If you're a business owner weighing up #businessowners

If you're a business owner weighing up whether to take a lower salary and larger dividends, or a bigger salary and smaller dividends honestly it doesn't matter as much as people think.
Either way the tax you pay on that income is going to be the same rate. Whether you pay yourself a larger wage personally or take dividends paid out from the business, the tax catches up either way through your marginal rate or the top up tax.
It's less about trying to reduce tax and more about what works for your cash flow and the business. Generally you just want a good, comfortable salary level that you pay yourself, and then if there's anything left over in the business that's when you consider whether to reinvest it back into the business or pay it out personally as dividends.
So don't overthink the salary versus dividends question from a tax perspective think about it from a cash flow perspective instead.
Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401)

#BusinessOwnerTips #CashFlowStrategy #SmallBusinessFinance #DividendIncome #TaxPlanning