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How do I enter dividends I take from the company
I take bi-weekly withdrawals from my company account. My previous bookkeeper tracked them as shareholder loans I believe (I was told we don't use dividends anymore?). How do I enter these withdrawals into Quickbooks desktop (Canada)? I'm looking to match up the withdrawals in my bank feed.
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Hello bojopr,
You would create an equity account in your Chart of Accounts called Dividends Paid. Every time you allocate the transaction you would choose this account. This would also be an Out of Scope tax item as th default tax setting.
Let me know if you need step by step instructions to set up the account.
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If you are influxing money into the business it would be a negative. Equity accounts have a natural credit position. If it’s a contra account it has a natural debit position. This should help you figure out whether the negative is correct.
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Yes, it does; this is either Equity Out for your entity type or Expense for your entity type.
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I have just looked at the options from my QBO when creating a new Chart of Account item.
The type of account is Equity. The detail could either be Partner Distributions or Owner's Equity.
To answer [mention://6980737 [mention://6980737 @andy.hall]]'s question about the figure being a negative, that is correct. A draw or dividend is considered a contra account to Equity meaning it's natural position on the balance sheet is a Debit instead of a Credit.
Let me know if you have any other questions.
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No, you would use the Write Cheques function to yourself and select the Dividends Paid account under the Expense tab on the bottom section of the cheque.
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@Andy.hall - I don't understand what you are trying to accomplish: A Dividend is usually paid only at the end of your fiscal year - once you know how much Profit your business realized. Some businesses, however, pay dividends at regular intervals based on the assumption that the business will generate X amount of profit in that fiscal year. If you are taking money out of your business by paying yourself a Dividend, The transaction to use would be Write Cheques>payable to yourself>account: either Dividends Paid or Owners Withdrawals - Equity type. The transaction would reduce both your Bank account and your Equity account.
If your intent is to increase the value (Equity) of your business and you are moving funds from your own personal bank account to your business, the transaction to use is: Bank Deposit>Received From: yourself>From Account: Owners Contributions(Equity type)>complete the rest of the details as required. This transaction increases the business bank account as well as the Equity account.
If by current account you mean the Business bank account, a JE to move funds to an Equity account is incorrect. A positive balance in the Bank account IS equity and reducing your bank balance will not increase the value of your business.
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I hope this helps!