1) You must ensure that the company has sufficient reserves out of which to pay the
relevant dividend.

This means you need some financial information as back up to support the dividend
calculation. HM Revenue & Customs will expect this if they review your records.

The best back up would be a Company Profit and loss account however if it not possible to prepare such an Account then we would recommend that you at least prepare some kind of financial workings to justify the company having sufficient reserves to pay the dividends.

2) You need to draw up minutes of a Board Meeting to declare the dividend, after due
consideration of the businesses financial state.

3) A dividend warrant should be issued to each shareholder showing the amount of
dividend per share, the tax credit, and the net dividend.