Yu.A. Inozemtseva, expert on accounting and taxation

How to “spend” your net profit correctly

As is known, the net profit (NP) of a company is distributed by the owners. But whatever their decision, the accountant must reflect it in accounting and reporting. The catch is that in regulations accounting only talks about how to calculate profit clause 83 of the Regulations, approved. By Order of the Ministry of Finance dated July 29, 1998 No. 34n. During the year, it accumulates on the credit of account 99 “Profits and losses”, and when drawing up the annual financial statements sum net profit debited from account 99 to the credit of account 84 “Retained earnings”. The credit balance on account 84 is your retained earnings (RRP). But the accounting regulations say practically nothing about how to “spend” the profit; there is only a mention in the Chart of Accounts.

The procedure for distribution of private equity is established by the Laws on JSCs and LLCs subp. 11 clause 1 art. 48 of the Law of December 26, 1995 No. 208-FZ (hereinafter referred to as the Law on JSC); subp. 7 paragraph 2 art. 33 of the Law of 02/08/98 No. 14-FZ (hereinafter referred to as the LLC Law). At the same time, joint stock companies are obliged to send part of the emergency fund to the reserve fund, and LLCs can do this if they wish. pp. 1, 2 tbsp. 35 of the Law on JSC; clause 1 art. 30 of the LLC Law. Shareholders (participants) can distribute the remaining profit at their own discretion. So, subject to certain conditions, they can use profits to pay dividends in Articles 42, 43 of the Law on JSC; clause 1 art. 28, art. 29, paragraph 1, art. 30 of the LLC Law. And sometimes owners decide to use emergency funds to purchase new operating systems or pay bonuses to employees. But the Laws on JSC and LLC do not say how to reflect the distribution of NRP in accounting in these cases.

To understand this issue, let's first talk about what IUU fishing is from a reporting point of view.

What is capital and profit

Retained earnings are part of the organization’s capital; it is reflected in Section III “Capital and Reserves” of the balance sheet.

The standards establish rules only for the recognition of assets and liabilities, and capital is the arithmetic difference between them. There are no capital accounting rules in either RAS or IFRS.

In turn, profit is the difference between income and expenses and Clause 7 IAS 1 “Presentation of Financial Statements”.

As in the case of capital, the standards establish only the rules for accounting for income and expenses, and profit is a derivative value.

Accounting for income is regulated by a special standard PBU 9/99, and expenses - PBU 10/99. Moreover, the concepts of “income” and “expenses” are also defined using the categories “assets” and “liabilities”.

Thus, an organization’s income is an increase in its economic benefits as a result of the receipt of assets or the repayment of liabilities, with the exception of participant contributions to clause 2 PBU 9/99. As can be seen from the formula for calculating capital, as a result of the receipt of assets or the repayment of liabilities, capital increases.

An organization's expenses, on the contrary, are a decrease in its economic benefits as a result of the disposal of assets and (or) the occurrence of liabilities, with the exception of a decrease in contributions by decision of participants (owners of property) clause 2 PBU 10/99. As a result of the disposal of assets or the emergence of liabilities, the organization's capital decreases.

Of course it's only general definitions income and expenses, for their recognition it is necessary to comply with certain conditions established in PBU 9/99 and 10/99, but we will not consider them in this article.

Note that an increase or decrease in the economic benefits of an organization that occurs as a result of transactions with its owners (for example, payment of dividends) is not recognized as either income or expenses. True, this is directly stated only in IFRS, but in fact this rule also applies to RAS paragraph 109 IAS 1 “Presentation of financial statements”.

CONCLUSION

Capital, including NRP, is not the property of an organization, but abstract financial categories that represent the arithmetic difference between assets and liabilities (income and expenses).

We distribute profits

The question arises: if profit is not money, but an abstract indicator financial statements, then how can it be distributed or “spent” on something? Conventionally, we can say that profit is “spent” when its value in the balance sheet decreases. This occurs when paying dividends and creating reserve fund. Let's consider these and other options for profit distribution, as well as their impact on reporting indicators.

Dividends

The most common way to distribute profits is by paying dividends. As we have already said, the outflow of assets in connection with the payment of dividends is not recognized as an expense of the organization. Therefore, the accrual of dividends to participants relates directly to the reduction of NRP and the capital of the organization, reflected by the posting: debit of account 84 “Retained earnings (uncovered loss)” – credit of account 75 “Settlements with founders”.

