Paying dividends to shareholders

Dividends are a tax efficient means of withdrawing profit from a business. A dividend is a payment made by a company to its shareholders and are paid out of company profits, which the company has already paid or is due to pay Corporation Tax on. Using Provestor helps ensure you make informed decisions about dividend payments.

Important note on dividends

Before processing any dividends it’s important that your records are up to date, particularly personally incurred expenses and your bookkeeping. If your records are not complete then the LiveCash calculations will not be accurate and profit / cash available figures may be overstated.

Documenting a dividend

Director’s are required to hold a meeting and produce minutes documenting the decision to pay a dividend. With Provestor a set of minutes will be generated when you create a dividend - all you need to do is ensure all directors have agreed the decision.

In order for a dividend to be classed as legal, dividend vouchers must also be produced and retained. Again, when you create a dividend, vouchers are generated for you automatically and stored in Provestor for your records.

Creating a dividend

To create a dividend select Withdrawals in the menu then click Dividends. Select the Issue dividend button.

You'll see two figures – Profit available and Cash available.

  1. Profit available – this is the amount of profit that is technically available to be paid out as a dividend. This figure is based on your company’s profit and loss figures for the current year. You should never draw more than this figure as a dividend.

  2. Cash available – this is based on the LiveCash view of your companies finances and shows how much cash you actually have available to pay a dividend.

You can enter a figure in the Amount to pay box – the dividend will be split between shareholders according to the number of shares they hold.

Paying dividends

You can now make the payment to the shareholders – you will find a pending payment in the Bookkeeping area for each shareholder’s payment.