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Dividends out of retained earnings?

PsychePsyche Well-KnownRegistered Posts: 187
Hi there,
I have a client who had a profit in his first year of business (YE 31/10/10). For the first quarter of 2011 he had a loss. However he took a £2500 dividend. Is this ok, since he has the retained earnings to cover the dividend, or does he have to post a profit in the relevant quarter?
Thanks!

Comments

  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Dividend from retained earnings is fine (once you deduct the loss to date from those retained earnings).
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