To learn how to correctly calculate and pay dividends to LLC participants, read:

Dividends can be paid in money or property, but in any case, payment of dividends will lead to a decrease in the organization’s assets and clause 1 art. 42 of the Law on JSC. When paying in money, the posting will be as follows: debit of account 75 “Settlements with founders” – credit of account 51 “Current accounts”. And the payment of dividends with property (for example, goods) is reflected as a sale by postings:

• debit of account 76 “Settlements with various debtors and creditors” – credit of account 90-1 “Revenue” - revenue from the sale of goods transferred for the payment of dividends is recognized;
• debit of account 90-2 “Cost of sales” – credit of account 41 “Goods” - the cost of goods is written off;
• debit of account 75 “Settlements with founders” – credit of account 76 “Settlements with various debtors and creditors” - the debt to the participant for the payment of dividends is offset.

CONCLUSION

The distribution of profit on dividends leads to a decrease in capital (including line 1370 of the NRP) and assets.

Reserve fund

As we have already said, JSCs are required to create a reserve fund. Its size must be at least 5% authorized capital company, and the charter of the joint-stock company may determine a larger size of the background yes clause 1 art. 35 of the Law on JSC. If an LLC creates a reserve fund, then its size is determined solely by the charter clause 1 art. 30 of the LLC Law.

The reserve fund is created by posting: debit to account 84 “Retained earnings (uncovered loss)” – credit to account 82 “Reserve capital”. And it is reflected in the balance sheet on line 1360 in section III “Capital and reserves”.

Thus, from the point of view of financial reporting, the creation of a reserve fund leads to a redistribution of amounts within Section III of the balance sheet (part of the NRP is, as it were, “shifted” to another capital item). As a result of such redistribution, the structure of the organization's balance sheet improves. After all, only NRP can be distributed for dividends, and the reserve fund will remain in the capital theoretically forever. Since, despite what is written in the Laws on JSCs and LLCs, reserve capital cannot be spent. And in the balance sheet asset, the reserve fund corresponds to resources (property, money) secured own funds organization, which is certainly good.

From a financial (but not legal) point of view, the reserve fund can be compared to the authorized capital. It is no coincidence that in the Law on JSC, when we're talking about on the requirements for the structure of the balance sheet (for example, when deciding on the payment of dividends), the reserve fund is mentioned along with the authorized capital. For example, on the day the decision to pay dividends is made, net assets should not be less than the sum of the authorized and reserve capital and clause 1 art. 43 of the Law on JSC.

The reserve fund can be used to cover losses if the owners have made such a decision. On the date of its adoption, a posting is made: debit to account 82 “Reserve capital” – credit to account 84 “Retained earnings (uncovered loss)”. The decision by the owners to repay losses using reserve capital must be disclosed in the notes to the financial statements and clause 10 PBU 7/98. As you understand, as a result of using the reserve fund, as well as when creating it, the organization’s capital will not change. Covering losses with the reserve fund has a rather psychological effect - a “break-even” balance looks more attractive to investors.

In addition, according to the Law on joint stock companies The funds from the reserve fund can be used to pay off bonds and repurchase shares. However, in our opinion, this statement does not make sense. After all, paying off bonds (or buying back shares) means paying money to their holder. Consequently, only assets, and not a capital item, can be used to redeem and repurchase securities.

The issue of bonds is reflected in the same way as raising a loan, by posting to the debit of account 51 “Current accounts” and the credit of account 66 “Settlements for short-term loans and loans" clause 1 PBU 15/2008.

Accordingly, the redemption of bonds is reflected by the following posting: debit of account 66 “Settlements for short-term loans and borrowings” – credit of account 51 “Current accounts”. As a result, assets and liabilities on the balance sheet simultaneously decrease. This operation does not affect capital items. However, in the commentary to account 82 of the Instructions for using the Chart of Accounts it is stated that the repayment of bonds from the reserve fund is reflected by the posting: debit of account 82 “Reserve capital” - credit of account 66 “Settlements for short-term loans and borrowings”. However, we cannot agree with this. After all, as we have already said, the credit of account 66 reflects the issue of bonds, and not their repayment.

CONCLUSION

Creating a reserve fund at the expense of an emergency and using it to pay off losses leads to a redistribution of amounts within capital items. It is not possible to use the reserve fund for other purposes (for example, to pay off bonds).

