Is it alright to pay salary and dividends to the same bank account?
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Dividends and salary - to the same bank account
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Originally posted by Goggy View PostIs it alright to pay salary and dividends to the same bank account?
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. -
Originally posted by Goggy View PostIs it alright to pay salary and dividends to the same bank account?Comment
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Originally posted by Goggy View PostIs it alright to pay salary and dividends to the same bank account?'CUK forum personality of 2011 - Winner - Yes really!!!!Comment
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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.Comment
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Originally posted by dty View PostIt would be interesting to know what the driver behind this question is.
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.Comment
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Originally posted by Clare@InTouch View PostYes, 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.Comment
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Originally posted by Maslins View PostThis. 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.Comment
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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.Comment
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