A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders. I know how important it is to have the option to record this in QuickBooks Online. I'll help point you in the right direction for help with this.
Many people use Retained Earnings or Liability accounts to record journal entries relating to dividends. This is specific to your accounting methods, and it's best to run this by your accountant to get the best possible advice. They're the best equipped to help you figure out how to record this to get the desired outcome.
If you're not already working with an accountant, this would be a great time to connect with one in your area. Here's where to find one: Find an accountant. These ProAdvisors specialize in QuickBooks and they'll get you back on track to record your dividends.
Based on their advice, I'm happy to walk you through how to complete the setup of the particular transaction type/account setup.
You can also reach out to our tech support team after consulting with your accountant for further assistance.
Making sure your tax information is generated the right way is important for correct tax submissions to the government. Allow me to explain more about the workaround for your dividends and filing taxes.
Tracking and entering dividends is a feature that's currently unavailable in QuickBooks Online. Entering it as retained earnings as a journal entry is a great idea for a workaround to keep track of it in your books. QuickBooks Online doesn't generate T5 forms at this time, even if you enter the data as a journal entry. You can still create your T5 form manually outside of QuickBooks Online and file it.
Our developers are always looking to hear feedback about what businesses are looking for. If you want to have dividends and the ability to create T5 forms in QuickBooks Online, you can submit ideas online by going to the Gear icon>Feedback.
Have a great day!
That's the textbook way of doing it:
DR: Dividends Declared
Then after year-end
DR: Retained Earnings
CR: Dividends Declared
In my experience, however, any journal entry to retained earnings in QBO is like rolling a snowball down a mountain - it turns into a huge problem. This is why I avoid touching retained earnings at all costs. The problem however, is that I don't see any other way to keep the Dividends Declared account specific to the current year (rather than tracking all dividends ever issued). I'd like to hear from Intuit on the matter.
Thanks for joining us here. I see you've reached out on another Community post for advice and you can review the response here. In addition, here's a helpful article provided on the CRA website to report the amounts on your return. If you require additional assistance, I recommend speaking with your accountant. If you don't have one, we can help you locate a ProAdvisor in your local area.
Please don't hesitate to reach back out with other questions. We'd be happy to help!
Thanks for joining us here. It's important that you're able to reconcile your account seamlessly in QuickBooks Online. In addition to the information provided throughout this thread, I suggest speaking with your accountant for the best course of action for the dividend. If you don't have an accountant, we can help you locate a ProAdvisor in your local area.
Please feel free to reach back out if you have other questions. We'd be glad to assist!
I'm not an accountant just a small business owner (ltd company) but this is what I did. This is using Quickbooks online and I wanted to record monies I took out that weren't PAYE salary but a dividend on account type payment that at the end of the year the accountant could handle correct. So I created a new account of type EQUITY and detail type of ACCUMULATED ADJUSTMENT with the name DIVIDENDS TAKEN. Set the VAT Code to No VAT. This will appear on the Balance Sheet as it isn't related to profit/loss.
I number my accounts to I can get them to appear in the order I want so it appears just under Share Capital and Retained Earnings. The when you take money your entry comes out (credits) the bank and shows in the Dividends Taken as a debit.
There is no VAT involved so has no bearing on the VAT Return - one disclaimer is that I use accrual accounting i.e. vat is calculated on invoice date not cash in/out basis, but I'm pretty sure that is irrelevant in this situation.
Hope that helps.