1

This depends on how your company is set up.  IF it is a Sole-Proprietorship, you can more/less pay yourself as you have cashflow, and this amount would transfer to a Schedule C that would be used in conjunction with your personal tax return.  IF it is a Corporation, you generally pay yourself a salary and the W2 you would receive at the end of the year would be used for tax purposes.

Answer 2

As an owner of a small company I went through the same thing.  My accountant explained it this way: if I want money, I simply write a check to myself.  For the accounting it is categorized as "owner equity".  This income does not have any tax taken out, so when I do my taxes at the end of the year I need to pay income tax on these earnings, which can really hurt!  He recommended putting some of the owner equity cash into a separate account that I would save up to pay taxes with.  We calculated the amount I would need to save as around 13%, which is far less than normal income taxes, social security, etc. would be.

Also my accountant said I need to pay myself a "reasonable" salary, which woudl get the normal income tax, social security tax, etc. taken out.  If you don't do this then the IRS could go after you for tax evasion.

This is for a company based in the US.  I don't know how it would work if you are in the Caman Islands.

Bottom line: I think you need to find a good accountant that knows how to maximize your income while staying within the law.

Answer 3

if you are a resident alien in the U.S. then you do have to pay taxes in this country even if you generate your income in ANY other part of the world.

as for your question....all you do is pay yourself as you would any other employee (if you had any). Oh, if you are the sole owner/worker of the business then you can pay yourself any amount you wish...it does not have to be what somebody else might consider appropriate.