Each shareholder of the company must understand how dividends are accrued, how they are paid, and how they are calculated. Each company operating on the basis of the authorized capital must periodically distribute the income received between the founders, who are also called shareholders or founders. It was they who were engaged in the opening of the organization, so they invested their funds in the authorized capital. Also, they could already redeem shares during the functioning of the enterprise. Based on their investment, they have a specific share. Dividends are paid based on the size of this share.
The nuances of the process
Often, citizens with free funds invest them in the development or opening of various companies. They receive documents confirming their share in the authorized capital. Based on this documentation, they become shareholders. If they do not know what dividends are, then it will be difficult for them to figure out when they can receive these payments, how they are correctly charged and what is their optimal size.
Dividends must be paid taking into account numerous legislative acts. It is not always possible to assign these payments, as this depends on the company's performance. At the meeting of the founders it is decided whether the profit will be redistributed among all participants or whether it will be aimed at the accumulation or development of the business.
Basic concepts
Dividends are represented by some of the profit received as a result of the work of the enterprise. They are paid to shareholders if, after paying taxes and other obligatory payments, free funds remain in the organization.
The shareholder is represented by an individual or a company. He must invest in shares of the enterprise. The main purpose of such an investment is to receive income in the form of dividends or the sale of shares with a significant increase in their rate.
Dividends are paid exclusively to shareholders. Under such conditions, the return on investment is made in the development of the enterprise. The remaining profit is distributed among all the founders, for which it is taken into account what share they have.
The following payments are not considered dividends:
- payment of funds to shareholders upon completion of the reorganization or closure of the company;
- transfer of amounts to property;
- issuance of shares to a shareholder.
If a shareholder has any position in the company, then upon receipt of his salary, he should not assume that he is paid dividends.
Payment terms
Companies themselves make decisions about when the funds will be transferred. LLC dividends are paid based on a special schedule. It is fixed in the charter of the company or is developed and adopted annually at a meeting of shareholders. The features of this process include:
- if the deadline for the payment of dividends is not approved, then funds are issued to the founders within 60 days after the results of the enterprise’s work are announced;
- throughout the declared period of time, shareholders receive retained earnings received by the company;
- payment is made only after all taxes and other obligatory payments for each company have been paid;
- incomes are calculated on the basis of available information in the financial statements;
- funds are transferred in a standard way at the end of the year, but firms can independently set other terms; therefore, payments are often made at the end of each quarter or half a year;
- if the founder does not receive the required funds in a timely manner, then he has the right to require the company to repay the debt for three years.
Dates may be revised at a meeting of shareholders.
Limitations
When accruing dividends, one has to face certain restrictions. Dividend payment is not allowed provided that:
- not paid in full the authorized capital of the enterprise;
- the company is declared bankrupt, therefore, it is required to initially pay off all existing debts, and only then, if the company’s funds remain, they are distributed among the former founders;
- transfer of dividends may cause bankruptcy of the enterprise;
- the value of the firm’s net assets is less than the amount of money available in the reserve fund and the authorized capital.
Thus, even if there is a special decision regarding which it is required to transfer dividends to shareholders, this process cannot be carried out in some circumstances.
Legislative regulation
Each company, which is represented by a company with several founders, must be well versed in what regulatory acts govern the process of transferring dividends. The main such acts include:
- Federal Law No. 14, which describes the rules of the LLC;
- Federal Law No. 208, which contains the main points of the functioning of various societies.
Additionally, a lot of reliable and relevant information is contained in numerous articles of the Tax Code.
Dividend Transfer Organization Process
The procedure on the basis of which these funds are paid out is divided into several successive stages. Each of them has its own meaning. Initially, it is necessary to make a decision by the shareholders, for which the following actions are performed:
- a meeting of shareholders is organized;
- a decision is made on the payment of dividends;
- it is allowed to decide not to pay these funds, and under such conditions, the money left after paying taxes and other significant payments can be sent to the development of the enterprise, to savings or other purposes.
