Dividends

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Sevren
Sevren Registered Posts: 101 Dedicated contributor 🦉
in General accounting discussion
Hi all,

This another back to basics moment but I am having difficulty in getting a definitive answer in an area which is not a strong point.

If a Ltd company trades for 3 years and makes a loss evey year (to a total of say £20K) but then makes a profit in the 4th year of say £10K - are the directors able to take this as a dividend or does the retained profits accounts need to be in surplus before a dividend can be taken ??

Many thanks

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  • peugeot
    peugeot Registered Posts: 624 Epic contributor 🐘
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    No they are not entitled to a dividend as they still have brought forward negative reserves.

    Kind regards
    Steve
  • Sevren
    Sevren Registered Posts: 101 Dedicated contributor 🦉
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    Many thanks Steve - that was my understanding but had a confidence wobble.

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