Fancy some visual assistance?
Watch our handy tutorial video for Issuing & Paying Dividends in Crunch.
Dividends are payments made to company shareholders from the profits of the company after corporation tax (profit after tax). Dividends are the most tax-efficient way to take your income after you’ve exceeded the National Insurance threshold.
This article will help you know how much you could take as a dividend.
If your company has shareholders who are non-directors in the company, such as your partner for instance, then any dividends they take need to be recorded slightly differently to if they were taking a director’s withdrawal and completely separate from your own. Even if you’re married and are both shareholders, you can’t record the dividends you take separately as one.
Navigate to the 'Pay Yourself' tab and select the 'Dividends' sub-tab and select the 'New Dividend' button:
On the “New Dividend” form, start by entering the date of your dividend. Crunch will automatically calculate the ‘maximum dividend available’ on that date, based on income, expenses, corporation tax, etc. as shown below:
Next, enter the amount of dividend you wish to take. The “Dividend breakdown” form will appear underneath displaying the dividend amount for each shareholder, based on the number of shares held on the date chosen.
For example: If you wanted to pay yourself £2,500 in dividends, but have a 50/50 split on shareholding, you’d actually need to issue £5,000 in total and Crunch will split this according to the number of shares held at that specific date.
You may have also noticed on the image above that we’ve highlighted the ‘create withdrawal’ box as it’s been made unavailable to select for the shareholder, however, it remains available for the director. The reason for this is simply because you cannot record a shareholder dividend payment as a director withdrawal, because they’re not a director.
To record a dividend payment to a shareholder, once you’ve saved and issued the dividend(s) you’ll need to make sure you’re back on the ‘Pay Yourself > Dividends’ tab.
From here, select the blue figure underneath the ‘Shareholder details’ column and select ‘Options’ on the particular shareholder you wish to record the transaction for, and choose 'Record/Edit dividend payment to Shareholder’ from the drop-down menu:
From here, you’ll then be asked to specify how this was paid to the shareholder.
For example, ‘transfer out of company account’ will reflect that money has been paid directly from the business bank to the shareholder.
Using the same ‘Options’ menu will present you with the ability to download it as a .PDF document and/or email the dividend voucher directly to the shareholder(s).
Need some more help on ‘Director Withdrawals’?
Please see here for assistance with this.
Do you have a negative ‘Director Loan Account’ balance?
This can, more often than not, be caused by director withdrawals being recorded without the correct dividends issued with them. However, with “non-director shareholders”, due to the way that dividends are recorded differently, there’s a small chance that you may be recording those withdrawals against your name by mistake. If this is the case, please see here for guidance and give us a call to get it back on track.