So what percentage on average a year do you keep in your business and what do you draw out for yourself as dividends etc?

I'm interested to discuss this topic as it's recently come up with my accountant.

I guess this topic is more relevant when you want to exit or sell your company but even so having $x of dollars in your company is just going to be reflected in what the company is worth + $x amount of dollars when it comes to selling.



If I have made 100 percent profit then I take 50 percent and keep the other 50 percent to boost the business. For any profit which is less than 100 percent, it is advisable to take 30 percent of the profit and keep 70 percent for the business. If I make a loss then I'm usually forced to take all the money out of the business to start a new business.
I started my business about six months ago. What ever I have after paying EMI to the bank (I started my business with bank loan), staff salary, and business running cost, I reinvest in my business. I started my business with $10,000. Now my business worth $12,000.I will continue this until it grows $50,000.


The topic to me is not only relevant when you're exiting. I think it's very important beforehand to have your figures set. The goal of business is to take profits. From the profits, you can either take it for yourself or keep it to make your business grow. In my mind, it's best to set a profit goal of at least 20% to 40% max. If you are just starting out, and you reach this target - it's best to keep it in the business for growth purposes. Anything of excess, you can take out for yourself to enjoy or use for another purpose. As your business grow and become stable (or reach a figure you think is enough for that business), I think you can lower the percentage of the profit to keep in the business.


When our computer supplies retailing business was earning good, we didn't have the urge to give dividends. Our plan was to let the profit pile up (although we needed more capital). Giving away dividends to the owners is advisable only if the business is stable with the profit otherwise it might suffer a relapse and would be needing additional capital. That is the dream of every businessmen, to have a stable profit for dividend sharing.


For me it would depend on whether I intend to grow the business.

Take the example of someone who owns a grocery store in a small town. No matter how much money they put into the business eventually it'll get to a point where no matter how much money you re-invest, they won't be making more profits.

For me that's what I use to determine whether I'll re-invest some of the profits. When growing the business I'll draw out only 60% of the profits.


This is a great question, and one that will vary based on the type of business that you have, and the financial situation in its present state.

If your business is doing really well and you have already paid the bills and stocked your resources (physically, digitally, or otherwise), then you may be in good enough shape to justify being able to pull out a little more extra or more often than you usually do.

Some reasons could be that you want to renovate, increase your marketing on a personal scale to where you are able to manage funds individually and apart from your business for a task, or you want to have petty cash available for miscellaneous needs that do not need to be accounted for as exactly as things you would keep on the books for a CPA to look at or enter into the computer if managing those books yourself.

You might also have personal expenses that can't be purchased through the business name as well or other needs which are both personal and business (depending upon the business type and what it is), so there's times you will want to pull money out when you need it. And if you do, it's ok to..just don't over-do it. And always make sure that you have alternative funding arrangements already in place (business credit, personal credit, installments from scheduled payments, or other collateral that can be utilized if in a bind to get things paid and get the books balanced back again quickly).

As an example, suppose you had to go to the dentist or the doctor, and the issue was partially serious, but more cosmetic and comfort-based than an immediate need. Perhaps your insurance covered some of what was needed but not all of it, and you needed an extra $1,700 to cover it entirely.

Your business is doing well enough that you have about $16,000 you could pull from liquid, $50,000 you could pull from on business credit, $12,000 you could pul from on personal credit, and $150,000 you could claim if you really had to put everything up in a risky scenario. You wouldn't want to risk too much, so the last option would be the last resort. The use of your credit is possible and would be feasible (be it on a personal or business level), but you may want to be careful using your business credit for any personal expenses, especially if you have to write them off. Depending on what it is, where you are, and what the laws are where you are doing business, you may have an easier or harder time justifying it as proper use of the business credit, especially if it's joint-credit between you and a business owner and there are any concerns when writing things off.

Normally, you would want to use your personal credit in this instance since, even though it is only half of what your available business credit is, it would still cover your dental or medical expenses and you wouldn't have to worry about whether or not it was an acceptable business expense (if you needed to write it off in the future or for the next fiscal year). If your business involves you doing things such as public speaking, luncheons and gatherings, or business meetings of any kind where the cosmetic blemish would negatively impact your business, then you may very well be able to write that off as a business expense and not have to worry about it being questioned.

If however, your business never involves seeing or speaking with people in person (like if you are managing your business through digital means only and your interaction with people is either via email, over the phone, or online support), then you would have a harder time explaining to the IRS or a lender how and why that is as important as if you were face to face with potential clients who will make their decision based upon the appearance and quality of the personal relations in presentation just as much as the content, information, and value that they derive from it.

