Our small business accountants in Melbourne explain dividends
A dividend is the distribution of a portion of a company’s earnings to a certain class within their shareholders, which is then decided by the board of directors.
Dividends can be issued as cash payments, shares of stock or other property. A dividend can be determined or quoted by the dollar amount that each share holds or in terms of a percent of the current market price, which is referred to as the dividend yield.
It is also important to note that dividends are not a company’s expense, rather it is a distribution of the corporations earnings. For a company to be able to pay its dividends to current shareholders, they must also be required to have credit balanced in their Retained Earnings while having sufficient cash available to meet current and future needs.
If you were thinking about letting the public invest into your company, it is important to have a strong accountant by your side.
Feel free to contact our small business accountants in Melbourne for all your accounting needs.