Business owner, how does he/she get paid?

In broad brush terms, a typical freelance scenario:

You pay yourself a salary (If you want a pension the tax relief contributed by the Revenue is directly related to the size of your salary)

Your company pays various business expenses like insurance, hosting, your tech needs, mobile phone, Accountancy fees, Corporation Tax etc

From retained profit you pay the shareholders a dividend (now you might well be 100% shareholder, or perhaps your partner holds some shares). Typically every six months or sometimes every three.

If you just transfer a chunk of money from the Limited Company when you're short, you ask for an unholy world of trouble to be unleashed upon you.

You should be having a conversation with your accountant as to the best balance between salary and dividends for your circumstances.

It's in your interests to retain a reasonable amount of earnings year on year to allow for slack and dead periods to ensure your bills and salary can be paid for a few months or more.

Dividends are taxed at a lower rate than salary and do not attract NI payments. They are paid out of the already taxed profits of the company (That's why dividends come with a tax credit). Bear in mind that you will be covering both Employer and Employee NI out of the business on any salary you pay.

You might now think to pay yourself £1 salary and the rest in dividends, but the Revenue have already thought of that one :)

IR35 and s660 regs may affect you. Google and your accountant will tell you all about those! It's in your interests to have an IR35 aware accountant so you can stay outside of it.

Employees are paid salaries out of the revenues that companies generate. Profit is the money left after all salaries, taxes, utilities, rent, and other expenses are paid. Business owners can receive dividends that are paid out of profits.

Therefore, as an employee of your company you receive salary out of the revenue from your contracts. Under the US laws, the amount is determined in the contract that you sign with your own company (it might sound strange but that's the procedure). If your company turns up a profit, you may also allocate some dividends to yourself. However, you must consult the UK corporate law on the procedures for that (in the USA, dividends are subject to certain regulations & procedures).

Also, under no circumstances may you withdraw money from your company's bank account for personal use. That can be classified either as theft or misuse of funds.

In the end, you need to talk to a corporate lawyer to set up the proper legal structure. Although you own the company, there are regulations on what you may do with its bank accounts.