Calculate the profit available for distribution. Combine the net profit (or loss) of this year with the undistributed profit (or loss) at the beginning of the year to calculate the distributable profit. If the profit available for distribution is negative (that is, loss), subsequent distribution cannot be made; If the profit available for distribution is positive (that is, the accumulated profit of this year), subsequent distribution will be made.
Calculate the profit available for distribution. Combine the net profit (or loss) of this year with the undistributed profit (or loss) at the beginning of the year to calculate the distributable profit. If the profit available for distribution is negative (that is, loss), subsequent distribution cannot be made; If the profit available for distribution is positive (that is, the accumulated profit of this year), subsequent distribution will be made.
If the shareholders' meeting or the board of directors of the company violates the above-mentioned profit distribution order and distributes profits to shareholders before making up losses and withdrawing statutory provident fund and public welfare fund, the illegally distributed profits must be returned to the company.
Profit distribution refers to the behavior of enterprises to distribute the total profits realized in a certain period (usually annual) and the profits obtained from the joint venture between the state and enterprises and between enterprises according to regulations. Profit distribution should conform to the basic principles, including the principle of distribution according to law, the principle of capital preservation, the principle of fully protecting the interests of creditors, and the principle of giving consideration to multiple interests and long-term interests.
After paying income tax, the total profit realized by the enterprise in the current year can be distributed in the following order: to make up for the losses in previous years (no special accounting entries are needed to make up for the losses with profits); Withdraw statutory surplus provident fund public welfare fund; (Surplus reserves are used to make up for losses or increase capital, and public welfare funds can only be used for the collective welfare of employees); Withdraw any surplus reserve; Distribute dividends of preferred shares; Distribute common stock dividends. What remains is the undistributed profit at the end of the year.
legal ground
Company Law of the People's Republic of China
Article 166 When distributing the after-tax profits of the current year, the company shall allocate 10% of the profits to the company's statutory reserve fund. If the accumulated amount of the statutory common reserve fund of the company is more than 50% of the registered capital of the company, it may not be withdrawn.
If the statutory reserve fund of the company is insufficient to make up for the losses of the previous year, the profits of the current year shall be used to make up for the losses before the statutory reserve fund is withdrawn in accordance with the provisions of the preceding paragraph. After the company withdraws the statutory reserve fund from the after-tax profits, it may also withdraw the reserve fund from the after-tax profits upon the resolution of the shareholders' meeting or general meeting.
After-tax profits of the company after making up losses and drawing provident fund shall be distributed by the limited liability company in accordance with the provisions of Article 34 of this Law; A joint stock limited company shall distribute shares according to the proportion of shares held by shareholders, except that the articles of association of a joint stock limited company stipulate that shares shall not be distributed according to the proportion of shares held.
If the shareholders' meeting, shareholders' general meeting or the board of directors violates the provisions of the preceding paragraph and distributes profits to shareholders before the company makes up losses and withdraws the statutory reserve fund, the shareholders must return the profits distributed in violation of the provisions to the company. The company's shares held by the company shall not be distributed.