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Pay yourself a monthly salary or pay income tax on profits?

Posted 10 February 2013

My daughter has a internet buying and selling business. It is making good profits and she wants to know whether she should take those profits out as a regular monthly salary and pay PAYE or leave it as profit and pay income tax at the end of the year on it. She is operating as a sole proprietor from home.

TaxTim TaxTim says:
10 February 2013 at 22:12

If she is operating as a sole proprieter then the profits of the business are taxable in her hands as an individual so there is no need to pay a "salary" and the resulting PAYE as whatever taxable income leftover after that would be taxed at her tax rate. It would make more sense to include the taxable income as part of her tax return and she would be able to use the profits as she sees fit.

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