Yes, it is quite easy for us as business owners to become side tracked into not seeing the vast benefits that can be attained when we are within the Self-employed field, as we just think that earning a viable profit is enough. However, have we fully researched and entirely tried to understand what the term ‘self-employed’ means? As I can assure the sooner, we understand this term is the sooner we can see how greatly we can implement measures to reap a whole lot of benefits when it comes onto the banking sector; Especially when you ensure that a salary is taken on your behalf. As such, here are a few:
1. Taking a Salary makes you not only Self-employed, but also employed: This simply means that you can also take a loan in the name of your company and also a personal loan as an employee of your business; or company rather as you must register as a Limited Company to have access to this type of loan benefit. So let’s break this down in the aspect of wanting or needing to purchase a car or vehicle, so yes you might need a van to carry equipment or inventory for the company of which you would need a loan within the company and then furthermore you might need a personal vehicle of which you use a personal loan to purchase. Quite interesting isn’t it?
2. You’ll better able to take your personal expenses from the company: Many business owners fall trap within this aspect as they are most times unable to separate their personal expenses from the company. As such, designating a monthly salary to cover your personal or home expenses is the best way to address this problem.
3. Taking a Salary lets you know entirely what the Company is making: As explained above in note 2, many times we are unable to know how much the business can sustain when standing alone without our personal expenses attached. Especially when that particular business is that of a sole trader where most owners just see it fit to tie all their personal needs and expenses to that of the business. Hence, it is now common practice for the owner to see profits as that of the owner and not that of the business. Which is entirely not good for making long-term business-related decisions.
4. Your Personal and Business Account must be separate: Having these done separately is extremely important to acquire loans from the bank. Too many times we are accepting business funds to our personal account until the true reflection of our revenue cannot be proven from our business account. Which is ultimately what our banks and accountants will or must use to verify our revenues earned. As such, all discipline must be maintained to ensure that all revenues are sent by customers to that of the business accounts and not personal. A problem again of which taking a salary can aid as most times it’s just the access to funds that we ‘oh so seem to urge’.
5. Filing as an Employee ultimately separates you from the company: Many business owners are not aware of this factor as the notion of always having access to funds from profits is just always what’s in its entirety as more important. However, what we should know is that once we are taking a salary from the company, meaning we are on the payroll and monthly taxes/contributions are being deducted, we have ultimately now separated the profits of the company from ourselves as business owners. Thus, this makes you a legal contributor that takes a salary from your company and not from the company’s profits. As such, the company will be responsible for itself. Again, this is in respect to those who are shareholders or owners of companies.
6. The ease of not having to pay all Taxes or Contributions at once: Finally, if we should look at the burden being eased of not having to pay all those taxes or contributions at once if you would just declare your director fees taken for the year at once when filing your SO4/SO4A the following year as payments would be done monthly through the filing of the SO1, once more this is another great reason to continue filing as an employee.
The matter of implementing all the necessary discipline and consistency to do this monthly may sometimes be of greater benefit to us if we employ or appoint someone to ensure that this done. As the handling of transactions like these are most times seen as not important due to high inflow of funds that is always at our may and will. Thus, let’s ensure that everything is done for us to reap and enjoy these benefits from the bank and the Tax Administration of Jamaica.
If you need help or further information, please feel free to contact us at 1 (876) 902-7259 | 545-6928 or email us at BIZcareConsultationAcct@Gmail.com to arrange your consultation session. Do remember at BIZcare “Your Business is our Priority”. We offer the services of:
- Business Registration
- Tax Filing
- GCT Filing
- Payroll Services
- Consultation Services
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Written by: Kmar Henry [ CEO |BIZcare Consultation & Accounting Firm Limited ]
Edited by: Sheryl Bailey [ Director | BIZcare Consultation & Accounting Firm Limited ]