Directors loan and year end

[aztec]

I have just finished my company year end in August. I had previously taken out a directors loan upto 5K in June hoping to pay back through dividends by year end. After having worked out a basic trial balance and CT calcs and retained profit of at least 10K I can see that I don't have enough in the company to pay dividend of 5K to cover the loan.

I still have to send out 2 invoices for July and August to my client which would cover the dividend payment. was wondering if I send invoice dated 30/8 it would be part of last years(cmpany year) income.
And can I declare a dividend on the books but not withdraw the money immediately, maybe a week or two later.

[xoggoth]

All seems sound enough. Under the accruals principle, invoices issued in the year count towards profits of that year, even if they are paid in the following year. Ditto divis I imagine.

[Lucifer Box]

can I declare a dividend on the books but not withdraw the money immediately, maybe a week or two later.

Sure you can. YourCo can declare a dividend any time it likes - when the shareholder who receives the cheque cashes it is entirely up to them.

[boredsenseless]

Absolutely, in fact the best way to declare dividends is to wait until the year is finalised so that you actually know your complete financial picture

[OrangeHopper]

Re your last question.

Since you owe the company monies there should be a ledger in your accounts - say "Me" - that shows that loan.

When you pay the dividend you can show it as being paid into this ledger and therefore no cheques are raised and no monies need change hands. You have simply reduced the size of the loan.

My accounting system - OrangeHopper/Excel Manual Accounts - would require me to add an entry to the Journal to explain this transaction.

I use this method to account for things like travel expenses. Each month I produce a Mileage Claim then add the money owed to my ledger. Once every three months or so, I write out a cheque to myself for the accumulated total and clear the debt.

[ASB]

July/August

The work you have done in July and August (even if not invoiced) should be accounted for as work in progress - but don't include the vat value. This will have the effect of increasing the net profit you currently have by that amount.

Don't forget to debit the account next year when you actually invoice of course....