How to take dividends
I see too many directors helping themselves to company cash and calling it ‘dividends’. But every payment out of the business should be accompanied by some sort of paperwork (or digital equivalent). For dividends you will need:
- Review of management accounts and forecast to demonstrate that their will be sufficient funds left in the business to cover future debts (HMRC are particularly keep on this!) otherwise the dividends are illegal
- Sufficient post-tax profit to cover the dividends (another reason they may be illegal)
- A minute of the board meeting voting for the dividend
- A tax voucher for each shareholder.
We have templates for the last two and we can advise you on whether your bookkeeping is good enough for the first. Hint: if it’s not up to date then it can’t possibly be adequate.