Dividend

What is Dividend on Akaunting?

Dividend is the primary way for company owners to withdraw profits from their business or pay themselves. This is different from taking a regular salary.

• Tax Efficiency: Dividends are usually more tax-efficient than salary as they are subject to dividend tax rates rather than income tax and National Insurance contributions.
• Flexibility: You have more control over when and how much you take as dividends, as there are no set pay periods like with a salary. This can be useful for managing your personal finances and tax liabilities.
• Retained Earnings Requirement: Sufficient retained earnings (profits left in the business after previous dividends and taxes) are necessary before paying dividends to avoid potential legal issues.

Adding Dividend on Akaunting:

• Click Double Entry from the Dashboard
• Then select Chart of Accounts

• On the Chart of Accounts page, Click New Chart of Account
• Enter Name: Dividends.
• Enter the Code: 3201
• Select type: Equity
• Select Parent Account: Retained Earnings
• Write a description. E.g., Dividend payment

• Then, Click Save.

The Chart of Accounts page adds Dividend as a Retained Earnings sub-account.

Note: You need to upgrade to the Premium or higher plan to access the Double Entry feature.

Paying Dividend

• Click Banking on the Side panel Menu
• Select Transactions
• Click New Expense

• Enter the Date, Select Cash Method, and Account.
• Enter the Amount intended for the Dividend.
• Write a Description
• Select Dividend in the Chart of Account dropdown menu
• Add a New Category: Dividend
• Select associating Vendor, Project, or Tax.
• Then, Save.

A Dividend Transaction is created.

See the Dividend payout on the Balance Sheet

• Click Reports on the Side Panel Menu
• Click Balance Sheet
• Then, Scroll to the Equity Section to see the Dividend Payment record.
• Click on Dividend to see all Dividend payment records.