Hi - is this an incorporated company?

Yes it is. It is a subcontracting company, my husband and I are the only 2 in the company.

Ok thks - if it was a partnership or a proprietorship then Dividends do not apply.

The amount of dividends must be declared first by lawyer as requested by your accountant before paying it out and that would be related to the last fiscal year end.

If this has been done and since both of you are shareholders then both of you must be paid as per percentage of each shareholders.

You should have an account in the 3000 nbr located after the retained earnings acct nbr called Dividends Paid. To pay the dividends then record as a Journal entry for each shareholder crediting bank and debiting the Dividends paid acct nbr. The source would be your chq nbr and the comment would be "your name - to pay dividends" Then  have a look at your balance sheet to ensure that the Total retained earnings is still in the credit balance (will show as a positive number on the balance sheet).

Hi brooks101

In your post you state your company is Incorporated. I assume articles of incorporation were filed and both you and your husband have shares in your company.

When booking/recording the entry to pay your husband dividends there are 2 different accounts you may choose from.

1. Shareholders Withdrawal which could be a liability account.. Create an account in the 2000 series called that and use that account for record in Purchases to your husband as a vendor for the amounts you pay to him. I am assuming you are going to print the cheque or handwrite the cheque.

2. Dividends which would be an equity account is your other choice. Create an account in the 3000 series called Dividends and use that account to record the payment in Purchase to your husband as a vendor.

Either account is acceptable to use. The most important thing is each time you do pay him Dividends use the same account each time.

Hope this helps.

Jo Anne

When I set up a corporation in 2005 (Job interview would only consider incorporated consultants, so I did a quickie incorp -- didn't get the job and corp was dismantled by the province two years later) my lawyer had both my late wife and I put a bit of money in, and gave each of us our own class of shares.  He said that this was necessary if I wanted to direct dividends to a particular person.

I never used the corp and never issued dividends.

You say you want to give your husband a dividend.  I believe that dividends must be issued according to the number of shares held by each person.  If both of you have the same number of shares, you would both get the same dividend.  If you want to give dividends to just the husband, you may need to sell him some class B shares first -- and that only works if the corporation lawyer set up multiple classes.

Note that I'm a fresh-out-of-college guy -- I am neither a lawyer nor accredited accountant.  Take my advice for what you paid for it.