Dividends are represented by some of the profit of the organization, which remains in the company after payment of all mandatory payments and taxes. They are transferred only to owners of shares of the enterprise. Profit is distributed among shareholders depending on the existing share in the capital. The calculation of dividends should be carried out by an experienced accountant so that there are no errors that lead to regular inspections by the tax office. It is important not only to correctly determine the size of payments, but also to transfer funds in strictly established terms.
How are dividends paid?
When calculating these payments, companies take into account certain requirements. These include:
- dividends can be paid not only in cash, but also in the form of property;
- LLC participants or individuals receive money through the cashier's or current account of the company.
Each company independently determines by what methods dividends will be issued. The basic rules are enshrined in the constituent documentation of the enterprise.
How are dividends accrued?
At the end of each financial year, the organization shall form annual reports. If, based on the results of the work, retained earnings remain, then they can be used to accumulate, develop a company or distribute among shareholders. In the latter case, dividends are calculated, after which they are transferred to the participants of the company.
When organizing a legal entity, all founders invest their funds or property in the authorized capital. Based on this action, a certain share in the company is formed. In accordance with this share payments are calculated. Other features of the calculation of dividends on shares:
- only profit remaining after taxes and other obligatory payments is distributed;
- funds can be transferred annually, semi-annually or quarterly;
- the company's charter prescribes the terms and procedure for payment of funds;
- most often, companies pay dividends at the end of the year.
There are certain situations in which it is impractical to pay funds even if there is a positive result from the work of the company.
When are dividends not paid?
It is not always advisable for a company to transfer dividends to its shareholders, even if there is profit from activities during the year. All situations when a company cannot perform this process are listed in Federal Law No. 14. Such cases include:
- according to official documents, the director, who is also the founder, has too low a salary, therefore, the tax inspectorate may consider that dividends under such conditions act as payment for his work, which often leads to additional assessments and holding the organization administratively liable;
- the company distributes the remaining profit on a monthly basis between the employees of the enterprise, who are both its founders, although under the law, LLCs and JSCs can perform this process no more than once a quarter, therefore, through a court of the Federal Tax Service, they can insist on retraining of payments;
- dividends are paid during the year, but according to the final annual report, the company has a negative balance value, therefore, non-recorded profit is distributed, therefore, the funds paid will be transferred to net profit, which will lead to the calculation of additional contributions and taxes;
- funds are paid to shareholders without taking into account the share that belongs to them in the company, therefore, employees of the Federal Tax Service recognize such amounts as excess and will accrue additional contributions.
It is advisable to calculate dividends during the year from profits made in the previous period, rather than the current one.
Sources of Payments
Companies can use different sources to pay out these funds, which include current profit and profit received in previous years of work. Used for this is the profit received after payment of all mandatory payments and taxes.
When calculating the dividends to the founders, some parameters are taken into account:
- AO in the calculation should be guided by the evidence available in their financial statements, and for the LLC there is no such strict requirement;
- it is most important for calculations to use the profit received in previous years of work, and there are no restrictions on the period when such profit should appear;
- funds are paid solely on the basis of a decision made by the shareholders at the meeting.
Funds can be transferred in cash through the cash desk of the enterprise, but the most commonly used non-cash method.
Payout Rules
The calculation and payment of dividends is carried out solely on the basis of the minutes of the meeting, where shareholders decide on the need to pay these funds. For this, a general meeting is held. By voting, a decision is made on how retained earnings will be used. For this, shareholders can distribute it in dividends.
The results of the meeting are necessarily officially recorded, for which a protocol is being formed. Often a company has only one participant, therefore, in a free form, it draws up a decision on the basis of which it pays dividends to itself.
Within 10 days after the formation of the protocol, a copy is sent to all participants in the enterprise. It must contain information:
- indicates the type of meeting, which may be extraordinary or ordinary;
- it is prescribed in what form it was held, since an absentee meeting is held on many issues when the participants in the enterprise do not vote;
- Messages by shareholders can be sent in various ways, for example, by telephone, the Internet or other methods;
- the decision on the transfer of interim payments is made only if there is a quorum, therefore, a decision correctly made by the participants is required;
- it is allowed for shareholders to attract representatives, which should be indicated in the minutes;
- the participant who is the chairman of the meeting is registered;
- questions are formulated that were discussed at the meeting, and 15 days before the appointed event, any shareholder may raise additional issues of interest to him;
- all items on the agenda are listed;
- the fact of decision making is notarized, although the law provides for the possibility to use another confirmation method prescribed in the charter of the enterprise.
If necessary, the protocol may specify other issues.
Calculation Rules
When calculating dividends, it is required to take into account the requirements prescribed in Russian legislation. Additionally, the norms enshrined in the internal regulatory documentation of the organization are observed.
The method of calculation depends on which particular shares a particular participant has.
