Profit is calculated as the difference between income and production costs, where income is the indicator financial activities enterprise, which reflects all financial receipts of the company, including manufactured and sold products paid for by the customer.
Costs are the costs of producing and selling products.
The profit indicator consists of three components:
- profit from the sale of products is calculated as the difference between the funds received from the sale of goods (revenue) and the full cost of production;
- profit from the sale of various property and material assets;
- profit from non-realization of operations - funds received from non-core activities of the company ( valuable papers, dividends, proceeds from the lease of property and other activities).
If the profit of the enterprise is reduced to zero, then the result economic activity are costs.
Marginal profit is obtained by selling an additional copy of the product.
A high rate of such profit may not always show a really high profit.
Profit can be effectively managed only when not only accounting for funds by increasing the total cost of sales with a stable level of costs, but the maximum amount of profit that can be achieved under the prevailing conditions.
It should be remembered that setting a low price can undermine the profitability of a product or service. It is recommended to practice lowering the price policy for a short time and in a small amount of goods, otherwise in great demand the profitability of the enterprise as a whole will fall on such a product.
In order for a product or service not to fall in price, it is recommended to offer customers simpler analogues. Such a step helps to maintain the price distance and the attractiveness of products.
Types of profit
Profit is classified depending on the conditions of its formation. There are several types of profit.
Depending on the distribution costs:
- accounting- profit received as the difference between the income from the sale and expenses (costs);
- economic- profit received as the difference between accounting profit and additional costs (including costs that are not taken into account in the cost of production).
According to the final result of the company's economic activity:
- normative(provided) - the minimum profit that allows you to ensure financial stability enterprises;
- maximum possible(or the minimum allowable) - the profit received when minimal cost and maximum revenue
- unreceived(lost profit) or loss - income that is not received due to violations of an obligation by the other party.
By the nature of taxation:
Tax free income- income received as a result of operations regulated by Article 251 of the Tax Code of the Russian Federation.
What is income?
Income represents the revenue received for a certain period as a result of the sale of goods and services, excluding material costs. Taxes are also deducted from this amount in accordance with the law.
Under material costs means the amount spent on the production of products. Depreciation of fixed assets, social contributions and other costs, with the exception of wages, are also equated to such costs.
The constituent elements of income are profits and expenses for payment. work force. The amount of income directly depends on the market value of the goods and market conditions.
Income does not include receipts from individuals and legal entities. If the income is taxable, then the amount that remains after paying the tax is divided into the following components:
- consumption funds - spending on social sphere(compensation of employees);
- investment income - the amount received as a result of investment activities;
- insurance income - the cost of insurance premiums.
Income is classified according to costs.
Marginal revenue is calculated as the amount by which the total income of an enterprise changes after the sale of one unit of a good or service.
The resulting figure reflects the payback of the enterprise.
On its basis, in combination with marginal cost, management decides whether it is rational to expand the firm.
Average revenue shows the level of income received from the sale of one unit of goods. As a rule, this amount is equal to the price of the product. By controlling pricing, a company can regulate its own revenues.
Total income is the result of the company's economic activities, calculated as the difference between the cost of goods or services sold and total costs for production.
What is revenue?
Revenue - total amount Money received as a result of the sale of goods and services for a certain period of time.
The total revenue consists of the amounts received by the enterprise as a result of the main activity (sale of goods or services), investment activities (sale of non-current assets and securities) and financial activities of the enterprise.
Sales revenue is cash received from the sale of goods and services. It is divided into two types:
- gross proceeds- represents the total amount of proceeds from the sale of goods, services, income from non-sales operations and property;
- net proceeds- cash received after deducting VAT, taxes, discounts and the cost of returned products from gross revenue. It is from these funds that the calculation of dividends and amounts for the development of the enterprise is then carried out.
EBIT profit
Earnings Before Interest and Taxes (EBIT) is an intermediate value between gross and net income, it is income from which interest and taxes have not yet been deducted.
This is also referred to as operating income.
But it's not right. Unlike operating income, EBIT also includes non-operating income. If there are no non-operating income and expenses in EBIT, the indicator will be equal to operating profit.
EBIT is calculated from the income statement and is the sum of profit or loss before taxes and interest payable. A positive EBIT is considered normal.
EBITDA profit
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) depends on the depreciation method. This is the amount of earnings before interest, taxes and depreciation, which shows cash inflows.
Based on EBITDA, the company's debt burden is calculated. To do this, the total liabilities (long-term and short-term debt) are divided by the nominal value of EBITDA.
The value of total liabilities is available for calculations from the Liabilities section of the balance sheet. The normal value of the indicator should not exceed 3. If the value is 4 or more, then the company has a strong debt burden.
When calculating the debt burden indicator, it is necessary to take into account the degree of repayment of receivables. If the receivables are not repaid by buyers, the company loses its solvency, but this fact is not reflected in the indicator itself.
