Do I pay myself salary or dividend or make a contribution to a personal pension fund? I must caution the reader that you must talk with a Financial Services Authority registered individual if you want to take this further.

However this article tries to demystify some of the tax issues and opportunities to get money out of a limited liability company

Insurance Contribution. Without getting too fussy about it the rules are as follows:

In the year to March 2010 the first \u00a36,475 of income is tax free. This is called the personal allowance and it slowly creeps up each year. The next \u00a337,400 is taxed at 22% with anything over \u00a343,875 at 40%. Simply you can pay yourself \u00a3500 per month tax free.

This is levied on your salary as well. There is now the same tax free band up to \u00a35,720.

There are all sorts of wonderful twists and turns, but the main rate that is probably applicable to you is 11%, on top of your income tax; reducing to 1% over \u00a343,888.

So the basic rate of tax your salary will suffer is not 22% but 22%+11%, i.e. 33%. Higher rate tax will kick in at \u00a337,400 plus your personal allowance of \u00a35,720 - \u00a343k in round figures.

There are two ways of paying pension. The first is out of your salary, the second is out of the company.

Which you choose really depends upon your situation, which I\u2019ll explain in a second. But the main thing to bear in mind is that pension contributions reduce your tax bill. When the time comes to draw down your pension you will probably have less taxable income so you can get your money back with less tax attracting to it.

Furthermore, the government wants to encourage you to put money on one side for later years so it makes it attractive for you to do this. As I said there are two types of pension contribution:

up to 100% of your salary should you so wish (up to \u00a3215k a year or \u00a31.4m in your lifetime). Not only would this reduce your tax bill to zero but the government will also put in a further 22/78 into your pension i.e. a further 28%. Where else could you get this rate of return on an investment?

So say you set your salary at \u00a340,000 and decided to make a \u00a310,000 pension contribution. You only need to actually pay out \u00a37,800 into the fund and the government puts in the balance. So instead of simply seeing your tax going into the government coffers it is set aside for your old age\u2026getting maximum value for your money. This must make sense.

pension contribution your company can make on your behalf.

Although the government doesn\u2019t gross this up, it does reduce your tax liability by the rate of corporation tax you pay \u2013 somewhere between 20% and 30%.

The important thing about Dividends is that they don\u2019t attract Employers National Insurance Contribution of 12.8%

One clever aspect, that is not immediately obvious, is that if you pay yourself a \u00a310k dividend it is already assumed that you have paid 10% tax on that \u2013 so that there is no further tax to pay \u2013 unless your total income goes above \u00a343,400k.

Pay as much as you can afford into a pension fund by way of an employers contribution.

First tranche of money: pay as salary \u2013 around \u00a36k, or \u00a3500 a month.

Next tranche of money: pay as dividend - around \u00a337k or say \u00a33k per month.

Final tranche of money, do a careful calculation depending on what your personal circumstances are. Dividends are slightly cheaper but there\u2019s not much in it.

Whether you own a small or large business, chances are very good that you can benefit from outsourcing some of your business functions to outside vendors.

Ideally, you want to be in a position where you are working on your business, rather than in your business.

Running and operating a business positioned for growth requires many different key functions.

For starters, you must handle accounting, administration, customer service, as well as sales and marketing.

Many new small business owners attempt to tackle all of these functions on their own, and find that they work long hours and can begin to burn out quickly.

By outsourcing some of your routine tasks, you can leverage your time to spend on the functions that you do best in order to grow your business.

When trying to determine whether outsourcing will benefit your company, you need to determine how much money your time is worth.

A simple way to figure this out is to estimate how much money you would like to make in a year, and divide that into productive work hours. Most of us are only productive about 2-3 hours a day.

For example, if you'd like to make \u00a3200,000 this year, and you work 3 productive hours each day, 5 days a week, then your time is worth roughly \u00a3260 an hour. With this scenario, you could benefit from outsourcing any function that you can pay someone to do for less than \u00a3260 an hour.

In order to outsource effectively, you must understand your own business and processes. Take some time to write down job descriptions for different functions, as well as the processes you use in your business to accomplish certain tasks (like how you enter your invoices and receipts, how you generate new leads and clients, etc.).

As part of this exercise, include clear expectations of what you hope to accomplish. A clear vision and business plan is key to setting up clear expectations.

Once you have written down the job descriptions, you'll have a better idea of what you would like to outsource first.

There's no hard and fast rule as to which job functions you should outsource first, but many business owners like to hand off the functions that they enjoy the least. If you really dislike customer service, you may want to find a customer service rep first.

You have many options when looking for companies or services that will handle your outsourcing needs. Check with others in your industry to see who they use to outsource their functions.

Many outsourcing firms not only specialise in certain functions (like customer service), but also in certain industries (like finance).

Many business owners hesitate to outsource some of their functions because they want to have complete control over their business, or they believe that it will be too difficult to train someone to do what they need.

If you fall into this category, you may want to try outsourcing some very simple, routine tasks to get started.

When choosing an outsourcing firm, or freelancer, make sure you set clear expectations up front.

Share your vision about how you see that function growing your business, and offer incentives for work well done, or work done under budget, or before a deadline.

In addition, take time to properly document how the work should be performed.

This can be done easily with screen capture video software, and/or written processes and procedures.

Taking the time to properly train and motivate your outsourced personnel will benefit your business greatly.

By now, you will see that outsourcing some of your business functions will help free up your time to work on your business, rather than in your business.

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How Do I Know My
Processes Are Working
Effectively?

The Process is owned, with Process Ownership responsibilities being clearly defined.

The requirements of the process are defined, such as; addressing the needs of the Stakeholders, meeting Business desired states, identifying constraints (such

People know and understand how they contribute to meeting the process objectives. The competencies needed by people to perform the work are clearly identified.

People are multi-skilled, with clear accountability, authority and responsibility (Jobs are multi-dimensional, with several jobs being combined into one. Hand-offs are minimized (Involves as few people as possible)).

Teamworking is the order of the day. People are empowered to make decisions.

are minimized). The process has clearly defined inputs (interfaces to other processes, supplier interfaces, data, materials) and has clearly defined outputs (the deliverables, interfaces to other processes, customer interfaces).

The process is also designed to be fail- safe and has quality built in. Technology supports the process.

Such as Information, Tools, Materials and Documentation are aligned to the process flow, (available at the point of need, with steps in the process being performed in a natural order. Work is performed where it makes the most sense. Smart documentation reduces errors).

Measurement is used to manage, review and drive continuous improvement in Process, Product and Service. Changes are managed. Processes are designed to be flexible, to deal with central, regional and local variation.

All processes exist for a number of reasons. The first reason is primarily to deliver products and services to customers, whether they be internal or \u201creal\u201d customers.

and responsibilities for actions required to ensure the process works effectively.

do it. In particular, those who are in control of the process (typically team leaders or managers) need to know how things are progressing. For this there is a need for measurement.

Processes are designed (or often emerge) to meet some objectives (sometimes stated, but more often assumed) and to know whether these objectives have been met, attributes of the process need to be measured. Typically these are associated with the following:

By careful use of measures (where, when and how they are collected, analysed, reported and acted upon, process capability can be determined and used to control how effective the process is.