Dividend Declared

[ishfaqsangra]

My company accounts for 2 years were in loss(over 26,000) but the third year although Company is still in loss but my accountant declared dividend of £13000(which has reduced overall loss for 3 years to around £13000(£26000-13000(dividend)....

I am going to reinvest before my application(March17)
How much should I reinvest, Please guide.
Total Director Wages: 14000( from payrol since October13 till today)
10,000(first 2 years Oct13-Oct15)when company for those years was in loss.
4000 in third year(Oct15-Oct16) where Company generated profit for this particular year.
Additionally,13000 Dividend declared(yet not withdrawn)

Can I please get an advise how much should I reinvest to avoid Using investment
Directors Loan total:52000(mentioned in accounts)

My Understanding is: The Salary taken in third year is not from investment(as Company generated profit for third year. Dividend declared also reflects third year profit.

Also from accountants point of view,is it mandatory to get the dividend once declared?

Regards;

[nasiaziz]

how much was the opening loss in the 3rd year and then how much was the profit for the year you can check it in the reconciliation of reserves section under profit and loss account.

[ishfaqsangra]

how much was the opening loss in the 3rd year and then how much was the profit for the year you can check it in the reconciliation of reserves section under profit and loss account.

Opening Loss in the third year:£26449
Profit: 13771
Dividend:: 13500

This is what is under Reserves(profit and loss account)

Thanks Nasia

[nasiaziz]

ur company stilll at the end of the 3rd year is -26178..

[nasiaziz]

if he has declared dividends in your accounts that means you have already taken them within the year you dont have to take it again.

[ishfaqsangra]

I did not understand that bit.
Loss for 2 years was 26349
Third year cash flows and net profit is 13771
I did not take anything (other than 4000 being on the payrole)
How can the dividend already taken?
Accountant advised that you can take this out although it will reduce overall loss of the company from 26349 to around 13000 snd for next year let's say profit is 20000 then the tax will be on 7000.
I m clear on that.
If I take 3rd years profit as dividend do I need to pay this back from Home office point of view.
I undetstand PAYE remeunaration should be reinvested.

[ishfaqsangra]

Can someone please input further

[ishfaqsangra]

Let me make it clear for myself.

Should dividend be reinvested or only Directors wages.
Accountant said only wages as dividend is from third years profit and ignore brought forward losses for now.

[ishfaqsangra]

No more comments so I am assuming that:

Director wages in total since the incorporation of the company till the application date which is:£14011, I am going to reinvest as DL so total DL will be £64011(£52 is already given)

The dividend which I took , (third year only when company is in profit and dividend is less than the profit)I am not going to reinvest and I am also not in a position to invest.
Still £9000 to pay in application fee(including HS) for myself and 4 dependents.

Anybody with any comments please.

I searched forum and read 5 to 6 threads about this topic and that's what I understood

[sgdxb]

Hi Isfaq,

Your accountant may have declare dividend for covering your 50K DL account, however you can issue dividend only if there is surplus. You should not declare dividend as your company's P&L account is still in loss. If you have invested 50K once, try to maintain that 50K and pay back any salary or expenses you claimed out of 50K.

[kaps84]

As far as my knowledge goes, director's salary is not accounted towards investment.
Neither the dividend staying back in the companies account is the investment by director's loan to company.

The only way is to take the money out into your personal account and than invest back into the company as director's loan.

[live4pride]

agree with this.. Please confirm this with your accountant.. !!

Hi Isfaq,

Your accountant may have declare dividend for covering your 50K DL account, however you can issue dividend only if there is surplus. You should not declare dividend as your company's P&L account is still in loss. If you have invested 50K once, try to maintain that 50K and pay back any salary or expenses you claimed out of 50K.

[ishfaqsangra]

Yes
No dividend.
The accounts were submitted but now amended ....
Nothing withdrawn.
Thanks for valuable suggestions everyone.