Accumulation and consumption funds

Sometimes owners want to use NRP to purchase new operating systems, to pay bonuses to employees, or to charity. Usually in such cases they decide to create so-called accumulation and consumption funds.

The accountant needs to reflect the owners' decision in the accounting. But how to do this, because such funds are not mentioned either in the Laws on JSCs and LLCs, or in the current accounting regulations. Let’s say right away that there is no need to create any funds in accounting.

WE TELL THE PARTICIPANTS

Clean Profits can only be spent on dividends. There is no need to create consumption and accumulation funds from net profit, since real money, not profit, is still spent on acquiring assets.

The very concept of funds at the expense of profit came to us from Soviet accounting. For example, Soviet enterprises created production development funds, the funds of which were used to purchase new equipment. The Instructions to the 1985 Chart of Accounts state that the funds of such a fund intended for the purchase of equipment must be kept in a special account in the bank.

S. NIKITINA
Consulting group RUNA

According to the Chart of Accounts for accounting the financial and economic activities of organizations and instructions for its application, approved by Order of the Ministry of Finance of Russia dated October 31, 2000 No. 94n, the indicators “net profit” and “retained profit” are formed on different accounting accounts.

The net profit indicator is formed on balance sheet account 99 “Profits and losses” by the end of the reporting year and represents the final financial results activities of the organization for the reporting period.

The possibility of writing off any expenses at the expense of net profit, except for those determined by regulatory acts on accounting, is not provided. Thus, in addition to profit and loss from ordinary activities and other income and expenses, only expenses incurred by the organization due to emergency circumstances (natural disaster, fire, accident, flood, etc.) accrued can be reflected in the debit of account 99 tax payments on profit of organizations

, as well as the amount of tax penalties due.

The amount of net profit of the reporting year is written off with the final turnover of December by recording:

Debit 99 “Profits and losses”, Credit 84 “Retained earnings (uncovered loss)”.

Balance sheet account 84 is intended to summarize information about the presence and movement of the amount of retained earnings (uncovered loss).

In accordance with the letter of the Ministry of Finance of Russia dated August 23, 2002 No. 04-02-06/3/60, retained earnings from previous years represent the remainder of the profit remaining at the disposal of the organization based on the results of work for the last reporting year and decisions made on its use (direction into reserves formed in accordance with legislation or constituent documents, to cover losses, to pay dividends, etc.). Based on this, net profit is formed on the organization’s balance sheet only at the end of the current (reporting) year, i.e. We are talking about reflecting the organization’s operations in the accounting accounts for the current period.

Analytical accounting for account 84 should be organized in such a way as to ensure the generation of information on the areas of use of funds.

According to current legislation, the net profit of an organization can be used for contributions to reserve capital, for the payment of dividends, for the capitalization of the organization, as well as for other payments by decision of the shareholders (founders) of the organization.

Contributions to reserve capital

Joint-stock companies form reserve capital in the amount provided for by the company's charter, but not less than 5% of the authorized capital.

The reserve capital of the company is formed through mandatory annual contributions until it reaches the amount established by the charter of the company. The amount of annual contributions is provided for by the company's charter, but cannot be less than 5% of net profit until the amount established by the company's charter is reached.

Article 30 Federal Law dated 02/08/98 No. 14-FZ “On Limited Liability Companies” (hereinafter referred to as Law No. 14-FZ), a limited liability company is given the right to create a reserve fund and other funds in the manner and amounts provided for by the company’s charter. The procedure for using the reserve fund is determined by the supreme management body of the company.

In limited liability companies, the creation of a reserve fund, unlike joint stock companies, is voluntary. Thus, when approving the charter, the founders express in advance their consent to allocate part of the profit to the formation of reserve capital. No further decision is required in this regard. Therefore, we can conclude that directing profits to form a reserve fund is a mandatory procedure that does not require a decision from the owners.

According to the Chart of Accounts, contributions to reserve capital from profits are reflected in the credit of account 82 “Reserve capital” in correspondence with the debit of account 84.

Dividend payment

In accordance with paragraph 1 of Art. 43 of the Tax Code of the Russian Federation, a dividend is any income received by a shareholder (participant) from an organization when distributing profits remaining after taxation (including in the form of interest on preferred shares), By owned by the shareholder(participant) shares (shares) in proportion to the shares of shareholders (participants) in the authorized (share) capital of this organization.

