This article describes how to explain a dividend payment that has been paid out of your business bank account to a shareholder.
Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you will need to explain it using the appropriate ‘Type’ and ‘Category’ as detailed below.
Please note that you need to have level 6 access or above to your FreeAgent account to explain bank transactions. The shareholder who will be receiving the dividend payment will also need to be added as a user in FreeAgent. The options listed below will only be available if your FreeAgent account is listed as a limited company.
If the dividend has been declared but hasn't been paid out of your bank account yet, you will need to post a dividend journal set in FreeAgent instead of following the steps below.
Explaining the money paid out of your bank account
Navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.
Choose the relevant bank account from the list.
Select the transaction that you would like to explain.
Select ‘Money Paid to User’ from the transaction ‘Type’ drop-down menu.
Please note that this option will only be available for business bank accounts. You won’t see this option if the bank account has been marked as personal or for a user who has been allocated the role of ‘Accountant’.
Select the relevant shareholder from the ‘Payment to’ drop-down menu.
Select ‘Dividend’ from the ‘Category’ drop-down menu.
Select ‘Explain Transaction’ to complete the process.
If the dividend payment is for more than one shareholder, you will need to split the bank transaction to allocate the appropriate dividend amount to each shareholder.
If you have more than one transaction that you need to explain as a dividend payment to the same shareholder, tick the checkboxes to the left of the relevant transactions and select ‘Money Paid to User’ from the ‘Type’ drop-down menu in the panel on the right-hand side.
Select the relevant shareholder from the ‘Payment to’ drop-down menu, select ‘Dividend’ from the ‘Category’ drop-down menu and select ‘Explain [X] transactions’ to explain all the selected transactions in the same way. Remember to include an appropriate description for the selected transactions. If you leave the ‘description’ field blank, the transactions will be given the original descriptions that came through for them via the bank feed import or bank statement upload.
For more information on explaining multiple transactions at once, please see this article.
How to view a record of the dividend payment
Navigate to the ‘My Money’ tab at the top of the screen and select ‘Dividends’ from the drop-down menu.
Select the relevant user and time period using the drop-down menus. You can select the dividend to view the dividend voucher and board minutes.
A record of the bank transaction(s) being explained will also appear in your Audit Trail report.