What is a dividend?
If your limited company makes a profit, it can transfer that profit to shareholders in the form of a 'dividend.' Profit is the amount of money left over after deducting all business expenses and liabilities, as well as any unpaid taxes (such as Corporation Tax and VAT).
How does your company issue a dividend?
If you intend to pay out a dividend, you must hold a board of directors meeting to “declare” the dividend. The meeting must be minuted and a record of it must be retained. This is true even if you are the sole director of your limited company; but, in that case, it may simply be a matter of issuing the necessary papers. If you use a competent online accounting software system, such as Crunch, it should usually take care of all the admin users.
You must issue a dividend voucher that includes the following information for each dividend payment made by your company:
When the dividend is given out
Name of the company
The names of the shareholders who have received a dividend
The dividend amount
If you’re not yet an Accotax (Accountants in London) client, we can make paying yourself tax-efficiently easy, with all your HMRC payroll and dividend forms taken care of. Even better, you’ll get all the support and advice you need, plus all your company tax filing taken care of. We can even prepare and file your annual Self Assessment tax return. Find out more about our great-value Limited company accountants Packages.
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