What expense category are dividends?
See how Ramp automates accounting for 25k+ businesses
There is no definitive answer to this question, as it depends on the accounting method used by the business owner or finance team. However, some common expense categories for dividends include:
Operating Expenses
Dividends can be considered an operating expense, as they are paid out of the company's profits. This is the most common way to categorize dividends, and is typically used by businesses that have a large number of shareholders.
Non-Operating Expenses
Another way to categorize dividends is as a non-operating expense. This is typically used by businesses that have a small number of shareholders, and is less common than the operating expense method. Dividends paid out as a non-operating expense are not deducted from the company's profits.
Other Expenses
There are a few other expense categories that dividends could fall into, depending on the business's accounting method. These include:
- Cost of goods sold
- Selling, general, and administrative expenses
- Research and development expenses
The best way to determine which expense category is correct for your business is to speak with your accountant or financial advisor. They will be able to help you choose the correct accounting method for your business, and ensure that your financial statements are accurate.
As we scale we need tools that are built to scale with us - we need to see expenses real time, we need to see duplicate spend. These types of insights are important to the health of our business.
SVP Finance & Strategy, Barry's
The information provided in this article does not constitute legal or financial advice and is for general informational purposes only. Please check with an attorney or financial advisor to obtain advice with respect to the content of this article.
Learn more about our Expense Management software.