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How to record a dividend payment

This article explains how to record a dividend payment when it has been paid out of the company's bank account.

If the dividend has been declared but not yet paid, you will need to post a set of dividend journals in FreeAgent.

Explaining the payment 

Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

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Select the bank account that the dividend was paid from.

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On the bank account page, select the uploaded transaction or create a new transaction manually.

When you explain (or manually enter) the transaction, select ‘Money Paid to User’ as the ‘Type’. Please note that this type is only available for business bank accounts and will not be visible for personal accounts.

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Payments to more than one shareholder

If your company has more than one shareholder, you're likely to be paying dividends to more than one person at one time. Your bank may group these together as one transaction on your bank statement. In FreeAgent you can only record dividends paid to one user at a time, so in this situation you will need to split the transaction by changing the amount so that it reflects the dividend paid to one shareholder.

Choose the user to whom this dividend was paid. Please note that any shareholders who are receiving dividends need to be set up as shareholders, employees or directors in the Users area.

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Under ‘Reason’, choose ‘Dividend’.

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Create the new transaction.

View the recorded dividend payment 

Select ‘My Money’ at the top of the screen and choose ‘Dividends’ from the drop-down menu. You will see that FreeAgent has posted this dividend here.

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Select this dividend to see the dividend voucher and board minutes.

Remember that if you altered the amount of the payment because the company was paying more than one user's dividend at once, you'll now have an extra transaction to explain. You will need to repeat the above process  to explain the dividends paid to any other shareholders.

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