Withdraw cash from business account
Thomas Vles
6 minute read
There is a lot of uncertainty surrounding the withdrawal of funds from a business account. Some entrepreneurs believe it is simply not allowed, while others assume they can withdraw without limit. The reality lies somewhere in between. There are various situations and legal forms, such as a sole proprietorship, a partnership, or a limited company, each with its own rules and accounting treatment.
Moreover, there are limits on cash withdrawals for almost every payment account, depending on the package you have. In short: you can withdraw money from your business account, but there are always conditions and limits attached.
Are you allowed to withdraw money from a business account?
Yes, you may withdraw money from your business account. There is no law that prohibits this. However, it is not as straightforward as with a personal account, as each withdrawal has accounting implications and there are always withdrawal limits. The amount you can withdraw per day or per month at an ATM varies by provider and package.
At GoDutch, a standard withdrawal limit of €3,000 per month at ATMs applies for all paid packages (Starter, Pro, and Unlimited). The Free package does not provide any option for cash withdrawals at ATMs. If you, as an entrepreneur, want to withdraw cash regularly or choose to have an additional business payment account, then a paid plan is a logical choice. This limit protects both you and your business against irregularities and aligns with the guidelines surrounding financial management and anti-money laundering regulations (AML).
Why withdraw money from a business account?
There are various reasons why entrepreneurs withdraw money from their business account. Consider situations where cash payment is the only or most practical option, but also paying yourself a salary as a director-major shareholder or making small business expenses on the go. Below are the most common reasons:
Cash business expenses: some suppliers, markets or service providers only accept cash.
Private withdrawal as an entrepreneur (sole proprietorship/partnership): you withdraw money to reward yourself for your work, which is treated as a private withdrawal for tax purposes.
Salary or current account (limited company/director-major shareholder): as a director-major shareholder, you withdraw an amount through the current account relationship or as a regular salary payment.
Expenses and travel costs: small cash expenses for parking costs, tips or other business costs on the go.
Emergency situations: when card payment or transfer is temporarily not possible and you need cash quickly.
Recording your money withdrawal from a business account
Every withdrawal from your business account must be accurately recorded and processed in your accounts. This applies not only to your own records but also to the Tax Authorities. They want to be able to see at all times how money flows within your business. A withdrawal that you do not register correctly can lead to questions, additional assessments, or even fines. Good record-keeping is therefore not an option, but a requirement.
Withdrawal for business expenses
If you use the withdrawn money for business costs, such as purchasing materials or small supplies, then you must book this as a business expense. Without proof of the expenditure, you cannot deduct the costs from your profit. The Tax Authorities only accept business costs that are demonstrable and necessary for business purposes.
Record the withdrawal as "cash": debit the cash account in your bookkeeping so that the cash is visible as an asset.
Keep receipts: note the amount, date, supplier, and business purpose for every cash expenditure.
Process the expenditure immediately: as soon as you pay in cash, record the cash expenditure so that your cash records remain current.
Check the cash balance regularly: the balance of your cash account must never be negative; that is a signal that there are missing entries or that errors have been processed.
Withdrawal as a personal withdrawal
If you are the owner of a sole proprietorship or partnership, there is no legal distinction between you and your business. Whether you need a business account as a sole proprietor is determined by law. Nevertheless, you must separately account for any withdrawals you use for personal purposes as a personal withdrawal. This has direct consequences for your taxable profit and your income tax. It is one of the most common accounting mistakes made by freelancers and small entrepreneurs.
Record the withdrawal as "personal": credit the business account and debit the personal account or the current account of the owner.
Document the purpose: note in your records that it is a personal withdrawal, even if it is a small withdrawal.
Include it in your tax return: personal withdrawals reduce the equity of your business and affect your taxable profit.
Maintain a consistent rhythm: regular, predictable withdrawals are easier to explain during a potential audit than random amounts.
Withdrawal as a director-major shareholder
As a director-major shareholder of a private limited company, things are a bit more complicated. The private limited company is a legally independent entity, which means you cannot just withdraw money as if it is personally yours. Every withdrawal must have a clear legal basis, such as salary, a dividend distribution, or a loan via the director-major shareholder current account. Incorrect processing can have tax disadvantages or even be classified as irregular distributions.
Salary: record the withdrawal as wages, including payroll tax, through the payroll administration of the private limited company.
Director-major shareholder current account: formally record an advance or loan in an agreement and process it as a debt to the private limited company.
Dividend distribution: ensure that the private limited company has sufficient freely distributable equity, have this formally approved by the shareholders' meeting, and pay dividend tax.
Document everything: the Tax Authorities and any accountants must always be able to see on what basis you received money from your private limited company.
Important points when withdrawing money from a business account
In addition to correctly managing your recordings, there are a number of additional points you need to consider as an entrepreneur. These points prevent problems during a tax audit and ensure that your accounting is correct from start to finish.
Always keep receipts for cash expenses: without supporting documentation, cash costs are not deductible and you cannot justify them to the tax authorities.
Ensure that your cash management is accurate: the cash balance must never be negative; a negative cash balance is a sign of missing or incorrect bookings and will immediately attract attention during an audit.
The tax authorities may always request a reconciliation between bank statements and accounting records: ensure that every amount on your statements can be found one-to-one in your records, so you can always provide a conclusive explanation.
Costs of withdrawing money from a business account at GoDutch
The costs for withdrawing money at GoDutch are transparent and easy to understand. There are no hidden fees or complicated tiers: you know exactly what to expect. For cash withdrawals at ATMs, fixed costs per transaction apply, regardless of which package you use. The withdrawal limit is only available with paid packages. It is also wise to compare business accounts. Below is a complete overview of the withdrawal costs per package from GoDutch.
Cost type | Free | Starter | Pro | Unlimited |
Withdrawals within SEPA* | €1 | €1 | €1 | €1 |
Withdrawals outside SEPA* | 2% | 2% | 2% | 2% |
ATM withdrawal limit | - | €3,000 | €3,000 | €3,000 |
Easily withdraw money from your business account with GoDutch?
GoDutch offers entrepreneurs the best business payment account that rewards you instead of taxing you. Open your account within 3 minutes, receive your Dutch IBAN within 3 hours, and manage all your business finances easily through the GoDutch app. With a paid package, you have immediate access to cash withdrawals via your GoDutch Mastercard, with a transparent withdrawal limit of €3,000 and fixed costs of €1 per withdrawal within the SEPA zone. No surprises, no small print.
More than 15,000 entrepreneurs have preceded you. Choose the package that suits your business and discover how GoDutch helps you keep a grip on your business finances, with cashback on your spending as a bonus. Choose between one or multiple business accounts. Open your account with GoDutch today.
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