Solved

How do I enter dividends I take from the company

Forum|Forum|7 years ago
March 12, 2019
4 replies
44 views

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.

QuickBooks Desktop

Best answer by

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.

A

Anonymous

Answer

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.

B

bojoprAuthor

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

N

NEVER

Level 1

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.

D

Diane18

I'm reading through this thread because I wanted to make sure that our QB Desktop was set up properly in 2013. After reading through here, I found out that the Dividends Payable account was set up as an Other Liability - not an Equity account. That explains why every time I get the adjusting entries back from the accountant, there's an entry moving the dividends to Retained Earnings which is an Equity account. Is it possible to change the Dividends Payable account from an Other Liability and make it an Equity account? Or will that screw up all those years of entries? How can I correct this going forward or should I just leave it as is?

L

LauraAB

Level 8

Hello Diane18,

Happy Wednesday! I hope things have gone well for you so far this week, and I'm glad this thread has helped clarify why your accountant has been making the changes they have in your books. I can appreciate now wanting to change the type of account your dividends are allocated to so that your accountant doesn't need to make these kinds of corrections, and I can help shed some light on this.

I've just done some testing and see that from a QuickBooks Desktop perspective, you can change the type of account from an other liability account to an equity account, even if you already have transactions in it. For the transactions, everything should still be the same since you're simply changing the type of account.

Before you do that, though, I strongly recommend speaking with your accountant since they've already been reallocating funds to another equity account. It may be best to even simply begin using the equity account your accountant has set up or been using moving forward, but they'll be able to best advise you so that you avoid any negative impacts to your books. Having that discussion is key in this case, so don't hesitate to reach out to them to go over this.

I hope this helps! Have a great rest of your day.

N

NEVER

Level 1

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.

N

NEVER

Level 1

@Andy11.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.

E

erikyuzwa

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?

Sign up

Login with SSO

Let's get you signed in

Login with SSO

Scanning file for viruses.

This file cannot be downloaded