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Paying a dividend back to the Company
I paid myself and my associate a nice little dividend a few months ago. I now find that i'm pushed into the 40% tax bracket and my accountant advises me that we can pay some of the dividend back into the company. Is there an 'explanation' for doing such a thing? I have selected a user payment into the directors loan account, but the accounting figures still show the original dividend, and I have no idea where the money I've just added is accounted for.
I’m wondering if my Accounting calculation is blown
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Inappropriate?Simon,
You should reclassify the original dividend as a 'Payment from Director's Loan Account' - which is what you're offsetting by explaining the payment back.1 Comment
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This solves the problem
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Its a neat "accountant"-type solution, but it leaves the dividend as zero on the final accounts, and I can't print out a dividend certificate, so its not really what I was looking for. -
Inappropriate?Simon, perhaps you could do this:
1) Change the amount of the original dividend in FreeAgent to the amount you've kept.
2) Explain the remainder as Payment from Director's Loan Account using the same date. The bank account should be balanced at this stage; you've essentially "split" the original dividend payment in two.
3) Explain the returned money as Payment to Director's Loan Account, this should balance the Director's Loan Account back to zero and you should be left with a dividend certificate of the correct amount.
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