The activities of any enterprise are aimed at making a profit, which subsequently must be properly distributed.
As a rule, its substantial share goes to the further development of production, but we will talk about how dividends are accrued and paid, postings, as well as the reliable reflection in the accounting of operations on the movement of dividends, the timing and payment procedure.
Dividends and shareholders
Dividend is the share of the profit of the organization, which is paid to shareholders after repayment of all necessary payments. That is, in order to receive dividends, it is necessary to be a shareholder of the company, in other words, to own shares of the company. Typically, the founders of the company are still shareholders at the stage of its formation, with the aim of acquiring income from financial resources invested in the development of the organization.
Legislation defines a dividend as income received by a participant or shareholder from a company with a proportional
distribution of profits (according to invested shares in the
authorized capital) remaining after taxation. Dividends include interest income on preferred shares.
What payments cannot be considered dividends?
Do not fall under the definition of "dividends":
• payments to the shareholder during the reorganization or liquidation of the company, not exceeding the size of his investments in joint capital;
• payments transferred into the ownership of shares of the company to shareholders of the same organization.
• payments of non-profit organizations to employees for the implementation of its statutory activities.
Dividend Decision : Who Accepts It?
The law establishes that following the results of activities for the year, the company has the right to declare dividends on shares, but may not do so. This is a company’s right established by law.
Such obligations are not provided for, and the decision on the payment of income on shares or the distribution of profits for other needs is made at a general meeting of shareholders. If it decides to pay dividends, then the board of directors after a thorough analysis determines their size, which will be recommended to the general meeting. Shareholders are given the right to agree and approve the recommended amount of payments or reject it and refuse to declare dividends. The general meeting is not entitled to establish a different dividend amount. In Russia, the amount of dividends is set in national currency (rubles) per share minus personal income tax.
Payment terms
Having approved the amount of profit distributed for the payment of dividends, the general meeting announces a decision on the payment of dividends, which informs the parties involved.
Typically, such income is paid in cash, but there are also property forms of payment, which must be provided for in the company's charter.
Joint-stock companies and LLCs have the right to distribute dividends not only according to the results of the year, but also six months and a quarter. The law has no restrictions on periods for the payment of income.
It happens that the company's profit is not distributed for several years, accumulating in the account of retained earnings (No. 84). Bans on the payment of dividends of previous periods are not legally established either, so such a decision of the board of directors and subsequent approval by its general meeting are quite feasible.
The charter of the organization or the meeting of shareholders determines the time period during which the company is required to accrue and pay dividends. If the payment period is not established, then, according to the legislation, it does not exceed 60 days from the date of the declaration of dividends. Within these terms, shareholders must receive accrued income.
Accrual
After the decision to pay dividends and approval of the lists of those to whom they are due, painstaking accounting work begins. The amount of income is calculated individually for each participant.
Typically, the company's charter provides for the distribution of dividends among shareholders in accordance with applicable law, dictating the recognition of income accrued in proportion to the shares of participants. The total amount of profit, which by the decision of the meeting is determined for payment to shareholders, is multiplied by the percentage of contributions to the charter capital of each participant. This determines the amount of the dividend due to an individual shareholder. Accompanying the calculation of dividends, transactions will be indicated below.
Taxation
Like any income, a dividend due to a shareholder is taxable. The size of the tax rate depends on the category of taxpayer. Since the beginning of 2015, tax rates have changed significantly. Previously, dividend income for individuals and legal entities located and residing in Russia was taxed at a rate of 9%. Now the amount of tax has increased to 13%, and declared dividends for previous periods will be taxed at this rate.
Dividends of legal entities that do not have the status of a tax resident of the Russian Federation are taxed at a rate of 15%, for private ones - 30%.
Russian companies act as tax agents and usually withhold and transfer taxes to the budget on their own, so shareholders receive dividends already minus the amount of tax.
