One of the practical questions founders ask after forming a limited company is how they actually get paid from it. Unlike sole trader income — which flows directly to the individual — money in a limited company belongs to the company as a separate legal entity, and extracting it as personal income requires a deliberate process.
As a director and shareholder of your own limited company, you can pay yourself through a combination of salary and dividends. A salary is paid through payroll and is subject to Income Tax and National Insurance in the usual way. Dividends are distributions of company profit and are taxed differently from salary income. The most efficient combination for a particular director depends on individual circumstances and is typically determined with accountant input.
There is no single correct approach to director remuneration — the right structure depends on the company's profitability, your other sources of income, and your plans for reinvesting profits in the business. What matters most is that salary payments are run through payroll correctly and dividend payments are properly documented. Our guide to paying yourself from a limited company covers the practical steps involved.