According to paragraphs. 11 clause 1 art. 48 of Law No. 208-FZ (as amended on October 31, 2002, No. 134-FZ), the distribution of profits (including the payment (declaration) of dividends) falls within the competence of the general meeting of shareholders, and in accordance with clause 1 of Art. 47 of this Law, issues provided for in this subparagraph must be resolved at the annual meeting of shareholders, which is held within the time limits established by the company’s charter, but no earlier than two months and no later than six months after the end of the financial year.

A joint stock company has the right to make decisions not only on the payment of dividends based on the results of the financial year, but also on the payment of interim dividends based on the results of the first quarter, half of the year, nine months of the financial year (clause 1 of Article 42 of Law No. 208-FZ). Such a decision may be made within three months after the end of the relevant period.

Based on Art. 33 of Law No. 14-FZ, approval of annual reports and annual balance sheets, as well as making a decision on the distribution of the company’s net profit among the company’s participants falls within the competence of the general meeting of the company’s participants. According to Art. 28 of Law No. 14-FZ, a company has the right to make a decision quarterly, once every six months or once a year on the distribution of its net profit among the participants of the company. The decision to determine the part of the profit distributed among the company's participants is made by their general meeting, which must be held no earlier than two months and no later than four months after the end of the financial year (Article 34 of Law No. 14-FZ).

Thus, the legislation establishes strict deadlines for the distribution of net profit, including the accrual of dividends. The use of retained earnings to pay dividends is legal if the corresponding decision is made by the general meeting of shareholders (participants) within the time limits established by law.

Retained earnings from previous years cannot be used to pay dividends.

Considering that the source of payment of dividends is the company’s profit after tax (net profit), which is determined according to the financial statements, dividends in a joint-stock company can be accrued and paid only from the net profit of the joint-stock company for the reporting year. This point of view is reflected in the letter of the Ministry of Finance of Russia dated August 23, 2002 No. 04-02-06/3/60.

This procedure for distributing net profit amounts for the payment of dividends is confirmed by arbitration practice. In paragraph 15 of the section “Disputes related to the payment of dividends” of the resolution of the plenum of the Supreme arbitration court Russian Federation dated November 18, 2003, No. 19 “On some issues of application of the Federal Law “On Joint Stock Companies”, it is explained that the decision on the payment (declaration) of dividends, including the amount of the dividend and the form of its payment, is made by the general meeting of shareholders for shares of each category (type), including privileged ones, in accordance with the recommendations of the board of directors (supervisory board) of the company. In the absence of a decision to declare dividends, the company does not have the right to pay, and shareholders do not have the right to demand their payment.

Dividends, the decision on payment (declaration) of which was made by the general meeting of shareholders, are subject to payment within the period determined by the charter of the company or the decision of the general meeting of shareholders. If such a period is not defined by the charter, it should not exceed 60 days, including when it is established by a decision of the general meeting (clause 16 of the resolution of the plenum of the Supreme Arbitration Court of the Russian Federation dated November 18, 2003, No. 19).

The allocation of part of the profit of the reporting year to the payment of income to the founders (participants) of the joint-stock company based on the results of approval of the annual financial statements is reflected in the debit of account 84 and the credit of account 70 “Settlements with personnel for wages” or 75 “Settlements with founders”.

Despite the fact that according to the Chart of Accounts, when paying interim dividends, an entry is also provided for the debit of account 84 and the credit of accounts 75 and 70, in our opinion, such an entry is incorrect and should not be used this year.

According to the Tax Code of the Russian Federation, dividends are recognized as amounts of distributed profit, regardless of whether the profit is distributed at the end of the year or before its end. The only requirement is that it must be net profit, i.e. profit remaining after taxation.

However, as already indicated, after the decision was made by the general meeting of shareholders (founders) to approve annual reports and distribution of profits until the end current year The organization's account 84 reflects not net, but retained earnings, i.e. one that is not subject to distribution. And in accordance with paragraph 2 of Art. 42 of Law No. 208-FZ, the source of dividend payment is the company’s profit after taxation (the company’s net profit). Dividends on preferred shares of certain types can also be paid from special company funds previously formed for these purposes. The company's net profit is determined according to the company's financial statements and, until the end of the financial year, is reflected in the financial statements by comparing credit and debit turnover on account 99.

