The best way to effectively manage drawings is to treat it like a salary.
- Work out how much money you need to live off each month, and what your business can afford.
- Do one lump sum payment per month into your personal bank account.
- Then you use a website like https://www.paye.net.nz/calculator/ to work out the tax on that lump sum payment. It will calculate what the PAYE rate is on that amount.
- Then you can transfer that tax amount into a savings account to cover your tax payment later in the year.
The worse thing you can do is do small payments here and there, and not put anything away for tax.
If you need any help working out how much you should be taking in drawings from your business, please get in touch.
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