Declaring/Paying/Taking a dividend

[bazzawatson]

Hi all. Just enquirer about the process to do this here. I have read up a bit about the Gross/Net dividend, board meeting minutes, dividend voucher etc. Also about illegal dividends. I have received first payment from client.

So my question is, once I have determined that the dividend is 'legal' (i.e. coming from profits after any VAT/Corporation tax liabilities etc), what is the procedure of actually effecting the payment? Can I just transfer the net dividend amount from business account to personal account and deal with the paperwork with my accountant in the coming days? Or should the paperwork etc all be in order and completed first?

I am reluctant to just transfer any money from business account to personal account but is this reluctance unnecessary if I am aware of the main potential liabilities from the companies perspective?

[TykeMerc]

As long as you have the appropriate shareholders meeting with minutes, declare the dividend from retained profits and issue the right voucher then you just transfer the cash.

I know the theory and could probably do it myself in a few minutes, but tbh I just get my accountants to do it from verified figures, it's part of their service.

Personally I only pay dividends quite infrequently as I don't like it to look like Salary payments, that's just me being cautious and I pay myself a salary too, this year it will be £10,600 if memory serves.

[bazzawatson]

Thanks Tyke. Yes I think I am going on same salary £10,600. But was hoping to get some sterling out of the company as have very little myself yet. When you say you don't want it to look like a salary what features makes a payment look like salary? Is it frequency/amount? At the end of the day it is money/'income' going from company to personal. I would be hoping to take a dividend now and probably not again for 2/3 months, does that sound ok?

[TykeMerc]

Thanks Tyke. Yes I think I am going on same salary £10,600. But was hoping to get some sterling out of the company as have very little myself yet. When you say you don't want it to look like a salary what features makes a payment look like salary? Is it frequency/amount? At the end of the day it is money/'income' going from company to personal. I would be hoping to take a dividend now and probably not again for 2/3 months, does that sound ok?

It's entirely up to you of course, your business, your company.

Frequency mostly. Quarterly, annual, half yearly look (yes it's purely subjective) like a business action, monthly looks like a salary. I agree it's a level of paranoia and being risk averse, from my personal perspective I prefer my dividends to look very different from salary.

[SueEllen]

It's paying exactly the same amount on the same interval.

[PerfectStorm]

It's paying exactly the same amount on the same interval.

Surely no one does that, there are different numbers of working days in each month

[Project Monkey]

Surely no one does that, there are different numbers of working days in each month

I thought everyone did exactly that. I usually take the same amount at the same intervals up to the upper tax threshold and then decide if I want to take more at the end of the year.

Some years there are regular payments only, other years have additional 'ad-hoc' dividends.

[TheCyclingProgrammer]

I make regular payments but if you have enough retained profit there's certainly some benefit to taking the whole years worth of basic rate band in a one off dividend at the start of the year, as you can then stash that money somewhere more useful than your business bank account (e.g. mortgage offset account).