In our opinion, it is advisable to reflect the accrual of interim dividends during the year by writing: Debit 99, Credit 75. In the Profit and Loss Statement, accrued interim dividends should be reflected with a minus sign (in parentheses) after the line “Current income tax”.

Taking into account the requirement of prudence in maintaining accounting records, i.e. greater readiness to recognize expenses and liabilities in accounting than possible income and assets, avoiding the creation of hidden reserves (clause 7 of the accounting regulations “ Accounting policy organizations" (PBU 1/98), approved by order Ministry of Finance of Russia dated December 9, 1998 No. 60n), making a decision to pay dividends more frequently than once a year can lead to negative tax consequences

. For example, a situation is possible in which an organization that paid dividends based on the results of the first quarter of 2004 from the profit generated during this period may receive a loss based on the results of work for this year. Thus, only those organizations that have a stable financial position

and are confident of increasing profits by the end of the year. It should be taken into account that from January 1, 2005, the income of taxpayers - individuals and legal entities

from equity participation in the activities of organizations received in the form of dividends are taxed at a rate of 9%, and not 6%, as was previously the case.

For accounting purposes, funds transferred in connection with the implementation of charitable activities, sports events, recreation, cultural and educational events and other similar events in accordance with clause 12 of the accounting regulations “Organization expenses” (PBU 10/99), approved by order of the Ministry of Finance Russia dated May 6, 1999, No. 33n, are non-operating expenses and are reflected in the debit of account 91 “Other income and expenses.” However, such payments can also be made at the expense of retained earnings, since the decision on the use of retained earnings in a joint stock company or limited liability company is within the competence of the general meeting of shareholders (participants). Therefore, if the minutes of the general meeting of shareholders (participants) determine that some expenses should be made at the expense of profits, in accounting this expense should be reflected as a debit to account 84.

Thus, when closing (reforming) the balance sheet after making an appropriate decision, the shareholders (participants) of the company must reflect the direction of profit to reserve capital, for consumption needs and for the payment of dividends to the founders.

The distribution of profit to consumption and accumulation funds is reflected in internal entries in account 84, and in analytical accounting the used and unused parts of net profit are distinguished. Example.

At the end of 2003, the joint-stock company received a profit in the amount of 1,200,000 rubles. The General Meeting of Shareholders on March 25, 2004 approved the results of the company’s activities for 2003 and decided to pay dividends in the amount of 1,000,000 rubles. and about the direction of 200,000 rubles. to organize summer holidays for children.

These transactions were reflected in the accounting records as follows:

final entries December 2003:

Debit 99, Credit 84, subaccount “Retained earnings of the current year” - 1,200,000 rubles. - retained earnings are reflected;

Debit 84, subaccount “Retained earnings”, Credit 75, subaccount “Calculations for payment of income” - 1,000,000 rubles. - dividends accrued; Debit 84, subaccount “Retained earnings”, Credit 84, subaccount “Profit for use according to the approved estimate” - 200,000 rubles. - the amount of profit from 2003 was reserved for use in 2004 according to the approved estimate for organizing summer holidays for children.(other accounts, for example, materials accounting) reflected the expenditure of reserved amounts of profit on children's summer holidays. Thus, when it is actually used, there will be no balance on account 84, the subaccount “Profit for use according to the approved estimate.”

Similarly, the use of profits to pay bonuses to employees of the organization, provide financial assistance, to pay for cultural and sporting events, etc. The main condition is that the owners of the organization must decide to use the net profit for these purposes.

Retained earnings (uncovered loss) characterizes the net profit accumulated during the existence of the organization, remaining at its disposal (after paying dividends, creating a reserve fund, etc.). This part of the profit is no longer spent, and no further entries are made in the debit of account 84. Consequently, this part of the profit represents a source of financing capital investments industrial and non-productive purposes.

In analytical accounting, funds of retained earnings used as financial security development of the organization and other similar activities for the acquisition (creation) of new property, as well as those not yet used, may be divided.

In order to monitor the status and use of funds to finance capital investments for analytical accounting, it is recommended to open two sub-accounts on account 84: “Retained earnings generated”, “Retained earnings used”. The organization’s retained earnings are sent to the subaccount “Retained earnings generated” and the following entry is made:

Debit 99-9, Credit 84, subaccount “Retained earnings generated.”

