Taking money out of a company?

"Michael" wrote

There are no "best ways" to do that. Facts and circumstances dictate what to call, and therefore classify, and therefore the tax treatment on, the money you draw from an incorporated business.

Clearly the amount of salary you take must be reasonable given the type(s) and amount(s) of work you do for the business.

If you own the building your business is located in, part of the distributions to you could be in the form of "rents". But those too, need to be reasonable - market rates. And there should be a lease agreement dictating the lease terms.

Distributions could also be repayments of loans - monies you loaned to the company to get it started, or to see it through tough times. Of course, part of any loan repayments would be interest.

True dividends are from a "C" corporation (and taxable at 15% maximum), while distributions of profits from an "S" corporation are not generally taxable, as you paid tax on the profit amount in an earlier year.

Your best bet is to seek the guidance of a CPA or EA who can, after gathering all the relevant facts, make the best decision as to what you should do.

1. It's a question of taxes and personal finance, not really an accounting question.

1. Depends on your country. OK, I see your NFLD address, but others might not.