Should a boss pay for himself?

Many people think that being a boss is all about instructing others to do things every day, but the truth is boss has to manage all the things by himself/herself. And does the “self-employed” boss need to pay? Isn’t it just move the money from left hand to right hand? Wait, bosses, pay attention! You as a director of the company, every time you pay out is not only “meaning”, but has practical significance. Make good use of personal allowances and save money when you know how to earn!

Plan ahead and save money

According to the “Company Law”, a limited company is required to submit an audit report audited by a professional auditor and a tax return to the Inland Revenue Department every year. The company’s tax will deduct the company’s daily operation expenses, including the remuneration expenses of directors. Therefore, no matter whether the business is profitable or not, the bosses as directors must remember to pay themselves salary, otherwise they will loss their own personal allowance (free of tax).

In contrast, an unlimited company only needs to do accounting and tax declaration every year, and does not need to have the company’s accounts audited by professional auditors. Therefore, the salaries of company proprietors and their spouses and partners will be classified as personal expenses and not tax deductible, but they can also apply for personal salaries tax exemption.

Case Sharing: “The Boss’s Wife” Has to Pay?

Mr. Li is the owner of a toy company, and he has encountered many difficulties in starting a business. He has to learn everything from scratch. As the wife of the boss, Mrs. Li, naturally, helps out from the administration work to Human Resource. Does Li Sheng need to pay his wife monthly salary?

Take this case as an example. Suppose that the company was operating at a loss for the first two years, but during the period it paid monthly salaries to the boss and his wife, and reported to tax department accordingly. In the third year of business, the company gradually started to make huge profits. The tax in that year will deduct the loss from previous year first , include the salary expenses paid to Mr. Li and his wife for the first two years. As a visionary boss and a caring husband, Mr. Li should of course pay Mrs. Li a monthly salary. Moreover, the wife worked so hard, how could she be allowed to do it in vain!

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