Originally posted by richy
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Dividends from retained profits after loan
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Originally posted by Maslins View PostThe director (or bank) loan is basically irrelevant, it's the income vs expenditure that's key (a loan isn't income...no EBT comments plz!).
You can have debts and pay dividends, as long as you have assets in excess of the debts. Inevitably each listed company will be different to the next, so can't really lump them all in one basket.
You may be interested to read the BHS/Philip Green stuff with this in mind. Some would argue he did some clever/dodgy accounting, understating debts, to make it look like there was profits. He then declared a big dividend, and later on...oops, actually the company was in a much worse state than we thought.
Thank you @Maslins
Ok I understand better now.
So the loan was used on expenses, which then mean a loss this year.
In a future year when the loss carried forward has been passed (at that point I'll repay the loan) and then be able to declare dividends from profits again.Comment
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Originally posted by pr1 View Postit could pay back some of the directors loan to the director?Comment
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As Maslin said, the loan isn’t really what’s important. The capital element of a loan just affects your cash flow. It sits on the balance sheet as a liability.
It’s the actual expenditure that affects your profit and loss. Of expenditure means you’re making a net loss for the year then this will reduce any retained profits from previous years.
Only once there is a sufficient balance in the company reserves will you be able to take dividends again.
The loan itself can be repaid whenever the business has the money to do so.Comment
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Thank you @TheCyclingProgrammer
yes, my retained profits are gone... at least can carry forward the loss on that expenditure.Comment
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Originally posted by WTFH View Postcome back and let us know what your accountant says!Comment
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Capitalise the loss, and then amortise it as an expense as the business generates profit. Matching principleI was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).Comment
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Originally posted by Scruff View PostCapitalise the loss, and then amortise it as an expense as the business generates profit. Matching principle'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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Originally posted by northernladuk View PostI've no idea what any of that means but it got me mildly aroused.I was an IPSE Consultative Council Member, until the BoD abolished it. I am not an IPSE Member, since they have no longer have any relevance to me, as an IT Contractor. Read my lips...I recommend QDOS for ALL your Insurance requirements (Contact me for a referral code).Comment
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