Video on the topic: “Profit and gross income, what is the difference?”
Financial relations permeate the life of society, and become successful person today is impossible without understanding the essence of the most important economic categories. The concepts of "revenue" and "income" are often confused even by novice businessmen, since in the mass consciousness they are synonymous. In fact, it is very important to understand the difference between them, which will allow you to analyze any economic information more deeply.
Revenue- the amount of money received in the sale of goods or services. It can also be called "dirty" money, since costs are not taken into account when calculating the value. Revenue is always either positive or at zero, but never negative. It is determined either on a cash basis (with actual receipt of funds), or on an accrual basis (at the time of shipment of goods or provision of services, including with deferred payment).
Income- funds received by the subject of economic legal relations for certain period time. They are formed at the expense of the main activity of the legal or individual, as well as with the help of attracted investments. The concept of "income" largely intersects with the concept of "profit" and is defined by "pure money": revenue minus expenses. This is a purely economic category that reflects the current financial condition legal or natural person.
Comparison
So, revenue is a positive value, which can be equal to zero only in rare cases. Receipts are added together, forming a certain amount. Income can be negative when the revenue received does not cover the cost of obtaining it. Revenue is generated from the main activity of the enterprise: the production (sale) of products or the provision of services. Income can be received at the expense of the company's assets (rental of space, deposit, attraction of investments), as well as at the expense of the main activity (sale of goods and services).
At the same time, revenue is an attribute of a subject that is actively working in the economic sector. A person who, for one reason or another, is not engaged in socially useful activities (student, disabled person, pensioner, unemployed) can have income. These funds are generally not subject to income tax. In rare cases, revenue may equal profit. This happens in cases where, upon receipt of it, there is no expenditure part (provision of a certain list of services). However, most often it is revenue that exceeds income in terms of volume.
Findings site
- Formation. The organization's revenue appears as a result of the sale of goods and services, and income is also due to the sale of shares, attracting investments, receiving interest on funds placed on a deposit account.
- Way of origin. Revenue can only be held by an individual or legal entity leading economic activity. Income can be from the unemployed and the student in the form of scholarships, financial assistance, benefits.
- Calculus. Revenue is cash received from the sale of goods and services. Expenses are subtracted from revenue to calculate income.
- Meaning. Revenue is either zero or positive. Income can be negative if the cost of obtaining revenue exceeds the profit received.
- Ratio. Revenue is always greater than income, and only in rare cases can they be equal.
First of all, let's understand the meaning of such economic categories as revenue, profit and income.
At first glance, it seems to be the same. But that's not the case at all. To successfully start your own business, every entrepreneur must clearly understand the difference between these terms.
The mistake is that many novice entrepreneurs understand this word as everything received at the cash desk. IN retail when the buyer pays for the goods upon receipt, it happens. But in mutual settlements between counterparty enterprises, the difference between paying for the product and delivering it to the buyer is revealed.
Revenue - a set of funds for the sold goods sold, which must be received by a business entity.
Income
This is an indicator indicating the difference between the revenue received from the sale of services, and.
Profit
It is the difference between income and the cost to generate it. Determines performance. Can be negative when costs exceed revenues.
Kinds
If we subtract the deductions associated with them from the sum of all incomes, we get as a result. There is also a net one - what remains if all payments of the enterprise are removed from the income:
- Credits.
- Penalties.
- Taxes.
- Office rent.
How revenue, income and expenses are determined
Two methods:
1st - accruals "on shipment". The indicators are calculated at the time of the provision of services, performance of work or transfer of goods. It does not depend on payment. The most common way.
2nd - cash, "on payment." Determine the indicator when the calculation is made. Suitable for small organizations working for cash - shops retail. The disadvantage is the inability to control accounts payable and receivable. This happens because the receipt of funds is taken into account, but there is no accounting for the work performed by the enterprise, services rendered or goods sold.
We have reviewed the most significant indicators activity of any entrepreneur.
Profit is one of the main performance indicators of a company. The receipt or absence of profit characterizes the activity of the company as successful or unprofitable. The more profit, the better. This means that the enterprise works perfectly, pays off the costs, and, moreover, the entrepreneur who has received a profit can dispose of “free” money: send it to the further development of the company or spend it on personal needs.
To determine profit, one must know and be able to find such related indicators as costs (otherwise expenses or costs) and revenue (income) of the company. People often do not see the difference between profit and revenue. In addition, profit is divided into types: balance sheet, net, taxable and others. In our article, we will understand the intricacies of this most important indicator for every businessman.
Before explaining what Profit is, it is necessary to distinguish between 2 concepts: revenue and profit.
Article 249 of the Tax Code of the Russian Federation and comments to it indicate that these are proceeds from the sale (sale or other alienation for compensation) of goods, services, property and property rights, both own and acquired for resale.
