What Are Dividends?

As a business owner, one of the benefits of owning a Limited Company is the ability to issue dividends. What are dividends? Dividends are payments made to shareholders from a company’s profits. Today, we will discuss what dividends are, how they work, and how to take them from your company.

What Are Dividends?

Dividends are payments made by a Limited Company to its shareholders. They are typically paid in cash, but can also be paid in stocks or other assets. Dividends are a way for Limited Companies to share their profits with their shareholders, and can be a source of income for shareholders.

How Do Dividends Work?

Dividends are paid out of a company’s profits, which are the amount left over after all expenses and taxes are paid. A company’s board of directors decides if and how much to pay in dividends, and can choose to pay dividends in a lump sum or on a regular schedule. Dividends can be paid to all shareholders, or only to certain classes of shareholders.

How to Take Dividends from Your Company

To take dividends from your company, you must first ensure that your company has profits available for distribution. You can do this by reviewing your company’s financial statements and working with your accountant or financial adviser. 

Once you have determined that there are profits available for distribution, you can take dividends by following these steps:

  • Hold a board of directors meeting to approve the payment of dividends.
  • Decide on the amount and timing of the dividends.
  • Notify shareholders of the payment of dividends.
  • Issue dividend payments to shareholders.


It is important to note that there are tax implications to taking dividends, and it is recommended to consult with a tax professional before taking dividends from your company.

In conclusion, dividends are payments made to shareholders from a company’s profits. They are a way for Limited Companies to share their profits with their shareholders, and can be a source of income for shareholders. To take dividends from your company, you must ensure that your company has profits available for distribution and follow the proper procedures for issuing dividends. It is recommended to consult with a tax professional before taking dividends to ensure compliance with tax regulations.

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