Good morning, i am slowly getting up to speed with Solar Accounts but have a couple more questions please.
Firstly, what is the best way to record dividends paid to shareholders?
secondly, how would i account for depreciation? For example, almost a year ago i bought a new printer for the company (
Keep the questions coming - it helps us improve Solar Accounts! For example I'm beginning to feel we need a help page on dividends. It's also nice hear that you appreciate our product!
The simplest way to record a dividend is to create a new General Transactions (click menu File > New > General Transaction), then set the >From Account to 'Cheque Account' (or wherever the money comes from) to the 'Retained Earnings' account.
To record depreciation, create another General Transaction, this time from the Computer Equipment account (or whatever asset account keeps track of your printer) to the 'Depreciation and Loss on Sale' expense account.
Regards,
Mark,
Many thanks for the info but so I understand what I am trying to do and why can I just clarify some points please:
Hi Alan,
To answer your questions:
Here's another example of equity: Say Jane starts a business with
Mark,
Apologies but I must be having a
Hi Alan,
Perhaps a better way of thinking about it is this: Equity represents the amount of money put into the business by the owners plus the accumulated profit of the company. Because you are taking profit out of the company you need to reduce your Equity balance - you do this by transferring money into Retained Earnings (it may sound strange that paying money into an account reduces its balance, but this is what happens with a loan such as a Mastercard account).
It's OK to have a negative Retained Earnings balance as long as the total Equity balance is positive. Also note that the dividend payments should not be more than your accumulated net profit after tax. You can see your net profit in the Profit and Loss report.
Note that paying dividends also requires formal paperwork - click here for details. You will also have to pay personal income tax on the dividends - see here.
I hope that makes a little more sense!
Mark,
Many thanks for the clarification. Please don
Hi Alan,
Yes it's a good to have Solar Accounts produce the dividend paperwork - we'll add that to our 'list of things to do'.
When you buy online you won't automatically receive an invoice, but I can manually produce one for you - please let me know your purchase code.
Mark,
Whilst I was trying out some of the other software packages, I came across a capability that I think could be a good addition to Solar Accounts. During set up, it asked if I was using the Flat Rate VAT Scheme and the rate and also the date when the 1% reduction ended. I assume then that the software would automatically account for the end in the first year reduction. Personally I think this is a good function since it means that it takes away the responsibility of the business having to remember to go in reset the VAT Flat percentage when the 15 reduction ends.
Just a thought.
That's a good suggestion about the 1% flat rate reduction - we'll add it to the 'to do' list.
Could I make another suggestion please, well it
I'm afraid you cannot change the default email message - that's another item for the 'To Do' list!
Hi,
I would like to ask a question regarding the depreciation of assets. Normally, the transaction involves debiting an expense account which is depreciation expense and crediting accumulated depreciation. However, on solar, the way I see how it records the transaction is it reduces the book value of the asset straight away thereby not keeping track of the historical value of the asset with the total depreciation recorded. Would it be possible to set up this transaction procedure in solar?
Many thanks and regards,
Aris
Hi Aris,
Yes, if you prefer you can create two asset accounts such as:
1. Motor Vehicles at Cost
2. Motor Vehicles Accumulated Depreciation
Then to record the depreciation create a General Transaction from the 'Motor Vehicles Accumulated Depreciation' account to the 'Depreciation and Loss on Sale' account.
Regards,