Paying Yourself From a New Irish LTD: Salary, Dividends and Expenses

Company money and your own money are different

Section 25 provides for the incorporated company as a body corporate. Even where you own every share and are its only director, the company is not simply your personal wallet. Its receipts, liabilities and records should be kept distinct from your household finances.

Begin by asking why the company owes or is paying you money. Remuneration for work, a shareholder distribution, reimbursement of a particular cost and repayment of a real debt are different explanations. Do not start with the amount needed for rent and choose a description afterwards.

Keep separate company and personal records and reconcile the bank account. A transfer can be properly classified only when the underlying facts support it. A generic reference such as director payment gives the accountant little information and can conceal more than one transaction.

• Companies Act: Section 25 effect of incorporation

Match the payment to the evidence before transferring

Use this comparison to prepare a discussion with the accountant. It is not an instruction to use whichever route appears easiest or a calculation of the cheapest personal tax outcome. Eligibility, approval, tax and cash availability all need separate consideration.

For example, a monthly transfer might contain net salary and repayment of an approved expense claim. Keep the components distinguishable in the records instead of treating the whole sum as a business expense. Where the amount cannot be explained, ask for a review before making another similar payment.

Salary and director fees normally go through PAYE

Revenue states that PAYE applies to proprietary and non-proprietary directors. The employer requests and applies a Revenue Payroll Notification, and reports the remuneration on or before the pay date. Its employer guide also addresses registration and PAYE where directors are the company's only employees.

Arrange the payroll process before paying: approved gross remuneration, deductions, net payment, submission and payment of employer liabilities. Gross pay and the amount reaching your personal account are not the same figure. Check the applicable PRSI position with the adviser rather than copying another owner's payroll setup.

Revenue's pay-date guidance explains bank-transfer timing and non-bank-working-day arrangements. Its director guidance also contains special timing rules for certain proprietary-director remuneration paid late. Ask about arrears or voted bonuses before processing them; do not invent an earlier payment date or assume every timing question is answered by the transfer date alone.

• Revenue: PAYE and proprietary-director income
• Revenue: Employers' Guide to PAYE, Chapter 2
• Revenue: payroll reporting and pay dates

Owner-director payroll does not settle every personal return

Revenue defines a proprietary director by beneficial ownership and direct or indirect control of more than 15% of ordinary share capital. Its director guidance says proprietary directors are subject to self-assessment and Form 11, and that their directorship income is assessed on an earnings basis. Being in payroll does not remove that separate work.

Tell the accountant about your ownership, other income, existing employment, residence and work locations. Agree whether the quote covers company bookkeeping, payroll and your personal return, or only some of those tasks. Do not assume a company tax-return fee includes the director's individual filing.

A director living or working abroad needs an assessment of the actual Irish and overseas position before recurring payments begin. Do not change Irish payroll solely because you moved, or assume an Irish incorporation settles all foreign obligations. This guide deliberately gives no universal tax-rate comparison for overseas founders.

• Revenue: proprietary-director definition
• Revenue: PAYE and proprietary-director income
• Revenue: Employers' Guide to PAYE, Chapter 2

A dividend needs profits, not merely cash in the bank

Section 117 limits distributions to available profits: accumulated realised profits after accumulated realised losses and relevant prior use. Cash from a loan, share subscription or customer deposit is not automatically a distributable profit. The company needs an assessment of its actual accounts, not a screenshot of its balance.

Section 121 ties the decision to the relevant financial statements, including initial statements for a proposed first-year distribution and interim statements where applicable. You do not automatically have to wait for a full trading year, but being newly formed does not waive the accounts and legal conditions.

Before any declaration, have the adviser review the profits, previous distributions, share rights, constitution and approval route. Keep appropriate minutes and dividend evidence. A planned future profit cannot be used as a reason to pay an unsupported dividend today, and a generic voucher template does not establish that the distribution is lawful.

• Companies Act: Section 117 distributable profits
• Companies Act: Section 121 relevant financial statements

Dividend withholding is not necessarily your final tax bill

Revenue treats dividend income as taxable and explains that it is added to the recipient's other income. Relevant DWT withholding and exemptions require their own assessment. Personal tax and, where applicable, USC and PRSI may need consideration beyond the amount initially withheld.

Do not compare a salary's net payment with a dividend's gross amount and conclude that one is automatically cheaper. Ask for a model using the company's position, your other income, applicable credits and social-insurance treatment. The adviser should distinguish withholding, final liability and cash needed to pay it.

For a non-resident shareholder, check the prescribed exemption or treaty position before assuming no Irish withholding. Corporate shareholders, individual shareholders and different residences can have different conditions. Use the detailed dividend guide below for preparation and agree who performs the actual filing work.

