How to prove remuneration not from investment

[sm12]

How can I prove remuneration was from revenue generated and not investment?

[noajthan]

How can I prove remuneration was from revenue generated and not investment?

From business accounts.

[Mrchaany]

Yes from business account that the investment is not touch through out period and business profitable via Buinesss account and also all annual accounts must show profit

[sm12]

Thank you for your reply.

But what if the business is making revenue but not profit? Money is coming in, so can you not pay yourself?

[noajthan]

Thank you for your reply.

But what if the business is making revenue but not profit? Money is coming in, so can you not pay yourself?

Not if there's no profitable revenue stream!

If you're just paying yourself from your initial 'investment' then you are basically having a very, very expensive holiday in the UK.
Where's the revenue being spent?

[zimba]

Thank you for your reply.

But what if the business is making revenue but not profit? Money is coming in, so can you not pay yourself?

Yes you can as long as you pay yourself from the revenue generated not the investment. Your company does not need to be in profit. You are in profit when your expenses are lower than your revenue.
Basic business concepts

[sm12]

Thank you for your reply.
I know that profit I'd when the business has expenses higher than revenue.
My question is that if my revenue is £32000 and expenses are £34000, can I pay myself from the revenue generated as long as the investment is only used for other expenses and asset purchases? Or must the business first be profitable?

[zimba]

Thank you for your reply.
I know that profit I'd when the business has expenses higher than revenue.
My question is that if my revenue is £32000 and expenses are £34000, can I pay myself from the revenue generated as long as the investment is only used for other expenses and asset purchases? Or must the business first be profitable?

Depends on how much you invested. If you invested 50K in the business and your company made 32K in a that year and your expenses are 34K, then your remuneration/salary must be less than 32K in that year and you should have 48K in the bank.

[sm12]

Hi Zimba

Yes, that's right. I only took £100 a week, or £5200 for the year.
The rest of the revenue has stayed in the bank account for business expenses, etc.

[n8net]

so the maximum a directors can pay himself is the total revenue in the accounting period if the company made losses and if the company has made profits it is ( revenue + profits ) ?

[zimba]

so the maximum a directors can pay himself is the total revenue in the accounting period if the company made losses and if the company has made profits it is ( revenue + profits ) ?

The guide is that your salary must be smaller than your profits, otherwise you are paying yourself from your investment.

[sm12]

Hi Zimba

Sp in my case, would you suggest I invest the £5,200 back into the business as there was a loss of 2,000?

[sm12]

With regards to my we question above, I have already transferred the original £50,000.

[sm12]

Hi Zimba
I would be extremely grateful if you could advise whether it would be better to reinvest the £5,200 salary that I've taken from revenue.

Thank you again.

[zimba]

Hi Zimba
I would be extremely grateful if you could advise whether it would be better to reinvest the £5,200 salary that I've taken from revenue.

Thank you again.

If that money came from your investment you better reinvest it back to be safe.

[sm12]

Hi Zimba
Thank you for your reply.

I took it from the £32,000 revenue generated, and have already invested £50,000. However, the expenses were £34,000. £2,000 loss, but the overall revenue generated was much more than the salary.
I'm not sure whether this revenue can be used to pay myself or I must show profit first. I've read the guidance but not sure whether a salary can be taken as long as it's less than the revenue.