Dividends and salary - to the same bank account

[Goggy]

Is it alright to pay salary and dividends to the same bank account?

[jamesbrown]

Is it alright to pay salary and dividends to the same bank account?

Er, yes.

I assume the underlying question is: "under water circumstances might a dividend be classed as salary?" The answer is, when they're illegal.

The only thing you need to worry about with dividends is that they're legal, i.e. paid from profit with appropriate paperwork. Timing or frequency is irrelevant.

[mudskipper]

Is it alright to pay salary and dividends to the same bank account?

Yes, that's fine. You do need to have separate business and personal accounts, but you knew that, didn't you?

[northernladuk]

Is it alright to pay salary and dividends to the same bank account?

**** me sideways :|

[dty]

It would be interesting to know what the driver behind this question is.

[Clare@InTouch]

Yes, just make sure they are distinct from salary. So don't just pay £5,000 a month into your current account and expect your accountant to split it into salary, expenses and dividends for you at year end. Do things properly and make a payment for salary each month, then pay dividends as and when, and keep a copy of the dividend vouchers on file. Pay expenses according to what you're owed.

[TheFaQQer]

It would be interesting to know what the driver behind this question is.

I've read people speculating that if there is a regular payment into a bank account as salary, and at the same time a regular payment going into the same bank account as a dividend, HMRC could try to argue that they were all salary.

As long as the dividends are legal, and there is the paperwork to back it all up, then there is no issue about making the payment into the same account. I also have a different reference on the payments from my business account to split salary and dividend.

[Maslins]

Yes, just make sure they are distinct from salary. So don't just pay £5,000 a month into your current account and expect your accountant to split it into salary, expenses and dividends for you at year end. Do things properly and make a payment for salary each month, then pay dividends as and when, and keep a copy of the dividend vouchers on file. Pay expenses according to what you're owed.

This. It's one of a few reasons whilst I love FreeAgent, I hate their "smart user payment" option. If looked into, it certainly doesn't give the impression the business owner is fully aware of what's going on, checking the figures, and drawing funds appropriately.

[Clare@InTouch]

This. It's one of a few reasons whilst I love FreeAgent, I hate their "smart user payment" option. If looked into, it certainly doesn't give the impression the business owner is fully aware of what's going on, checking the figures, and drawing funds appropriately.

I found that really odd in Freeagent, so glad it's not just me. I had a client who paid equal dividends, but because expenses and salary were unequal Freeagent had done some bizarre behind the scenes adjustment, seemingly without him being aware, that made the dividends uneven. Very odd, and resulted in the SA comp being totally wrong on Freeagent.

[dty]

FA just did something quite scary with my Smart User Payment. I made a payment which it allocated partly to expenses and partly to dividend. So far, so good. I printed the divi voucher, signed it and filed it. Then I noticed I'd missed some expenses from before the payment date. So I entered those expecting that they would just accrue on the expense account for payment next month, but no! FA adjusted the expenses/dividend split of my Smart User Payment without telling me or warning me! So suddenly my divi voucher was wrong! Good job I spotted that.