Calculation of ordinary shares
Such securities are considered the most popular among participants in various organizations. The formula for calculating dividends on such shares is as follows:
Dividends paid last year / cost of securities * 100%.
Additionally, a formula that takes into account dividend yield can be applied. In this case, the following formula is used:
Dividend yield = dividends for ordinary shares / their market price * 100%.
When calculating dividend income, firms must consider certain rules:
- first check whether all the requirements listed in the regulatory documents of the company are met;
- it is important to check if there are any restrictions on payments;
- when calculating, it is additionally recommended to use correction factors, the size of which is established by the board of directors;
- when calculating payments on ordinary shares, their average indicator is often predicted, after which the current size is set.
When making the calculations, it is taken into account that the payment of dividends cannot act as a way of developing the company. Large deductions are allowed exclusively for long-running and well-developed enterprises, therefore there is no urgent need to channel funds for development.
It is more advisable for young companies to use money to further expand their activities.
Calculation of preferred shares
These securities are considered to be the simplest in forecasting. For the calculation of payments, usually only 10% of the company's income is taken into account. It is this amount of funds on such securities that must be paid without fail.
10% of the profit is certainly transferred for all preferred shares. It is allowed to increase the amount of payment, but firms rarely take this opportunity.
Single Member Payouts
Often, an enterprise opens with just one person. In this case, he independently decides on the need to transfer dividends. The decision made must be correctly written in writing.
The transferred funds are certainly taxed. Calculation of personal income tax on dividends is considered simple, since since 2018 a standard rate of 13% of all paid funds has been used for this.
When transferring money, certain conditions are included, which are included in Art. 29 Federal Law No. 14. These include the fact that it is important to correctly formulate a written decision. The protocol must contain information:
- correctly calculated amount of payments;
- form of dividend payment;
- the period during which the funds will be transferred.
Based on the protocol, an order is formed to pay part of the profit to the sole participant of the enterprise. It is he who acts as the basis for the calculations. Under such conditions, the Russian company acts as a tax agent, therefore it is obliged to calculate and transfer to the Federal Tax Service the corresponding amount of funds in the form of personal income tax.
Calculation Example
Calculating the size of payments is actually quite simple. An example of the calculation of dividends allows you to easily determine the optimal amount that should be transferred to shareholders. For example, a company issued 500 shares at the opening, of which 80 securities are preferred.
For the year, the company received 630 thousand rubles. in the form of net profit after payment of all required payments. The owners of the enterprise decided to pay 5 thousand rubles for each preferred share. In this case, holders of preferred shares will receive: 5,000 * 80 = 400,000 rubles. The remaining 230 thousand rubles. will be distributed among all holders of ordinary shares. For each such security, the following will be listed:
230,000 / 420 = 547 rubles.
An example of the calculation of dividends shows that it is actually very simple to determine how much money should be transferred to shareholders. At the same time, business owners themselves determine exactly what amount will be distributed between holders of securities.
Tax rules
Dividends are calculated in the calculation of insurance premiums or personal income tax for each shareholder. The company paying the funds acts as a tax agent, so it is obliged to correctly calculate and pay tax to the Federal Tax Service for the participants.
When calculating the tax on dividends, it is taken into account who is the recipient of the funds. They may be a Russian citizen, a foreigner or a company. Government bodies cannot act as the founder of a company.
Most often, the owners of shares are Russian citizens. For them, 13% of the total amount of dividends is paid. For foreigners, an increased rate of 15% is used. If a company receives funds, then it must independently pay income tax, depending on which taxation system it operates on. Dividends are calculated in the calculation of insurance premiums, if the recipient of the funds is additionally employees of the enterprise. Therefore, transfers to state funds are increasing for him.
Calculation rules for the simplified tax system
Dividend payments are allowed even for companies operating under simplified tax regimes. In this case, the profit is distributed according to the rules recorded in the charter of the organization. If there is no specific procedure, then the calculation of dividends on the simplified tax system is based on the shares held by the participants.
Only profit that is retained is used. When transferring funds, the company becomes a tax agent. Therefore, the company on the simplified tax system calculates, withholds and transfers to the Federal Tax Service personal income tax or income tax, depending on the recipient of the funds.
Is there a maximum payout?
The amount of dividends is determined at the meeting of shareholders of the company. Additionally, various nuances are fixed in the regulatory internal documentation. Therefore, there are no restrictions on these payments.
The company can pay the amount of funds that it remains after the transfer of all required payments. The only restriction is the share of each shareholder in the company.
Conclusion
Many companies pay dividends to shareholders. The rules for calculating them depend on whether these securities are preferred or ordinary. Only profit that remains with the company after taxes and other obligatory payments is distributed.
The need to pay dividends is decided jointly by the participants of the company during the relevant meeting. It is required not only to make a decision, but also to make it correctly. When transferring dividends, the company becomes a tax agent, so it must independently calculate and transfer tax for foreign or Russian shareholders.