Payment of dividends upon departure from the founders

Payment of dividends to LLC founders in 2020

After the decision on payment is made, funds are transferred to the participants within 60 days (more specifically, the period is described by the decision or the Charter). Although this can be not only money, but also products or property, which must be separately prescribed by the Charter. If dividend payment deadlines are not met, the founders may demand the transfer of funds from the organization, and then through the court.

The payment is calculated taking into account the founders' shares in the authorized capital. Since this is the only way to legally distribute funds, each LLC participant must take a responsible approach to the issue of participation of members of the enterprise in the capital even when registering the company.
Only the founders have the right to receive payments. This is their main income from the operation of the enterprise. In addition, each participant has the right to occupy a position and receive a salary, which is a second source of income for him.
Payment cannot be made more frequently than quarterly. The LLC also has the right to do this once every six months or year. More specifically, the issue of frequency is reflected in the charter. Interim dividends are those distributed before the end of the year. The company may be at a loss at the end of this period. In the absence of profit, the distribution of amounts cannot be considered dividends, although the funds have already been distributed. Then they can be recognized as a reward.

This is important to know: Dividends in an LLC: formation and payment conditions in simple language

Payment of dividends in installments throughout the year

Article current as of: April 2021

We offer you two options to solve the problem.

Option 1: we accrue dividends and repay the debt in installments. Once a year (for example, at the beginning of the year), a general meeting of the founders of the LLC meets to discuss the distribution of profits, including the payment of dividends. His decision is formalized in a protocol that determines the deadline for the payment of dividends, for example, December 31, 2021.

Based on the protocol, the head of the LLC issues an order to pay dividends. It, among other things, indicates the amount of dividends due to be accrued to each founder of the LLC, and establishes the procedure for repaying debts to the founders - specific deadlines for paying dividends (taking into account the cutoff date established in the protocol) and the amounts that must be paid within these deadlines.

Further, on the basis of the order, the accounting department of the enterprise accrues dividends to the founders and makes their payment within the time limits established in such an order.

Disadvantages of this option: 1) the need to comply with the deadlines for payment of personal income tax and military tax - 30 calendar days following the last day of the month in which dividend income was accrued but not paid ( clause 49.18.1, clause 57.1

and
p.p.
168.1.5 NKU ); 2) difficulties with the bank in the case of payment of dividends in non-cash form or from the cash desk using money specifically received for these purposes.

In such a situation, the bank will require payment of personal income tax and military tax on the day of payment of dividends.

Option 2: pay dividends in installments. The general meeting of LLC founders meets on the “dividend” issue several times during the year.

Moreover, each time, not the entire free part of the profit that the founders want to receive in the form of dividends, but a certain part of it (taking into account the financial capabilities of the enterprise), is used to pay dividends.

This is recorded in the minutes of the meeting of the founders of the LLC.

Based on the protocol, the head of the enterprise issues an order for the accrual and payment of dividends in the amount specified in the protocol.

But is it possible to get together so often, you ask. Yes, for LLCs there are no restrictions on the frequency of dividend payments at the legislative level. Here the reference point is the provisions of the specific (your) charter of the LLC and the decisions of its general meeting .

The disadvantage of this option is that you need to hold a meeting of the founders on the issue of profit distribution several times during the year.

Payment of dividends to LLC founders in 2021

The payment is calculated taking into account the founders' shares in the authorized capital. Since this is the only way to legally distribute funds, each LLC participant must take a responsible approach to the issue of participation of members of the enterprise in the capital even when registering the company.
Only the founders have the right to receive payments. This is their main income from the operation of the enterprise. In addition, each participant has the right to occupy a position and receive a salary, which is a second source of income for him.
Payment cannot be made more frequently than quarterly. The LLC also has the right to do this once every six months or year. More specifically, the issue of frequency is reflected in the charter. Interim dividends are those distributed before the end of the year. The company may be at a loss at the end of this period. In the absence of profit, the distribution of amounts cannot be considered dividends, although the funds have already been distributed. Then they can be recognized as a reward.

This is important to know: Payment of dividends using LLC property

Accounting entries for dividend payments

Accrual of dividends - entries from recipients (founders, participants) are reflected in the accounting records on the date when the meeting of shareholders (participants) decided to pay them (clause 7, subclause a-c, clause 12, clause 16 PBU 9/99 , approved by order of the Ministry of Finance of Russia dated 05/06/1999 No. 32n):

Is it possible to pay dividends to participants in installments throughout the year if it is not possible to pay them in full at once? (D

1. Distribution among the participants of a limited liability partnership of the net income received by the partnership based on the results of its activities for the year is made in accordance with the decision of the regular general meeting of the participants of the partnership dedicated to the approval of the results of the partnership’s activities for the corresponding year.

If the general meeting of a limited liability partnership makes a decision on the distribution of income between participants, each participant has the right to receive a part of the distributed income corresponding to his share in the authorized capital of the partnership. The payment must be made by the partnership in cash within a month from the date the general meeting made a decision on the distribution of net income.

Payment of dividends in 2021 from the point of view of an accountant and a director

1) The charter must provide for quarterly distribution of profits and payment of dividends. Each fact of distribution of net profit and direction for payment of dividends must be recorded and recorded on paper, there must be a recorded decision of the general meeting.