Tax Dates
The law requires the deduction and transfer of personal income tax not later than the date of receipt of money for payment from the cash desk or transfer of funds to the accounts of participants, shareholders on behalf of or third parties. In the payment documents for the transfer of personal income tax should indicate the budget classification code - 18210102010011000110.
Calculation and payment of dividends: postings
All information on the accrual and movement of dividend payments is accumulated on the balance sheet of settlements with the founders (No. 75), which corresponds to the accounts of sources, assets, settlements, taxes, etc.
Having decided on the size of the total amount intended for payment, the accountant accrues dividends. Postings:
• D / t 84 - C / t 75/2 - for the amount of profit distributed to pay dividends. The analytical accounting of accrued dividends personally for each participant is a list of surnames with due payment amounts, the results of which correspond to the credit turnover of account No. 75/2 of the specified transaction.
Shareholders and participants in receiving dividends may work in the company, or may not be on the staff of the organization, so dividends should be calculated in different ways. The accrual of income to the company’s employees is made to account No. 70 “Payments with employees”. Dividend postings to the founder, participants and shareholders working in the company:
• D / t 75/2 - K / t 70 - for the amount of income to the shareholder-employees of the enterprise.
The next step is the taxation of accrued income. Accrued tax on dividends to shareholders, posting:
• D / t 75/2 - K / t 68 / profit - tax on income from dividends of shareholders - organizations is accrued.
• D / t 75/2 - K / t 68 / NDFL - for the amount of tax on dividends of shareholders - private individuals.
• D / t 68– K / t 51 - the amount of taxes withheld is transferred from the current account .
Dividends (transactions: d / t 75/2 - t / t 50, 51) are paid to participants who are not on the staff of the company in cash or by transfer from the company's account to the shareholders' accounts.
Sometimes income is paid not in money, but in securities, for example, bills of exchange of third-party organizations held by the company. Transfer of bills - the same payment of dividends. The transactions reflecting this operation are as follows:
• D / t 75/2 - K / t 91 - for the amount of the face value of the security.
• D / t 91 - C / t 58/2 - for the amount of actual expenses accompanying the purchase of a bill recorded on account 58/2.
• D / t 91 (99) - C / t 99 (91) - the financial result from the disposal of the monetary document is determined.
Some companies allow property dividend payments. The postings in this case are as follows:
• D / t 75/2 - K / t 90 - for the amount of the selling value of goods or property equivalent to the amount of income due.
• D / t 90 - C / t 68 / VAT - VAT is charged on the selling price of goods.
• D / t 90 - C / t 41, 43, 20 and other production accounts - for the amount of the actual cost of purchased goods, products.
• D / t 90 - C / t 99 - the result from the sale of goods or services is displayed.
The transfer of company property (not goods) is reflected in other accounting entries. Dividend payment:
• D / t 75/2 - C / t 91 - for the value of the property, including VAT, for the amount of income due less tax withheld.
• D / t 91 - C / t 68 / VAT - for the amount of VAT calculated on the property price.
• D / t 91 - K / t No. 01, 08, 10 - for the amount of the residual value of the transferred property.
• D / t 91 - C / t 99 - the amount of profit from the transfer of property has been determined.
These are the postings on the payment of dividends to the founder and other shareholders of the company.
Subtleties of determining the tax base of the company on the simplified tax system after the payment of dividends
In connection with the payment of dividends, the "simplistic" often question arises: "Is the payment of dividends (transactions indicated) and the transfer of personal income tax reflected in the tax base of the simplified tax system?" Enterprises in the “Income minus expenses” mode may reflect a limited list of expenses mentioned in the Tax Code of the Russian Federation. But the dividends accrued and paid to participants are not indicated in it. Consequently, they cannot reduce the tax base. And since the company, following the duties of a tax agent, does not transfer taxes for itself, the amount of personal income tax withheld also does not affect the reduction of the tax base.
So, the article gives the basic concepts, such as dividends, accounting entries reflecting operations for their accounting.