Quickbooks and Dividends

LynWest

Hi everyone. I was wondering if anyone could help me, I have just this week taken on a new client and she has been doing her accounts on QB's and has paid herself a dividend but doesn't know how to process it. She has asked for my advice. I have only ever had clients that are sole traders on quickbooks so i haven't come across the dividend issue before. Can anyone please let me know the entries she should do on QB's please? Many thanks x

Monsoon

Payment from Bank to an Equity account called Dividends. You may have to set it up as a new account.

LynWest

Many thanks Monsoon

LynWest

My client has just got back to me to say that she doesn't think that she has actually paid the dividend to herself, so wouldn't she just cr her directors loan account and dr the dividend account and then when she does pay it, dr the directors loan account and credit the bank account? Would somebody please confirm whether i am right or not?
I have said to my client that if she has problems understanding quickbooks(and she has a very small income from her business as she will be doing the day to inputting, i am just going to do final accounts) that i would be happy to set up some excel spreadsheets which would capture the info that she needs but keep everything straight forward and easy for her to go back to find out information. But she says that she would see this as a step backwards :S! I am confused because surely a simple system that is captures the right information is much better than a system that you enter things incorrectly. Can anyone please recommend a simple cost effective bookkeeping package? Many many thanks

Monsoon

If the dividend was declared but not paid then it's Cr DLA DR Divs.

Excel is a step backwards, for sure!! More room for error and more hassle to create a set of books, especially for a Ltd Co.

Is she having trouble with QB or are you just being cautious?

LynWest

Thank you!

I suppose it is a bit of both, she said that she has used QB's for years for her husbands self employment, but she is now a company which is very new to her. But thought she has lots of experience so was happy. I went to see her Monday as she wanted some help and i had to show her how to get her balance sheet and profit & loss account off QB's and i have had since then had a few queries on how to process things ( the dividend question being one of them) I think you are right though and there is a BIG CAUTIOUS part of me as i am fairly new to working on my own! I guess she could just be using me as a sounding board to confirm she is processing it right, like i have with this dividend question with you!! *big breath have confidence in my own abilities and that of my client and stop panicking** Thanks for listening to my nervous waffling! Have a good weekend

Monsoon

That sounds just fine to me Lyn

If she can use QB, then she can use it, she just needs to learn the differences in keeping books for the Ltd.

Remember, QB has a bank rec, a TB at a click of a button, sales and purchase ledgers. Excel has none of that (and if you're going to build a spreadsheet that complex, you may as well use an accounting package). Trust me, the time you both put in now getting it right will pay dividends (haw haw) at year end when you have to produce the accounts. Better she picks your brains now and gets it right than muddle through and you have to fix a mess at year end. ;-)

Have a good weekend too, and carry on asking questions!

Sounds like you are doing fine

LynWest

Thanks Monsoon you've put my mind at ease!