The decision should be officially recorded in the minutes of the meeting.
What documents are formed at the meeting?
The decision as to when and in what amount dividends will be paid is made at a meeting of shareholders. The accrual and payment of dividends are certainly fixed by such official documents:
- Minutes of the meeting. It spells out all decisions made by the founders. To do this, use the voting method. It is standardly held annually. The dividend payment period is set, which does not exceed 4 months. Profits are often distributed quarterly or every six months. There are no strict requirements on how this document should look.
- Order. It reflects how exactly the remaining income after mandatory payments of the enterprise will be distributed among all shareholders. It is compiled on the basis of the minutes of the meeting.
Particular attention is paid to the proper drawing up of the minutes of the meeting. It certainly lists the main data:
- a list of all shareholders present at the meeting is formed;
- the agenda is indicated;
- register the results of voting related to the transfer of dividends;
- the date of formation of the document and its number are set;
- reflects the venue of the meeting;
- signatures are put by all participants in the process.
Compiled documents are transferred with an order to the chief accountant of the organization. After that, the specialist calculates how much profit should be distributed. It is divided based on the share of each recipient of funds. The size of the payments is approved, after which the shareholders are notified when and in what amount dividends on shares will be paid.
How are funds accrued?
After the decision is made, all persons who are entitled to receive funds are approved. The generated documents are transmitted to the accounting department of the company, so the specialists of this department perform the following actions:
- dividends paid by LLC or another company are paid to each shareholder of the enterprise;
- the company's charter should contain all the features of this process, but they should not violate the law;
- To determine the size of the payment, it is necessary to calculate how much share in the capital belongs to each founder.
Only after perfect settlements can funds be transferred.
How are payments reflected in accounting?
The procedure is reflected in the correct entries in the accounting records of the company. Payment of dividends to shareholders is fixed by postings:
- account 75 - payment of accrued dividends;
- D84 K75.2 - the amount of payments determined;
- D75.2K70 - funds are paid to the shareholder who is an employee of the enterprise;
- D75.2 K68 - accrual of personal income tax on all payments due to individuals;
- D68 K51 - payment of tax on shareholder income;
- D75.2 K91 - reflection of the amount of par value of shares;
- D91 K58.2 - reflects the amount of expenses that are required to incur when buying a bill;
- D91, 99 K99, K91 - financial indicators are shown at disposal of securities.
All enterprises in which shareholders receive dividends are represented by tax agents for income tax and personal income tax. Naturally, individual income tax is charged when dividends are paid. Postings must be properly prepared by the company accountant. This is extremely important.
It does not matter in what form dividends are paid to the LLC founder. Under any regime, the enterprise is a tax agent. It is taken into account whether the company is a resident of the Russian Federation or not.
Who can count on funds?
Dividends are transferred exclusively to those shareholders who have previously invested in the development or opening of an enterprise. Therefore, recipients of funds can be:
- employees of the organization;
- individuals who do not engage in any activity in the company, but at the same time act as owners of shares;
- various enterprises that have invested in the development of the company.
Dividends are paid to the founders of LLC based on special computer programs. Additionally, the accountant must draw up a payment calendar. Companies decide on their own which shares are preferred. Each founder can count on receiving money on time and in the right amount. If these requirements and rules are violated, this leads to the emergence of debt from the company.
Form of payment
Dividends can be paid to shareholders in various forms. For this, the following features are taken into account:
- transfer of funds determined depending on the share of each recipient;
- provision of company shares.
If a decision is made that the transfer of dividends is not required, then the remaining profit from the work may be directed to the reserve fund or to the development of the enterprise. If it is decided to accrue dividends, then the profit is transferred to the dividend fund. Next, the calculation of the amounts.
Payout sources
The legislation clearly states that different sources of funds may be used to accrue dividends. These include:
- undistributed funds received in past periods of the enterprise;
- share premium of the company;
- most often, companies use dividend income, which is net income for the reporting period.
