Dividends are payments to the company’s shareholders out of the company’s profits.
To record dividends in your Tally account you need to first create a transaction type (nominal code) that’s set as a Capital Reserves code To do that, go to Settings > Advanced Settings > Enable Configure Nominal Codes > Click Update. After that, go to Bank > Transaction Types > Add a new code named 'Dividends'. Click on the code to edit it, you should see a number of options for the code type. Set this to Capital Reserves and click Update.
Recording a Dividends Payment
To record a dividends payment go to Bank > View/Add Transactions > Add New Transaction.
- Date – this needs to be the date the money left the company bank account to pay the dividends
- Comment – use this record a note about the transaction, i.e. 'Quarter 2 Shareholder Dividends'
- Type – select your new Dividends code
- In/Out – as it's money thats left your account this should be out
- Amount – the amount that you have paid out
- VAT Rate – this should be N/A
- VAT Amount – this should be 0.00
When ready, click the Add Transaction button.
The transaction will now show in the correct place on your Balance Sheet Report.