Individual entrepreneur(IP) Ivanov purchased a batch of mobile phones Xiaomi in the amount of 10 pieces, at a price of 12 thousand rubles for 1 phone. Within a month, he sold phones at a price of 20 thousand rubles apiece. REVENUE was: 10 * 20,000 = 200,000 rubles. That is, revenue is the income received from the sale and does not take into account expenses.
The entrepreneur spent 10 * 12,000 = 120,000 rubles on the purchase of phones. These are the COSTS that represent .
Now we subtract costs from revenue: 200,000 - 120,000 \u003d 80,000 rubles - this is the PROFIT received by Ivanov from the operation for the purchase and sale of phones.
This example "on the fingers" helps to understand how they find profit. But there are nuances. Profit is classified into different types and depends on the categories of costs, tax burden, and other factors. This will be discussed further.
The concept of "profit" is characteristic of entrepreneurial activity. This indicator is used in the Civil Code of the Russian Federation, at its expense, in Article 50 of the Civil Code of the Russian Federation, legal entities are divided into commercial and non-profit organizations.
Profits appear in federal laws about activities production cooperatives, business companies, other business entities, is mentioned in the laws on, on the federal budget.
More precisely, this concept is disclosed in the Tax Code of the Russian Federation. Article 247 of the Tax Code of the Russian Federation states that the profit received as a result of the activities of the taxpayer is subject to the levy of income tax. Profit is recognized income received, which is reduced by the amount of expenses incurred. What relates to expenses is defined in articles 252-255 of the Tax Code of the Russian Federation, and is described in detail below.
To clarify: the expenses of the company, which generate profit and are recognized for tax purposes, must satisfy 3 principles:
- Be directly related to commercial activities. For example, the Orion company purchased computers for accounting for 150 thousand rubles. This amount is rightly included in the firm's expenses. But 10 thousand rubles spent on an aquarium with fish in the same accounting department cannot be attributed to expenses aimed at implementing commercial activities.
- Expediency of expenses from the economic point of view is necessary. So, if 3 full-time accountants work in the accounting department of Orion LLC, then the purchase of 5 computers will be an unjustified waste of financial resources.
- Documentary evidence of expenses is required. If in the same LLC they lost the invoice for the purchase of 1 of 3 computers, and it is impossible to confirm the purchase, then the costs of such technical means will not be recognized in order to reduce the tax base.
What are the types of profit
Two main approaches to determining profit are used, they find:
- book profit,
- economic profit.
What is accounting profit
This view is based on the firm's actual accounting data. Accounting profit is the difference between the income and expenses of the enterprise for a specific period of time. Here accounting (explicit, or, in other words, external) expenses of the company are taken into account.
- Accounting profit = Revenue - accounting (explicit) expenses
These expenses include:
- the salary of the personnel of the enterprise;
- funds spent on equipment, buildings, structures, machine tools;
- depreciation of fixed assets;
- payment transport costs;
- payment costs utilities, electricity;
- payments to suppliers of raw materials, other material services;
- payment for intermediary, insurance, banking services.
The difference from accounting is that costs additionally include alternative (implicit, or internal) costs. These are the costs at which, presumably, the firm could earn a large profit due to own resources.
When calculating this type of profit, those lost costs are taken into account, which, with more rational use the resources available to the firm would bring additional benefits.
Find economic profit using the following formula:
- Economic Profit = Revenue - (External + Internal Costs)
You can also calculate in another way:
- Economic profit = Accounting profit - internal (implicit) costs
Here's an example:
Businessman Petrov took a loan from a bank and opened manufacturing facility for the manufacture of furniture for cutting. The premises are owned by the entrepreneur. Explicit costs include: wages designer and two workers, depreciation of the computer and 2 sawing machines, monthly services utilities, payment of interest on the loan and the purchase of materials. For a month, these expenses amount to 200 thousand rubles. On average, Petrov receives orders for 300 thousand rubles a month.
Let's find profit indicators:
Accounting profit will be equal to: 300,000 - 200,000 \u003d 100,000 rubles.
If Petrov rented out the premises of the workshop, this would bring 40 thousand rubles a month. Working at the plant in his main specialty - a foreman in setting up machine equipment - he could receive 25 thousand rubles a month. Are these implicit benefits, or internal costs.
Thus, the economic profit is: 300,000 - (200,000 + 40,000 + 25,000) = 35,000 thousand rubles.
It is obvious from the example that the accounting profit in this case is greater than the economic one. This suggests that the entrepreneurial activity of IP Petrov brings more benefits and advantages than the absence of such.
If we assume that the prices for renting out the workshop premises have risen from 40 to 80 thousand rubles a month, and Petrov received an offer from his previous job to become a foreman of equipment adjusters with an income of 50 thousand rubles, then the economic profit will be: 300,000 - (200 + 80 + 50) = - 30,000 thousand rubles.