• Revenue: personal dividend-income treatment
• Revenue: who should withhold DWT

An expense refund repays a qualifying cost

Revenue's general expenses guidance includes company directors. It describes tax-free reimbursement where a cost was incurred for the required employment duties and is vouched by receipts. Travel has additional conditions; ordinary home-to-work travel is generally private. A receipt proves a purchase happened, not that every purchase qualifies.

Record the supplier, date, business purpose, person who paid, claim approval and repayment. Distinguish a genuine company cost you paid personally from private spending, mixed use or costs incurred before incorporation. Have unclear items assessed rather than treating every startup purchase as an automatic tax-free refund.

ERR is a separate reporting question. Revenue lists categories including travel and subsistence, the remote-working daily allowance and the small benefit exemption, and requires relevant reporting on or before payment. Do not assume every expense is an ERR item, or that submitting a report proves tax-free treatment. Agree who assesses and reports the actual claims.

• Revenue: employee and director expenses
• Revenue: Enhanced Reporting Requirements
• Revenue: expense and benefit reporting categories

A director's loan account is not a permission slip

The account can record money owed in either direction. If you advanced funds to the company, identify the genuine debt, original payment and repayment terms. Share subscription money is not automatically the same as a loan. Interest and other amounts require their own analysis rather than being merged into principal.

A loan from the company to you is different. Section 239 restricts certain director and connected-person transactions, subject to statutory exceptions. Revenue also describes tax rules for close-company loans to participators and associates. Recording a debit balance does not make an otherwise problematic advance acceptable.

Do not rely on a promise that a dividend at year-end will cure every personal withdrawal. The later dividend still needs its own lawful basis, and loan issues may already exist. If the company has paid personal bills or unexplained transfers, provide a complete list promptly and seek advice rather than deleting or relabelling transactions.

• Companies Act: Section 239 director-loan restrictions
• Revenue: close-company loans to participators

Company-paid private benefits need a separate review

Revenue explains that most employer-provided benefits are taxable and sets out benefit-in-kind treatment. A company card, vehicle or paid private cost should not be treated as invisible remuneration merely because no cash was transferred to your personal account.

Tell the accountant about personal use and mixed-use arrangements before a benefit begins. Identify who receives the benefit, the company cost, relevant dates and any employee contribution. The appropriate treatment depends on the benefit and facts; this guide supplies no generic exemption or valuation for all owner-directors.

Keep a list of recurring company-paid costs and review it when circumstances change. A subscription that began for business may later become mainly private, while a personal bill can be paid accidentally. Correct records openly and follow the required process rather than leaving the accountant to discover the issue at year-end.

• Revenue: taxation of benefits in kind

Plan the first payment and review it each month

Prepare a cash forecast that includes suppliers, tax, payroll liabilities and other commitments before deciding what can leave the company. A customer's payment may arrive before the related costs. Do not choose the withdrawal amount solely from today's balance or a headline company tax rate.

In a fictional first-month consultancy, the founder has paid for an approved work item personally and wants a regular salary. The team records the claim separately, completes payroll preparation and checks the company can meet its commitments. A dividend is considered only after a distinct profits and approval review.

The example is a workflow, not a tax calculation or a claim that a particular salary is suitable. Repeat the review as sales, costs, ownership or work locations change. If the company cannot meet its debts or the records are unreliable, obtain prompt professional advice before further owner payments.

• Identify the purpose and recipient of each payment.
• Agree remuneration and the payroll schedule before the pay run.
• Assess dividend capacity and approvals separately.
• Approve supported claims and check applicable ERR reporting.
• Reconcile any genuine debt or outstanding director balance.
• Review company-paid private benefits and mixed-use costs.
• Keep evidence linking approval, reporting, bank payment and ledger.
• Reserve cash for company liabilities and any personal tax due.

Ask for the accounting scope you actually need

StartCompany.ie connects companies with accounting support and works with authorised partners to provide services. Use the accountant-services page to explain your first owner-payment plan, then confirm which work can be provided and the total payable. Matching with an accountant is not, by itself, completion of a payroll run or personal return.

Ask whether the engagement covers bookkeeping, director payroll, expense review, ERR, dividend preparation, DWT, personal self-assessment and any cross-border advice. Identify excluded work and who remains responsible for approvals and providing records. A formation package should not be assumed to include all continuing accounting tasks.

Bring the incorporation date, officers and ownership, intended payments, work locations, records and next known deadlines. Share sensitive documents only through the approved secure process. A clear initial brief lets the provider quote for the real work instead of discovering missing tasks after the first transfer.