When a Limited Company makes profit it pays the profit out to its owners by Dividends - which are paid out in proportion to the shares held by the shareholders. Someone with 100 shares will be paid 100 times more dividends than someone with 1 share. Dividends can be paid out monthly or weekly, it doesn’t have to happen once or twice a year. As long as the Directors are satisfied that there is enough profit, they can decide on the Dividends to be paid out, and should record a ‘Minute’. The Dividends should be recorded on the Shareholders’ Tax Returns and Income Tax paid if it is due.
Find out more at www.ams-accountancy.co.uk