Small Business Accounting

What are dividends and why are they important?

By

Chris Andreou

Contents

A dividend is a payment of profit that a limited company distributes to its shareholders. This is the money remaining after all business expenses and liabilities, as well as outstanding taxes (including VAT and Corporation Tax) have been paid off.

Dividends are important as they are a tax-efficient way to pay yourself from your limited company. Other than drawing dividends as income, you may also consider paying dividends into a pension fund, ISA or to family members.

<p>A <a href="https://www.goforma.com/tax/what-are-dividends" target="_blank">dividend</a> is a payment of profit that a limited company distributes to its shareholders. This is the money remaining after all business expenses and liabilities, as well as outstanding taxes (including VAT and Corporation Tax) have been paid off.<br></p><p>Dividends are important as they are a tax-efficient way to pay yourself from your limited company. Other than drawing dividends as income, you may also consider paying dividends into a pension fund, ISA or to family members.<br></p>

Business accountant available for free consultation

Get a free accounting consultation

We'll walk through everything you need for starting or switching.

Read More Small Business Accounting guides below: