Payment from Retained Earnings?

[genjokoan]

Hi Folks,
thought I'd find this easily but perhaps I'm missing something obvious.

My limited has some retained earnings from previous years. Now I'd like to take that money out of the business. Is this just like a dividend? That would make sense to me as I guess it's already been taxed and is the residual left from previous profits less dividends.

Thanks,
GK

[Clare@InTouch]

It can either be a dividend, a payment of salary or a loan. If you're literally just wanting to make a payment of profits to the shareholders then yes, it would be a dividend.

Make sure you prepare the necessary paperwork (dividend voucher and declaration) and pay in accordance to the shares held by each shareholder.

If you're paying now, also consider whether it may be better from a tax point of view to wait until the new tax year (starting 06/04/2014).

[Craig at Nixon Williams]

It would be a dividend.

Your company will have paid corporation tax on the profits before distributed, however there may be further tax to pay on the dividend if you are a higher rate tax payer.

Hope this helps!
Craig

[TheFaQQer]

It would be a dividend.

Assuming that the OP is a shareholder and pays the money out according to the shareholding percentages. Failing that, it could be a loan or a salary payment.

[Martin at NixonWilliams]

Hi Folks,
thought I'd find this easily but perhaps I'm missing something obvious.

My limited has some retained earnings from previous years. Now I'd like to take that money out of the business. Is this just like a dividend? That would make sense to me as I guess it's already been taxed and is the residual left from previous profits less dividends.

Thanks,
GK

That's correct.

Make sure you consider whether higher rate tax will be due on the dividends. Note that the new tax year begins this Sunday and so you may wish to consider the timing of the dividend with this in mind.

I hope this helps.

Martin

[genjokoan]

Thanks!

Awesome thanks everyone!