Additionally, funds in the special dividend fund of the company may be used. It is created specifically for such purposes when there is no profit, but at a meeting a decision is made on the need to accrue dividends.
How are funds transferred?
The transfer of funds is carried out using the correct preparation of the payment order. It is presented by a special settlement document, on the basis of which dividends are paid for a year or other period. It is used so that the required amount of funds is transferred to the shareholder’s bank account.
A payment order is generated in a special form. When filling out the following information:
- purpose of payment;
- information on the status of the person involved in the preparation of the document;
- indicates how much is being transferred;
- Provides information on the current account where the funds are sent;
- at the end is the date of formation and the document number.
The compilation process is usually carried out by the accountant of the enterprise. Errors in the documentation are not allowed, since due to them, funds can be transferred not to the shareholder, but to an outside recipient.
What if there is one founder?
It is often enough that an LLC is opened by one person. Under these conditions, the payment of dividends to the sole founder is made on the basis of an independent decision by the head.
It determines how much net income will be paid. Additionally, a schedule of payments, the timing of the transfer of funds and the amount of dividends. The decision will certainly be made in writing, taking into account the requirements of the laws. Only after this is the dividend paid to the founder in due time.
Is it possible to use the retained earnings of past years?
Often, shareholders decide not to transfer dividends, so the profit received is intended to increase the capital of the enterprise. This leads to the fact that income remains in the reporting period, which is not distributed among the founders and is not spent on any other purposes.
If the profit is not distributed for several years, then in any case there will be a need to transfer dividends. In this case, it is allowed to take into account profits for previous years of work. Funds can be paid not only quarterly and annually, but also every month.
The legislation does not prohibit the distribution of profit of past periods. Therefore, companies can make this decision without being held accountable.
What taxes are paid by the founders?
All shareholders receiving dividends must pay tax on them. This is due to the fact that the funds received are the profit of citizens, therefore, they are usually charged with personal income tax.
If dividends are transferred by individuals, then the company acts as a tax agent for personal income tax. Therefore, if it is planned to pay dividends, personal income tax should be calculated and paid by the company, and citizens themselves are not required to make payments and transfers. This takes into account some features:
- the company itself, when transferring funds to the founders, is required to withhold income tax, after which it is paid to the state budget;
- a fee is calculated for each payment assigned separately for a particular individual;
- no need to reduce the size of personal income tax on deduction;
- for each transfer, a 2-NDFL certificate is generated, which is transmitted to the Federal Tax Service until April next year;
- Dividends are not taxed by insurance premiums, so it is not required to transfer funds to the FSS or PF.
Difficulties with accountants can arise with the correct calculation of income tax. In determining this fee , dividends remaining unclaimed shareholders are not included in the profit . Therefore, they are restored in the form of income, but at the same time they can not be classified as income that make up the tax base for income tax. This fact is indicated in Art. 251 Tax Code.
If dividends are paid to companies, then the income tax on these payments is calculated based on standard rates. For enterprises that are residents of the Russian Federation, a rate of 15% is used, and for non-residents - 30%. Tax payments must be made no later than the day when the money was received for transfers from the cash desk or on the day the funds were transferred based on the payment order.
Conclusion
For each accountant, the payment of dividends is a rather specific process that requires a good understanding of tax legislation. The founders do not always decide on the need for such an action, as often the company has much more important areas where funds should be redistributed. For example, you need to participate in an investment project or expand production.
Thus, dividends are paid to the surety in the correct sequence of actions. This requires a meeting of the founders, make a decision, draw up the necessary documents, send the documentation to the accountant and correctly arrange the transfer of funds. For this, not only the profit remaining from the current work period can be used, but also the retained earnings available in previous periods. You should correctly reflect the process with the correct accounting entries, as well as pay personal income tax for all individuals who received funds in the form of dividends. Violations of the rules for transferring dividends are the basis for holding the company liable.