To find the retained profits figure you need to find the following figures:
Brought forward retained earnings
If we have never submitted your accounts to Companies House, ignore this step and go onto step two (e.g. its your first year trading).
Open up your prior year limited company accounts (these will be in your Iris Openspace account if we did them)
Scroll to the balance sheet
- Take the Retained earnings figure from the most recent column
Current year profit before tax
Open up Quickbooks and make sure the bank feed has updated and all the transactions have been reconciled on the banking tab
- Go to Reports – Profit and Loss – Select “This Year/This Financial Year” in the “Report Period” and “Run Report”
- Take the net income figure – this is your profit before tax for the year
- Add back the client entertainment figure e.g. if you net income figure is £1,000 and this is after deducting client entertainment of £500 then your adjusted net income is £1,500
Estimate your current year profit after tax
Take the current year profit before tax calculated in point 2 above and multiply by the corporation tax rate of 19%
- Subtract this figure from your current year profit before tax figure and this gives you the current year profit after tax
Note – this is estimated as if you have purchases of capital equipment this can impact it- check with your accountant if you have significant capital purchases)
Dividends already taken this year
Open up Quickbooks and go to Reports – Balance Sheet – Select “Today” and “Run Report
Click on the dividends figure (under Capital and Reserves) and change the “Report period” to “This Year/This Financial Year”
This will give you the dividends figure already taken this year
Calculate the remaining retained profits available for distribution
Take the figure from 1. Add the figure from 3. Subtract the figure from 4. This is the figure you can take as a dividend.