Dividends and Directors Loan Account

Hi Paul,

When the dividend is created the system will create a journal that will

Cr (shareholder’s name) dividends and Dr Dividends.

How are you currently paying for these dividends?

Hi John How am I paying? I make a payment out of my business account to my personal account and then when explaining on import, I explain it as payment from my DLA - so the last time for example the transaction was: Cr -3500.00 Sterling GBP Account Dr 3500.00 PB Director Loan

If I look on a trial balance report I can see: A001 dividends (8505002) £21000.00 in credit column and also Dividends (9501001) £21000.00 in debit column So the dividend is being created and coded to an account.

The problem I have (or at least I think it's a problem!!) is my DLA account is showing a balance of £21000.00 (give or take a few other bits).

So as a non-accountant I read this as Clearbooks is telling me I owe the company £21000 via my DLA, but at the same time the company owes me £21000 in dividends. Shouldn't the 2 net each out to zero?

John - I seem to remember an issue on set up with my own details (sorry can't remember what) - thinking it through - is the problem that the A001 dividends (where the dividends are coded to) is somehow not linked to me?

If I look at the list of account codes for dividends there is: dividends 8505001 A001 dividends 8505002 (my wife's name) A002 dividends 8505003 (but note I haven't issued any dividends to her)

as well as Dividends 9501001

Many thanks John - worked perfectly. I have run a transactions report for the dividend account after doing the journals and the account is now back to a closing balance of zero, and the DLA reflects the journals as well.

As many of your customers (like me) will be small business owners who pay themselves dividends, wouldn't it be an idea to have an option when creating the dividend to do the above work immediately so the system links the dividend to the DLA? ie the step 2 in my original post above? I have "survived" for over 6 months in the world of Clearbooks without having to create a journal until now - the system seems to guide you and do it for you behind the scenes - seems odd that getting dividends out of the dividend account has no other option but to use the journal.

Clearbooks has helped me and my business massively in these last 6 months and thanks to all the team for the work, and the prompt responses to issues posted on these forums.

No problem Paul,

The dividend process was a bit simpler in the past, however change to this came about due to an accountant request. I think we were causing a headache for accountants at year end when dealing with dividends with our original process.

The current process does need a bit of refinement to make things a bit easier to understand - it's something that has been raised with our development team already, so hopefully they will be updating this in future.

Hi Paul

Just to add to the above, there's no need for journals if you just "pay" off the dividend using the DLA "bank" account (Manage money).

I and most of my clients use this method to pay off dividends, expense claims and salaries, ie to get everything owed to the director into one bin (the DLA) others, like to leave them sitting in the various places and make standard bank payments directly to them.