There might be moments when you would want to use your liquid money instead, though. Consider the fact that you may be needing to do a really large order soon for your business and plan to place it all onto your business credit card, or divide the transactions between business and personal credit to complete the order on short notice, and then balance that transaction and return things to normal after the orders and payments for what you do or offer are complete. You might be in a situation to where the use of your personal or business credit would preclude you from being able to make the successful purchase order that you need on a time-sensitive basis (just as your dental or medical arrangement may be time-sensitive and needed sooner). If there is any question about coordination for paying off any portion of either credit areas quickly enough to be able to restore the full credit amount needed to be able to make the main orders, then in that situation you would want to use what you have liquid to cover it instead. You would still have enough to make the payments needed to do everything smoothly, on-time, and in-full, but never jeopardize the importance of either one, and not have to worry about making any extra payments later or carrying a balance on your business or personal credit for any longer than you need to.

If you're doing a business in which you don't use business credit or personal credit at all and prefer to do things cash only (or maybe electronically and with a merchant still, but you personally decide not to use credit for any of your expenses), then you don't have to worry about credit statements and issues as much, but your options for pulling out of your business become limited only to available liquid cash, or collateral if taking a risky loan of some sort (which I would advise against unless you absolutely have to).

if you're looking at it purely from a liquid or cash point of view, then the same is applicable and mostly how it is above, only you want to keep your expenses as much under half of what you need as possible to keep going.

If that same dental procedure or hospital expense cost $1,700 and your insurance still covered all but that much and you had $16,000 available in cash, then you would want to make sure that if your business required a minimum of $2,000 a month to run smoothly and $5,000 a month to run smoothly plus a month in advance, you would want to only pull out maybe $2,000 or less in that case. You may need the extra $300 for something (and if you don't, you can always put it back), but you'll have the $1,700 on hand to deposit into your personal account, and can have $200 or $300 of that as cash, just in case there is a co-pay or anything you need to buy after the dental or hospital visit.

Every case and situation will be different, and some businesses may only have a few hundred dollars liquid rather than a few thousand. If you only have a few hundred liquid, then you'd want to pull out only the minimum needed in cash and then put the brunt of it on credit. It would take longer to pay off, but doing it that way, you don't place yourself or your business in peril by not having enough to make ends meet or stay in business with tools, stock, or other resources you need for month to month and daily activity.

If you're a small business that is doing well or find yourself engaging the status-quo of being a medium sized business over time, then the first method above may be more suitable than the second which favors smaller operations if in a pinch.

If you just want to pull out personal money, I would only pull out what you know you need or want to add to savings or checking.

In the past, I've been tempted to pull out more than I should to place things into a personal acount, and in doing so, I started to skimp on the needs of my business during that time. I don't like to do that anymore, and it makes me feel greedy even though I know it's just human nature to want to do that. :) So if you do pull out 25% or 20% maybe of what you are making from your business above and beyond expenses for personal and other needs are already met, I would place it into a checking account that offers money market features.

Why? You may pull out some of that money to use for cash, but the chances are good that you will want to have a decent amount in your personal and business checking, just to be secure with each and every one.

If your business and your personal accounts are generating small amounts of interest, over time it adds up and gives back to you.

The money you get may not be that much, but it can be enough of a reason why you might want to leave it in a business interest-bearing checking account which has a higher percentage than a personal account with a smaller APY yield or none at all.


On a side note, you may also want to withdraw only in small amounts if doing so in cash. The way the economy has become lately, they are a lot more comfortable with businesses and entrepreneurs who have a balance with them than they are those who would want to pull a few thousand out at a time. In fact, you may want to only pull out $1,000 or less at a time, and spread it out if you are doing so in cash. I have seen and heard of recent situations which, due to economic changes and banking factors, people have been given some difficulty or been denied the right to pull all of the money that was legally their own in their own account out due to excuses from the bank.

By law, the bank should have to give you what is yours and is in your own accounts. However, some of these laws are changing in certain states and countries (or have already!), and it's important to make note of and pay attention to them so that you still have the right to pull out what you need from your business for personal use, and are able to do so when you really need to.

So if you're doing a big or medium-sized business, you may have a few hoops to jump through and answers to provide if you are trying to pull too much out for your own personal use. If it's a business that you are doing alone without any partnerships, contracts, or joint bank or credit accounts, then you can pull out anything you need (but the banks may still try to limit you if they don't have the cash on hand at the branch (!) or, if they have some other reason they want it to remain in your account, since they too have external lenders who look at their current portfolio on ledgers to know if there is enough to borrow or lend from or through them to 3rd party investment sources).

If you're a small business or sole-proprietor who is just doing their own thing and trying to figure out how much is safe to pull out, then it's up to you...but make sure you can always put back whatever you take out before it comes due to the business as an expense or obligation, and always have a plan B and plan C that will work just in case your plan A to pay it back to yourself in the business has any type of delay.
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