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How to distribute profits

How to distribute profits

The company's profit is the aim of his work, the end result of the activity. Distribution of profit for the year takes place at the company at its discretion.

The goals, which is the net profit remaining in the disposal of the business entity from its activities may be determined by the charter.



Any company directs its profits primarily to payments to the budget and off-budget funds, and then the creation of the consumption fund and the accumulation fund, charity and other purposes.


After payment of all obligatory payments (taxesand fees) profit business entity is the formation of the accumulation fund. Its creation, as well as the creation of the consumption fund, provided by the constituent documents. The accumulation fund is necessary for the development of material and technical base of the enterprise.


Funds spent on its reconstructionexisting equipment, the purchase of new, repayment of investment credits, maintenance of social and cultural facilities, etc. Accumulation fund indicates opportunities available at the company for further expansion of the material base.


consumption fund? This means that an entity sends to the material incentives of employees. He spent on annual premiums and surcharges on encouraging employees to travel expenses, meals, issuing allowances supplement for pensioners, payment of interest on shares (dividends).


In addition, the net profit of the companysent to the reserve fund. This fund is intended for the payment of income on preferred shares and bonds in case if the economic entity will be insufficient funds. In addition, the contingency fund, the company will put out payable if bankruptcy occurs


Each company plans distributionprofits annually. For this analysis of data on the actual use of funds and balances, beginning of period. Most commercial firms consumes profits on the formation of the accumulation fund and the consumption fund, about 30 and 40 percent of profit, respectively.

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