Calculating Director Payments

As discussed in previous articles Tempo would advise a director to adopt a sensible "director payment policy".  This would generally involve a payment from the company for salary (after tax) plus a reimbursement of expenses owed.  This payment would be once a month

Then, ideally, no more often than once every 3 months a larger "dividend" payment should be made.

Assuming your Tempo records are up to date you can use reports in Tempo to help you decide on the exact figures for payment.

Monthly Salary and Expenses

The balance of the "directors account", if checked once per month (following payroll usually on the 25th) will indicate how much money the company owes the director by way of expenses and salary.  From the Menu in Tempo click "Directors Account" (under Company Directors) and select your name from the list.  Scroll down until you see the current "balance".  If this is a positive amount then (funds permitting) you can make a director's payment of this amount to bring the balance back to zero.

If this figure is negative this means that more has already been taken than is covered by salary, expenses and declared dividend.   A new dividend may need to be declared to cover the negative balance.  This figure ideally does not go over 5K in the negative at any point.

Dividends

It's advisable to consult with your accountant (Tempo) before taking funds for a dividend.  We will check the following:

• Your personal higher rate tax position
• Your company's tax savings
• Your company's "available profits" for distribution as a dividend.

A dividend can only be declared if the all of the above check out accordingly.   Tempo will then add a dividend record to your account and the director will then see that a large amount is now available for withdrawal in the "directors account".

Recording Director Payments

If your bank account is not linked to Tempo we will not know if you've made a directors' payment or not.  Please record any director payments made via the link on the dashboard if your bank account is not "linked".

If the account is linked then you will be able to easily code these payments as a "payment to director" once the transaction comes into Tempo.  A red link on the dashboard will prompt this.