What to do if you’ve lost your UTR number
Whether you're someone who likes to file your annual self-as...
By Lynne Gowers on 24th June 2014
By now we have established that a contractor that operates through a limited company may be both the sole director and the only shareholder for that organisation.
Even though you are only person involved in the company, you must still ensure that dividends are paid out in the correct manner and part of this process involves filling out the official paperwork.
Paying a dividend isn’t just a case of depositing the money into the stakeholder’s account and then filling out an invoice. You must follow the steps set out by HM Revenue and Customs (HMRC) in order to ensure that the paperwork has been filled out correctly.
Every Time you make a dividend payment from your company to a shareholder, you must must create a dividend voucher. This piece of documentation must contain the following information in order for it to be recognised as evidence of the tax credit by HMRC:
– The limited company name and date of the payment
– The name of the shareholder (which, in this case, is likely to be you)
– The full amount of the dividend being paid out
– The dividend tax credit that you received for the amount.
Dividend meeting minutes
For every dividend payment you must hold a board meeting between the company’s shareholders and directors. This still needs to be done even if you occupy both titles and are the only person involved in the transaction. Of course, in this case the meeting is mainly just the recording of the actual payment.
The purpose of this is to ‘declare’ the dividend, just as it would if you were a company paying out a portion of its profits to a shareholder.
Like the voucher, there are some pieces of information that should be included as a part of the meeting minutes:
– Place of meeting
– The date it took place
– Those present
– What was agreed in the meeting. For example, the payment of the dividend and the closing of the meeting.
At the end of the document you should also include your signature, name in print and the date. In a case where someone else is present then you should alter the meeting minutes accordingly to accommodate for them.
Other things to consider
Once you have made the payment, recorded the minutes and provided your shareholder (which is likely to be you) with the dividend voucher, you can then ask your accountant to integrate this into your corporate accounts.
Although dividend paperwork is relatively straight forward, there is a reason for it. It stands as a record of the transaction should you ever need to prove it to HMRC.
Things you should remember when paying dividends:
– When calculating your Corporation Tax, dividends cannot be claimed as a business cost.
– You can pay a shareholder by dividend at any time as long as your company has made enough profit to justify this.
Our accountancy application is specially designed to make managing your contractor finances as easy as possible, including helping you with Dividends. For more information, contact us today.
Take a look at our recent blogs below.
If you have made the decision to set up and run a limited company, one of your priorities should be ...
Published: 11th December 2018
Over the holiday period, we are closed on the Bank Holidays and the office will close slightly early...
Published: 10th December 2018
We want to warn all of our clients and readers about a sharp rise in the number of phone scammers pr...
Published: 6th December 2018
HMRC are dogged in their efforts to recoup unpaid tax through schemes that they view as tax avoidanc...
Published: 8th November 2018
Operating as a sole trader does exactly what it says on the tin – you are running your busines...
Published: 1st November 2018
Yesterday, Chancellor Philip Hammond delivered his Budget to the House of Commons, promising an end ...
Published: 30th October 2018
The director of an engineering company based in Aberdeenshire has been banned for seven years from r...
Published: 26th October 2018
Making Tax Digital, aka MTD, is HMRC’s project to modernise and digitise the tax system by 202...
Published: 22nd October 2018
October’s here and the Summer’s heatwave is fast becoming a distant memory. As well as a distinc...
Published: 4th October 2018
Registering for VAT (value added tax) allows your business to claim the VAT back on VAT rated busine...
Published: 28th September 2018
50,000 people, including nurses and teachers, are facing life-changing tax bills going back over 20 ...
Published: 21st September 2018
If you need a little help to find the right accountancy service, don’t worry.
Thousands of contractors, freelancers and locums turn to Boox for help and advice with their limited company accounting. They love our personal service and app.
Specialist accounting for sole traders and the self employed, Boox combines easy online tools with expert support to take away the stress of handling your accounts.
Our combination of market-leading accounting software and expert personal advice gives you greater financial control and more time to grow your business.