Declaring dividends

[yetanotherone]

Right,

I've just become a contractor 3 months ago and want to declare a dividend. Do I need to create any formal paperwork or can I just make a note in the company accounts and pay myself?

[ASB]

If you don't know the requirments you should ask your accountant. Or get one.

But this may yield some useful help

http://www.taxationweb.co.uk/forum/discuss.php?id=5395
http://maid.yasp.com/news/041202.html

[boredsenseless]

Right,

I've just become a contractor 3 months ago and want to declare a dividend. Do I need to create any formal paperwork or can I just make a note in the company accounts and pay myself?

Paying dividends is a simple concept but the actualities of it are a bit more involved.

Can you after 3 months say categorically that if you didn't work again all year the current profits would cover your salary (or income), general business expenses, Employers NI and Corporation Tax, if you can't 100% be sure of this then paying a dividend is technically illegal since they can only be paid out of realisable profits.

Get an accountant (or do some serious reading and wait until nearer the end of the trading year when you'll know your guaranteed profits) before you pay a dividend. If you get it wrong its counted as income and you'll be taxed at your full whack on it and the company will be charged the 12.8% NI.

And above all if you don't understand dividends which are one of the more enjoyable elements of our life, you are probably missing all sorts of other legal accounting requirements.

[XLMonkey]

Right,

I've just become a contractor 3 months ago and want to declare a dividend. Do I need to create any formal paperwork or can I just make a note in the company accounts and pay myself?

You need to hold a shareholder's meeting, declare the dividend and then issue a dividend certificate (including tax credit) from the company to each shareholder (in this case, just to you). Your accountant should be able to provide you with the forms for this, but just in case the attached link has a few templates.

http://www.warr.co.uk/company-dividendadmin.html

...though all the other advice posted so far remains relevant, it's a good idea to check with your accountant prior to starting the process off.

[Mailman]

Yes...hold a share holders meeting in sunny Thailand where you will agree to pay out a large divi!

Mailman

[VectraMan]

You need to hold a shareholder's meeting

If it's not a dumb question, when you're the only shareholder how do you have a shareholder's meeting? Do you just say that you had the meeting, or do you actually need to create minutes of a meeting with yourself at an allotted time etc. as if it was a proper meeting?

[DaveB]

If it's not a dumb question, when you're the only shareholder how do you have a shareholder's meeting? Do you just say that you had the meeting, or do you actually need to create minutes of a meeting with yourself at an allotted time etc. as if it was a proper meeting?

There is an official format for doing it, your accountant should be able to give you the appropriate paper work to fill in. But basically, yes, you have to hold the meeting, record who was there, date, time etc and the fact that the dividend amounts were agreed and who they would be paid to.

[Spartacus]

If it's not a dumb question, when you're the only shareholder how do you have a shareholder's meeting? Do you just say that you had the meeting, or do you actually need to create minutes of a meeting with yourself at an allotted time etc. as if it was a proper meeting?

It doesn't matter how many shareholders there are, you still need to make an entry in the company minute book. Whether the meeting actually takes place or not doesn't matter, as long as it is documented that it did.

[boredsenseless]

It doesn't matter how many shareholders there are, you still need to make an entry in the company minute book. Whether the meeting actually takes place or not doesn't matter, as long as it is documented that it did.

Officially at a directors meeting where motions such as dividends are declared the secretary should also be present I believe but I may be wrong

[XLMonkey]

Officially at a directors meeting where motions such as dividends are declared the secretary should also be present I believe but I may be wrong

You are correct, for it to be a shareholders meeting the secretary must be present (and sign to say so, that's why the title is "secretary"). I had my last shareholder's meeting in bed. It was more fun than the office and the company secretary made a number of interesting points....