How do I enter dividends I take from the company

bojopr · ‎March 11, 2019

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.

Anonymous · ‎March 11, 2019

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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Anonymous · ‎March 11, 2019

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.

bojopr · ‎March 11, 2019

Great! So, there is already a Dividends Paid account set-up. So, to enter dividends I take, do I create a bill?

andy-hall · ‎March 11, 2019

Hi, can you advise what "Detail Type" should be used for the Equity account? Thanks

andy-hall · ‎March 11, 2019

Also sorry, after putting a journal entry to move £2000 from my current account to the Equity account, my current account looks correct, and the Equity account is showing negative £2000. Is that expected?

Anonymous · ‎March 11, 2019

The detail type would depend on what the equity is for. If it’s a draw you would pick Owner’s Draw. If a corporation you may want Dividends. You may want to check with the accountant.

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.

qbteachmt · ‎March 11, 2019

You don't use JE for banking; you use Banking tools for Banking.

Anonymous · ‎March 11, 2019

Yes I agree with qbteachmt. I didn’t address this as I got distracted by the set up. You would use the expense or cheque function & allocate the dividends in the account section. Journal entries should not be used unless it is an adjustment.

erikyuzwa · ‎March 11, 2019

I'm not an accountant by trade, so I don't know which detail type to choose for this in April 2018. Under the Equity account type, I'm looking through the Detail Type picklist and there's no mention of "Dividend" or "Owner's Draw" -- I'm just looking for a "Shareholder Loan" classification. Any ideas?

Vitan · ‎March 11, 2019

What's the difference Owner's Draw or Owner's Dividence?

kjacanada · ‎March 11, 2019

Did anybody figure this out? The Detail Type doesn't have anything even remotely close to a dividend.. I had to choose "payroll expense" lol..

qbteachmt · ‎March 11, 2019

"The Detail Type doesn't have anything even remotely close to a dividend"
Yes, it does; this is either Equity Out for your entity type or Expense for your entity type.

kjacanada · ‎March 11, 2019

Hmm there doesn't seem to be an "Equity Out" or "Expense" under the "detail type" drop down.. Are you perhaps referring to "Account Type"?

user0971311 · ‎March 11, 2019

Why can quick books not track something as simple and common as a dividend payment to owner for a small business corporation? None of the help docs match the options available under Equity accounts.

Luke_A7 · ‎March 11, 2019

did you find an answer to this? i have a ltd company and want to know how to input this info

tania_franolic · ‎March 11, 2019

Hi everyone,

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.

tania_franolic · ‎March 11, 2019

[mention://13721888 [mention://13721888 @erikyuzwa]] a Shareholder Loan is under Long Term Liabilities for Type and Shareholder Note Payable under Detail.

tania_franolic · ‎March 11, 2019

[mention://2045052 [mention://2045052 @Vitan]] an Owner's Draw is usually used as taking personal funds out of the company as a sole proprietor (counts towards their salary). A Dividend paid can be to the owner or other stakeholder when paid from a corporation. There are different tax implications because of the nature of the business.

impossible · ‎March 11, 2019

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.

bojopr · ‎March 11, 2019

Thank you :)

impossible · ‎March 11, 2019

Luke: You would create an Equity type account in your COA called Dividends Paid. Then, each time you take a Dividend, use the Write Checks function; Payee is you; select the Dividends Paid account under the Expense tab of the check and enter the amount. Nothing else to do. If you regularly draw dididends, consider Memorizing the check.

impossible · ‎March 11, 2019

@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.

erikyuzwa · ‎March 11, 2019

Do these "Equity" Detail Types keep changing? I don't see anything using the term "Dividends" or "Owners Withdrawl" now in April 2018. Any ideas? I'm not an accountant by trade, so I need exact terms or I'm lost. If this has been re-classified, what is it now?

impossible · ‎March 11, 2019

@erikyuzwa, I can't see what you are loking at. There is no such thing as Equity Detail Type list in my QB Desktop 2018 Canadian Edition. You should start your own thread where you can select your version of QB and ask a question specific to your own situation.

Anonymous · ‎March 11, 2019

@ericyuzwa a Shareholder Loan isn’t an equity, it’s a current liability. It would be a debt that the shareholder would have to pay back to the company. A dividend is like a personal use that affects the balance sheet & value of the company. It would be taxable income taken out of the company for personal use.

I hope this helps!

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How do I enter dividends I take from the company