Question

Suppose you own a small business that generates $50,000 in profits. Why might you pay that to yourself as a dividend payment rather than as regular income or a bonus?

Answer 1

Paying yourself the amount of profit as dividend rather than income or salary because of following reasons-

• Though dividends are are also taxable but they are taxed at lower rate than income received as a salary. So this will direct save you money from paying more tax.
• It is very easy to use this Profits personally if you own 100% of your business as you just need to declare it as dividend and then you can easily transfer it from business account to your pwrosny Account.
• Paying yourself profit as a dividend also help to save personal and corporate costs since paying yourself as dividend will remove the need to contribute in pension plans

PLEASE GIVE YOUR VALUABLE REVIEWS ABOUT THE ANSWER IN THE COMMENT BOX AND YOU CAN ALSO GIVE THUMBS UP IF YOU LIKE THE ANSWER. THANK YOU