Paying Dividends

[dagenheis]

Hi,
I wanted to confirm my understanding of the dividend payment process as its my first time.

- Paying dividend after about 3.25 months
- Just did a spreadsheet to work out the outstanding liability such as VAT and other expenses including salary for Aug. For example, i have now 100 quid to pay as dividend.
- Now I leave corp tax (20 quid) into the account and pay 80 pounds to shareholders (0.80 per share)
- Prepare Minutes and issue Divi vouchers to shareholders (Not sure If I should ask accountant to prepare them first time)
- Make the payments to shareholders. and pass the details to accountant next month so that he can update his books.

Is there anything my accountant or I should do to make sure that I am following the right process?

Also, I am hoping that it's ok from HMRC standpoint if I don't keep enough amount in the business account to cover the salary for the remaining year? I am just leaving corp tax, VAT and a bit more for small expenses. I still have a contract so I should be able to build some revenue again.


Cheers

[northernladuk]

Hi,
I wanted to confirm my understanding of the dividend payment process as its my first time.

- Paying dividend after about 3.25 months
- Just did a spreadsheet to work out the outstanding liability such as VAT and other expenses including salary for Aug. For example, i have now 100 quid to pay as dividend.
- Now I leave corp tax (20 quid) into the account and pay 80 pounds to shareholders (0.80 per share)
- Prepare Minutes and issue Divi vouchers to shareholders (Not sure If I should ask accountant to prepare them first time)
- Make the payments to shareholders. and pass the details to accountant next month so that he can update his books.

Is there anything my accountant or I should do to make sure that I am following the right process?
Also, I am hoping that it's ok from HMRC standpoint if I don't keep enough amount in the business account to cover the salary for the remaining year? I am just leaving corp tax, VAT and a bit more for small expenses. I still have a contract so I should be able to build some revenue again.


Cheers

Yes, he should be advising you on your question and making sure you are doing it right. The theory is you should trust him a little more than a board of random strangers.

[Wanderer]

- Prepare Minutes and issue Divi vouchers to shareholders (Not sure If I should ask accountant to prepare them first time)

Yeah, you are pretty much correct on this. I presume you also understand about higher rate tax, dividends split between shareholders and your contract is reviewed to be outside IR35.

Ask your accountant to do the minutes and divi vouchers for the first time. The amount of dividend with it's gross and net values and tax credit is a bit goofy so you don't want to get it wrong.

SJD do a spreadsheet (free registration required) which is good for tracking this sort of stuff if you don't have something already.

[dagenheis]

The theory is to trust the accountant as he should be an expert but make sure that I understand on a functional level how different processes work through direct or indirect sources such as this forum.

Cheers Wanderer, I understand the other bits your mentioned.

[psychocandy]

My accountant does all this for me. All the paperwork.

He tells me how much profit is available, I tell him how much of this I want to declare as dividend, he does paperwork, I pay it out.