Difference between expenses recorded and paid for
Dividends are calculated from your Net Profit. The Net Profit is reduced by Expenses Recorded, not Expenses actually paid for. For instance you might record a purchase of a filing cabinet for the office at £500. However, you don’t pay for a further month. Your Dividend will be lower than your bank balance by £500 until the money for the filing cabinet comes out of your bank account. In a similar way, if you pay for an expense using a company credit card there will be a sometimes significant delay between the expense being incurred and being paid.