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Level 2

Paying Monthly Dividends - Chart of accounts

We take a monthly dividends, however my accountant has set this up as an expense account. So therefore the figures in Quickbooks are showing incorrectly every month, along with it deducting it from our Corp Tax. This is obviously incorrect.  

 

How do you set up dividends which are paid monthly in Quickbooks without setting up as an expense account? A step by step guide would be much appreciated, along with how you transfer them each month (From what account to where etc.)

 

 

Solved
Best answer June 12, 2019

Accepted Solutions
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Level 3

Paying Monthly Dividends - Chart of accounts

Hi EvilDrPorkChop

As an accountant, I would set up an account as follows:

Chart of Accounts > New

Account type > Equity

Detail type > Retained Earnings

Name > Dividends

I would then create a bank rule to transfer the payment from the bank account to the dividend account.

This will take the dividend payments out of your P&L and onto your balance sheet, thus reflecting the correct profit and CT.

I'd also be questioning your accountant about there reasoning for setting it up as an expense.

Thanks

Sindy

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6 REPLIES 6
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Level 3

Paying Monthly Dividends - Chart of accounts

Hi EvilDrPorkChop

As an accountant, I would set up an account as follows:

Chart of Accounts > New

Account type > Equity

Detail type > Retained Earnings

Name > Dividends

I would then create a bank rule to transfer the payment from the bank account to the dividend account.

This will take the dividend payments out of your P&L and onto your balance sheet, thus reflecting the correct profit and CT.

I'd also be questioning your accountant about there reasoning for setting it up as an expense.

Thanks

Sindy

View solution in original post

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Level 2

Paying Monthly Dividends - Chart of accounts

That's great. 

 

I've gone ahead and changed the Expense account that was created by the accountant to that you have suggested. The figures now seem correct in P & L. 

 

However the Dividend account now shows a minus figure due to what we've withdrawn. Is this correct or should it be a positive figure. 

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Level 3

Paying Monthly Dividends - Chart of accounts

Hi EvilDrPorkChop

As this is the money you have withdrawn, it will be  a minus, as you are taking your share of the profits available out of the company and reducing retained earning.

Hope that makes sense

Sindy

 

 

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Level 2

Paying Monthly Dividends - Chart of accounts

Hi,

 

Desperately trying to find a way to correct record dividends in Quickbooks as well.

 

I've tried creating a new Equity account named 'Dividend', however, I'm getting the error message "There can be only one account of detail type Retained Earnings.".

As we stand, I am recording the dividend payment as Other Expenses, but this is interfering with the P/L.

 

I would be very grateful if you could help and expose the correct way to do it for the Quickbooks community, we all need it!

 

Many thanks for your contribution.

 

Kind regards

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QuickBooks Team

Paying Monthly Dividends - Chart of accounts

I appreciate the details a lot, @dsbooks.

 

Retained Earning in QBO is a default account used when running the report. You can use another category to an Equity account or Other Current Liability account to reflect it right on the Balance Sheet. I'd suggest asking for an accountant's advice on what category is best to use.

 

In addition, you can edit/change the name of the retained earning Detail Type name to Dividend. Please make sure that there are no other accounts affected when you decide to change it.

 

Let me show you how:

  1. Go to Accounting on the left pane and then select Chart of Accounts.
  2. Search for "Retained Earnings" or search the account name with the Detail Type Retained Earnings.
  3. Click the drop-down▼ button on the Action column.
  4. Select Edit and then rename the account as "Dividend".
  5. Hit Save and Close.

I've added article as your reference in running Balance Sheet reports: What is a Balance Sheet report?.

 

Also, I recommend this article as your reference on how to print and email reports in QBO: Run reports.

 

Please let me know if you have anything else to add. I'll keep my notifications open. Stay safe and healthy!

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Level 2

Paying Monthly Dividends - Chart of accounts

Ours is set up as an Equity account, then Partnership Distributions. 

 

Hope that helps.