As fixed assets are acquired and other capital investments are made, simultaneously with the entry in the debit of account 01 and the credit of account 08, an internal entry is applied:

Debit 84, subaccount “Retained earnings generated”, Credit 84, subaccount “Retained earnings used”.

If the balance of the subaccount “Retained earnings generated” becomes a debit, then this indicates that the organization allows the immobilization of its own and borrowed funds, i.e. uses working capital as a source of acquisition of fixed assets.

Thus, if a decision on the distribution of profit was made at the annual general meeting of shareholders (participants), which was held within the time limits established by law, the accounting records can reflect the corresponding use of profit in the debit of account 84.

Procedure for submitting financial statements

Approval of the annual financial statements falls within the competence of the annual general meeting of shareholders (the next general meeting of participants). Based on the results of the approval of the annual financial statements, the organization must reflect the distribution of profits in December records, including the payment of income to the founders (participants) by debiting account 84 in correspondence with account 75 or 70. Thus, in the annual balance sheet in the “Capital and Reserves” section, the indicator “Retained earnings (uncovered loss)” will not correspond to the amount of net profit received for the reporting year.

In paragraph 2 of Art. 15 of the Federal Law of November 21, 1996 No. 129-FZ “On Accounting” (with subsequent amendments and additions) establishes that annual financial statements must be presented in authorized bodies within 90 days after the end of the year. Thus, it turns out that the reporting must be approved by the general meeting no later than 90 days after the end of the year.

However, in accordance with paragraph 1 of Art. 47 of Law No. 208-FZ annual general meeting of shareholders is carried out within the time limits established by the company's charter, but no earlier than two months and no later than six months after the end of the financial year; The next general meeting of LLC participants is held in accordance with Art. 34 of Law No. 14-FZ no earlier than two months and no later than four months after the end of the financial year. Consequently, a situation is possible in which the financial statements are approved in compliance with the deadlines established by these Laws, and the presentation of the statements is in violation of the deadline provided for in paragraph 2 of Art. 15 of the Law “On Accounting”. At the same time, according to paragraph 2 of Art. 15 of this Law, the submitted annual financial statements must be approved in the manner established by the constituent documents of the organization.

Of course, it would be optimal to hold the general meeting before 90 days have passed after the end of the year. However, if the organization was still unable to approve the reports within this period, then it has the right to submit them without taking into account the consideration of the results of activities for the reporting year. This is precisely the position taken by the Ministry of Finance of Russia, by whose order dated December 31, 2004 No. 135n “On introducing amendments to the Instructions on the procedure for drawing up and presenting financial statements (order dated July 22, 2003 No. 67n)” clause 14 was excluded from the Instructions, where it was said about the presentation of reports taking into account the mandatory consideration of the organization’s activities for the reporting year.

Participants in a limited liability company have the right to a share of profits in such an organization. Unless otherwise provided by the charter of the LLC, the profit of the company is distributed among the participants in proportion to their shares in the authorized capital (clause 2 of article 28 of the Federal Law of 02/08/1998 No. 14-FZ).

An LLC can decide to distribute net profit quarterly, once every six months or once a year. Issues regarding the distribution of net profit and payment of dividends fall within the competence of the general meeting of LLC participants. This means that it is the general meeting of participants that makes the decision to determine the part of the LLC’s profit that will be distributed among them (Clause 1, Article 28 of the Federal Law of 02/08/1998 No. 14-FZ). Despite the fact that the concept of “dividends” is typical for joint-stock companies, in our consultation we will also use this term for convenience, meaning by it the part of the LLC’s profit that is distributed among its participants.

We talked in a separate section about how to formalize an LLC’s decision to distribute profits as dividends and provided an example of such a decision.

However, before making a decision to pay dividends, you need to decide on the amount of profit that can be distributed among the participants. This value is brought to the attention of the participants by the head of the LLC. After all, it is the head of the organization (for example, its CEO) is responsible for the current management of the organization’s affairs, and, therefore, it is he who can propose the rate of distribution of profit for dividends, which at this stage would be optimal and would not contradict the requirements of current legislation. After all, LLC profits may not always be distributed as dividends.

