Pay Yourself

Taking a dividend

Dividends are payments made to company shareholders from the profits of the company (after Corporation Tax). They can be the the most tax efficient way to take profits from your limited company. Learn more about 2017-18 dividend thresholds. Important: The available dividend shown in your Crun...

Why does the maximum dividend available not match my bank balance?

For information on tax efficient dividends, please see here. In our experience, by far the most common reason for a mismatch between the Maximum Dividend Available and your bank balance is the fact that your Crunch Account is not up to date. Perhaps you have not recorded all of your Invoices and Ex...

Dividend scenario 1

Difference between invoices raised and paid Dividends are calculated from your Net Profit. Your Net Profit is calculated based on Invoices Raised not Client Payments actually received. This is standard Accounting practice (called the Accruals concept). You may have raised an invoice for £1000 o...

Dividend scenario 2

Withdrawing money without recording a dividend Let’s say our Maximum Dividend Available is £3000. You withdraw £3000 from your Company bank account but do not record a Dividend in Crunch. Crunch will still display the Maximum Dividend Available as £3000, even though your bank balance is now low...

Dividend scenario 3

Purchase of an asset This is a very common reason for the Maximum Dividend amount not matching your bank balance. If you have any assets this can cause a dramatic difference between the dividend amount available and your bank balance. Dividends are based on your company’s profits after tax. Ex...

Dividend scenario 4

Multiple bank accounts This may seem very obvious indeed but is worth mentioning. Let’s say you have done £10,000 worth of work and receive payment for this. You decide to split this money and put it in two separate bank accounts. The Crunch system will calculate your dividend as £10,000 but th...

Dividend scenario 5

Deposits by the director Let’s say a Director deposits £1000 of his own money into the company bank account. This money is then used to pay for the company’s expenses. The Maximum Dividend available will reduce by £1000 because of the expenses that have been recorded. However, the bank balance ...

Dividend scenario 6

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 furt...

Dividend scenario 7

Expenses paid by director personally Let’s say you record a company expenses of office rent at £2000. You decide to pay for this out of your personal funds and the money comes out of your personal bank account. Because Dividend amounts are calculated based on expenses recorded (not whether or ...

Dividend scenario 8

Unpaid Corporation Tax When you raise Invoices and record Expenses Crunch will automatically calculate your Net Profit. Crunch will then calculate the amount of Corporation Tax you owe and deduct this from your Net Profit. This may result in a Dividend that is lower than your bank balance becau...

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