1) D75.2, K91.1. Here correspondence is made on the cost of fixed assets, materials, including VAT. VAT is taken into account in cases where property is paid at enterprises that apply the general taxation regime and at enterprises that pay a single tax on imputed income.

New in the regulation of dividend payment (profit distribution)

Source: https://arenazakona.ru/dividenty/vyplata-dividendov-chastjami-v-techenie-goda

Payment of dividends in 2021 from the point of view of an accountant and a director

New in the regulation of dividend payment (profit distribution)

A joint stock company has the right to decide on the payment of dividends (Clause 1, Article 42 of the Federal Law of December 26, 1995 No. 208-FZ “On Joint Stock Companies”, hereinafter referred to as the Law on JSC). Similar provisions on the distribution of net profit are established for LLCs (Clause 1, Article 28 of the Federal Law of 02/08/1998 No. 14-FZ “On Limited Liability Companies”, hereinafter referred to as the LLC Law).

The timing and procedure for paying part of the distributed profit of an LLC are determined by the company's charter or a decision of the general meeting of company participants on the distribution of profit between them. However, the payment period should not exceed 60 days from the date of the decision on the distribution of profits between the company's participants. If the charter or decision of the general meeting of participants does not specify the payment period, then it is equal to 60 days from the date of the decision on the distribution of profits between the company's participants.

Rules for payment of interim dividends

The procedure for paying interim dividends can be divided into 3 main stages:

The accounting policy must indicate how to pay the founders. This document contains the frequency according to which dividends are paid (quarterly, half-yearly, yearly), terms, and distribution of profits according to shares.
At the end of the period in which the emergency is received, a meeting is held. A decision is made whether interim dividends will be paid. The minutes of the meeting record:

size of the state of emergency;
the amount of transfers to the founders;
in what form are they paid?

Direct distribution of interim profits according to the share/number of shares.

Normative base

The regulatory framework for LLCs is Law No. 14-FZ of February 28, 1998; Article 28 lists the procedure for distribution of profits and payment terms.

The activities of the JSC are regulated by Law No. 208-FZ of December 26, 1995. Article 42 says everything about settlements with shareholders.

How is cash issued

You can pay shareholders by bank transfer or by transfer via mail. To receive cash, the money must be received at the cash desk from the organization’s current account, since it is not paid from the proceeds, this is prohibited.

If a participant was entitled to interest on his share, but did not receive it due to some circumstances, he can contact the company within 3 years.

Accounting entries

Accounting uses the entry Dt84 Kt75-2 to calculate dividends. For employees of the organization Dt84 Kt70.

To pay the founders, the following transactions are made:

Tax withheld: Dt75-2 (70) Kt68.
The tax is transferred: Dt68 Kt51.
Dividends are paid: Dt75-2 (70) Kt51 (50).

If there is a loss at the end of the year

The company found itself in a position where interim dividends were paid, but at the end of the year there was a loss. In order not to complicate their lives with disputes with the Federal Tax Service, organizations in their documents indicate the return of funds from recipients.

In fact, the funds are usually not returned, and the participants remain in debt to the company. Such debt is repaid, for example, using discounts on bills of exchange or retained earnings of the next period.

How to be a simplifier

The simplified company in which interim dividends were paid is a tax agent. Her responsibilities include calculating and withholding tax regardless of the taxation regime. Calculations and payments are made in the general manner.

Closing the registry

The closing date of the register can be determined by the date of the constituent meeting. To clarify the list of recipients of funds, 10 days are given before the meeting and 20 days after. The exact date for closing the register is fixed at a meeting by the board of directors.

Dividend payment terms

If the minutes of the members record another date for the payment of part of the dividend amount, and not 60 days, and the meeting participants sign this statement, thereby agreeing to this, they will not be able to make claims that legal norms were violated when making payments.

The founders must agree on what form will be used in each individual case during the general meeting and record this in a protocol decision. For example, you need to know that issuing cash from proceeds received at the cash desk is prohibited. This will only be possible if an amount is deposited into the cash register specifically for these purposes.

How to correctly arrange the payment of dividends in installments

But the charter can provide for the payment of dividends quarterly (clause 1 of Article 28 of the Law of February 8, 1998 No. 14-FZ). In this case, the founders will need to hold a general meeting every quarter, but in this case dividends can be accrued over the next 60 days, according to the schedule approved at the general meeting. So payments to the founders can become regular.

Option 1

. The decision to pay dividends to a joint stock company is made by the general meeting of shareholders. This can be done based on the results of the year. Interim payments based on the results of the first quarter, half a year, and nine months are also allowed. But a decision on this can be made no later than three months from the end of these periods. This procedure is provided for in paragraph 3 of Article 42 of the Law of December 26, 1995 No. 208-FZ.

Payment of dividends in installments

As a general rule, in a limited liability company, dividends must be paid to the founder within the period established by the charter or the decision of the general meeting on the distribution of profits (Clause 3, Article 28 of Federal Law No. 14-FZ dated 02/08/98). This period should not exceed 60 days from the day on which the decision was made to distribute profits. That is, you can set several payment terms in the decision. In this case, the last period should not exceed 60 days from the date of the decision to pay dividends. For example, if you decided to pay dividends on March 30, then the payment deadline should be no later than May 29.

This is important to know: Order for payment of dividends in an LLC to the sole founder: sample