Prohibition on distribution of profits and payment of dividends

An LLC does not have the right to distribute among participants and pay dividends, in particular (Clause 1, Article 29 of Federal Law No. 14-FZ dated 02/08/1998):

• until full payment of the entire authorized capital;
• before payment actual value shares or part of the share of an LLC participant;
• if at the time of making the decision (payment) the LLC meets the signs of insolvency (bankruptcy) or if the specified signs appear in the company as a result of making such a decision (payment);
• if at the time of the decision (payment) the value of the LLC’s net assets is less than its authorized capital and reserve fund or becomes less than their size as a result of such a decision (payment).

The head of the organization can obtain information about the amount of LLC profit that can be distributed among the participants from an internal memo prepared for him, as a rule, by the chief accountant of the organization.

It is in the memo addressed to the head of the LLC that all conditions that impede the adoption of a decision and the subsequent payment of dividends to participants must be taken into account.

Let's give an example of a memo on the distribution of profits and payment of dividends.

Sometimes owners decide to create so-called “funds” of accumulation and consumption. However, such funds are not mentioned either in the Laws on JSCs and LLCs, or in the current accounting regulations. According to the rules for accounting for retained earnings, it is simply impossible to use it to purchase assets or pay for any expenses due to the very nature of the concept of “net profit.” Retained earnings can only be distributed as dividends.

From a letter to the editor

I ask you to help me understand this situation: by the decision of the founder of the enterprise to distribute the net profit of the year before last, it was decided to replenish: the fund for covering losses; production development fund; social benefits fund. This year the founder wants to use part of the funds from the funds to pay dividends. Is this possible from a legal point of view?

Expert opinion

The reserve fund can be used to cover losses if the owners have made such a decision.

The reserve fund is created by posting: debit to account 84 “Retained earnings (uncovered loss)” – credit to account 82 “Reserve capital”. And it is reflected in the balance sheet on line 1360 in section III “Capital and reserves”.

Thus, from the point of view, the creation of a reserve fund leads to a redistribution of amounts within section III of the balance sheet, but part of the retained earnings is “shifted” to another capital item.

Only retained earnings can be distributed.

Sometimes owners want to use retained earnings to purchase new operating systems, pay bonuses to employees, or give to charity. Usually in such cases they decide to create so-called “funds” of accumulation and consumption.

Such funds are not mentioned either in the Laws on JSCs and LLCs, or in the current accounting regulations. Thus, no funds can be created in accounting. The concept of funds at the expense of profit came to us from Soviet accounting. Soviet enterprises created production development funds, the funds of which were used to purchase new equipment. The Instructions to the Chart of Accounts of 1985 (it has become invalid) states that the funds of such a fund intended for the purchase of equipment must be kept in a special account in the bank. That is, Soviet funds from profits are real money that was allocated for specific purposes and kept in separate accounts in credit institution, and then spent for their intended purpose.

Everything is different now. Even if the owners decide to “direct the net profit to purchase the operating system,” no one credits the money intended for its purchase to some special account. That is, only the word has been preserved from the Soviet concept of “funds,” while the accounting rules have changed radically.

For example, an organization’s acquisition of fixed assets leads to a redistribution of amounts within a balance sheet asset. The organization will have less money (the balance on line 1250 of the balance sheet will decrease), but (the balance on line 1150 will increase). In this case, the accountant must record both expenses and asset acquisitions in the same way as normal business transactions. At the same time, both the balance sheet asset total and capital will remain unchanged. That is, it is simply impossible to use retained earnings to purchase assets or pay for any expenses due to the very nature of the concept of “net profit.”

note

Both profit and capital are not “real” money, but a calculated value - the arithmetic difference between assets and liabilities (income and expenses). Conventionally, we can say that profit is “spent” when its value in the balance sheet decreases. This only happens when dividends are paid and a reserve fund is created.

True, the current Chart of Accounts states that an organization can (but is not obligated) to separate “used” and “unused” retained earnings in analytical accounting. For example, you can open 84 subaccounts “Created Consumption Fund” and “Used Consumption Fund” for account. And when spending money for the purposes specified in the decision of the participants (for example, when purchasing OS), make the following entries: debit 84, subaccount “Created Consumption Fund” - credit 84, subaccount “Used Consumption Fund”. However, the redistribution of amounts between subaccounts does not change the overall balance in account 84 “Retained earnings”.

By making a decision to allocate profits for other purposes (not related to the payment of dividends), the general meeting of participants (shareholders) does not create an obligation, but only the right of the company to carry out expenses that are compensated by these profits. Simply put, society can, but does not have to, make these costs.