In the practice of any enterprise, whether it is a newspaper concern or a private construction company, there is such a thing as estimated profit. It is extremely important in calculating the income and expenses of a legal entity.
Estimated profit is the estimated income of an enterprise, net of the cost of work, intended to cover the costs of developing an organization, remunerating its employees and improving its social sphere. Its dimensions are either calculated at the conclusion of each new contract, or negotiated between the customer and the company in advance. The second case, as a rule, is used when the standard industry-wide estimated profit cannot cover all the expenses for the development of the company and material incentives for employees described above.
Estimated profit is not calculated to cover overhead (indirect or unforeseen) expenses of the enterprise. They are usually calculated separately. Then these costs are included in the estimate and paid on a par with any other necessary costs.
Estimated profit is calculated as a percentage within the norm adopted by law. The basis for the calculation is the wages of workers, which according to the standards should be at least 65% of the estimated profit. You should also consider the average cost of work and the norm of the enterprise itself.
At large enterprises (for example, construction companies), a special package of documents is drawn up to regulate business relations between the customer and the construction company.
Estimated documentation is a complete set of necessary papers with data on the project, all its details, on the planned costs and expected profits. It indicates the rates for all types of work performed by the enterprise, as well as a detailed description of these works with graphic drawings and diagrams.
Regulatory estimated profits in many industries are not yet well developed by Russian law. Therefore, in all disputed cases, enterprises deviate from accepted standards and assign the contractual cost of their work. For example, in large construction sites where many people work, wages per worker are lower than average, so the construction company has the right to increase estimated profits to ensure its future activities.
So, the estimated profit, or, as it is sometimes called, "net profit", represents the income of the enterprise from any project whose funds are allocated to improve its further work. Its size is determined depending on state, regional and local standards (norms established within the company, average wages and so on). The value of estimated profit does not have to be explained. After all, if not for it, enterprises would have lost the opportunity to develop, workers would have lost their wages, and the whole industry would have fallen into decay. Therefore, it is extremely important to correctly calculate the estimated profit to maintain the optimal balance in the company, its development, relations between it and the customer.