Dividend query .. delayed release of funds

[kooringa1@ukf.net]

My company has repaid the start up loan to myself and I will now need to take funds out by taking dividends.

I have been told that I must be careful to make sure that I only take from the company's profit - having worked out income less costs.

I am unsure what do in this instance .. I have had a significant amount of funds released from Paypal. It has been held on reserve with them for sometime, having been built up over the last 3 years. Am I able to take this money out of the company .. even though it doesn't relate to this years income?

[Incredulum]

You are allowed to take out realised profits since incorporation.

e.g. Set up company with £100 share capital.

Year 1 make £250 profit. At end of year 1 you could make a distribution of up to £250.

Year 2 make £150 loss. If you made a distribution after year 1 then no distribution possible as the company has no retained profits. If you didn't make a distribution at the end of year 1 then your total retained profits are 250-150=100 and maximum dividend therefore 100.

Year 3 make £500 profit. If

(a) you have never made a distribution then total retained profits available to be paid out are £600.
(a) you made a distribtion after year 1 then retained profits since amount to 500-150= £350.
(b) you just made a distribution after year 2 of £100 then retained profits since amount to £500.

Which ever way you do it, total dividends paid after 3 years are maximum of £600.

[kooringa1@ukf.net]

Thanks. So .. provided the company has made sufficient profits since start up 3 years ago, we are ok to take out any surplus as a dividend?

[Incredulum]

You are allowed to take out realised profits since incorporation.