First things first, there are two legal ways to withdraw profits from your business: through dividends
, both of which are covered in detail in our previous articles. Naturally, they are subject to corporate taxes.
Corporate tax is levied on all distributed
profits (hold on to this particular phrasing), regardless of the method used for distribution. This includes dividends, gifts, donations, representation expenses, expenses that are not related to the business, and fringe benefits for the employees such as health insurance among others.
This brings us to the other part of your hard-earned profits, which remains undistributed
. Technically, this means just that — the profits that remain in the accounts of the company. But if you're looking to make the most out of them and utilize the 0% corporate tax rate even when moving into the next tax year, you can either keep them undisturbed or you can reinvest.