Dividend Calculator

Idea suggested by Phil Cockayne 8 years ago

It doesn't appear to be possible to change the period in the dividend calculator to a year to date - only full year. The calculator just automatically includes everything entered as at 'today's date'. But not all expenses will have been entered (since we do most bookkeeping on a monthly basis) and yet (since our clients enter their own sales) all sales have been recorded. Hence the profit and therefore the reserves are overstated. This is quite dangerous is it not? Since there is a danger of an illegal dividend. Has anyone else noticed this issue? I can't believe I am the first person to notice this issue?

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3 Replies

Hi Phil - this is a little chicken and egg in that, if there's any doubt over the profits available for dividend, it is incumbent on the directors to make sure that the books are up to date, ie that all income & expenses are entered or accrued.

If books are up to date then, unless you have entered transactions in advance, the profit shown on the calculator (for the current financial year) will represent the profit to date, I would also point out that dividends are declared/paid in respect of a financial year, not X months, which reminds directors that they should also consider what the likely profit will be for the year, and not just X months to date.

Finally, the calculator can only ever be a rough estimate of the profits available for dividend, in particular, the tax liability is based on 20% of this year's profit which may be significantly different to the actual liability. Similarly, unless last year's liability has been entered in the books, the calculator may significantly overstate profits available in the first 9 months of the new year.

8 years ago

Well, quite. That really does render the Dividend Calculator rather redundant then, doesn't it? Rather backs up my point . .

8 years ago

..as well as dangerous

8 years ago

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