A negative indicator reflects the inexpediency of the business, in which case Petrov should have rented out the premises and gone to work as a foreman at the plant.
With negative economic profit, options are considered for repurposing or closing one's own business.
Complementing the analysis of accounting and economic profit is a closely related indicator called "normal profit". This type of profit is used in investment activities to assess the effectiveness of investing in specific business.
Normal profit
Normal profit is said to appear when the economic profit is zero. This equilibrium is reached when the company's total income is equal to total costs.
In the example with IP Petrov, a normal profit will be received with a number of orders in the amount of 265 thousand rubles, while the value of economic profit is zero, and the company's expenses are fully consistent with income. Everything that Petrov earned above this level, and this is 300 thousand - 265 thousand = 35 thousand rubles - is "surplus profit".
The excess over the level of normal profit reflects the positive dynamics of the enterprise. A value below the level of normal profit characterizes the profit as negative, and the company's activity as unprofitable.
What does this mean for the investor? The most direct. Achieving the level of normal profit characterizes the business as attractive enough for investment.
If the profit exceeds the normal rate, then investing in it makes sense and is beneficial for the investor.
If the return is less than normal, the investor loses income and may decide to withdraw the funds from the business and redirect them in another direction.
Video: Economic and accounting profit
Additional classification of the organization's profit
There is another gradation based on the inclusion in the calculation of various receipts and expenses of the company. Let's take a closer look at this classification:
Gross profit
It is an indicator of the return on the production or sale of goods, the provision of services and is directly related to the costs of such operations. This does not take into account the costs of management and marketing, advertising, sales of products (commercial expenses). That is, gross profit reflects income arising from the circulation of goods or production cycle production of products of the enterprise. It is most often used by the management of the enterprise when planning future revenues and costs. Production costs are not constant, they can change, so the estimate is made for a short period, for example, for a financial year.
Gross profit is calculated based on the financial results obtained by the enterprise and reflected in financial statements namely in the Profit and Loss Statement.
It is determined by the following formula:
- Gross profit \u003d Revenue - Cost
Revenue does not include other income, for example:
- sale of fixed assets: equipment, buildings, structures;
- from the sale of securities;
- gratuitous receipt of property as a result of donation;
- fines or penalties paid by counterparties for violations of contractual obligations.
There are exceptions when, for example, the sale of equipment is fixed in accounting policy as one of the main activities, in which case such transactions will be included in the calculation of gross profit.
The cost price is also found only on the basis of production costs or those that are aimed at selling goods or providing services.
Yes, in production organization to calculate gross profit, the following costs are included in the cost:
- for raw materials, inventories, working tools;
- fuel and energy costs;
- for depreciation and maintenance of machine tools and equipment;
- on the salary of the main personnel, taking into account the required contributions to the funds: pension, medical and social insurance.
In a trading company, the cost price consists of the following items of expenses:
- for the purchase of goods for subsequent resale;
- for the salary of employees, with deductions to the Pension Fund of the Russian Federation, the Social Insurance Fund, the Compulsory Medical Insurance Fund;
- rent payments for the rent of retail space, security.
For the 1st quarter of 2019, the Melange confectionery earned 650 thousand rubles. In addition to the owner of the business, the company employs 2 bakers and a salesperson, and a freelance accountant conducts bookkeeping. The accounting policy states that the purchase of raw materials and inventories, as well as the salary of employees, are included in the cost price.
During this period, the owner decided to sell 1 out of 2 dough mixers, due to the insufficient workload of two devices. The sale of the dough mixer brought in 300 thousand rubles, but this amount is not included in the calculation of gross profit, since such a transaction does not apply to the main activity of the company.
Let's find the cost of production: 175 + 15 + 110 + 24 + 60 + 25 = 409 thousand rubles.
The gross profit of Melange for the 1st quarter was: 650 - 409 = 241 thousand rubles.
The profit from the sale of products in production is the same as the profit received from sales in a trade enterprise or in the provision of services.
This is a more in-depth indicator than the balance sheet profit, it allows the company's management to evaluate how effective the production or sale of products is, taking into account selling and management costs. The amount of profit from the sale affects the enterprises, that is, the ability to cover current and repay unforeseen expenses that may arise at any time.
It is found by the following formula:
- Profit from sales (sales) = Gross profit - administrative and selling expenses
Selling and administrative costs are included in the general expenses associated with the ordinary activities of the company. Some of them are related to the cost of goods produced or sold.
In fact, in tax legislation and other regulations authorities do not give a specific concept of such costs. There is a generally accepted norm, and each enterprise in its accounting policy, at its discretion, assigns part of the costs to managerial or commercial items of expenditure, then they are reflected in the necessary accounting accounts.
It is customary to attribute to management costs those costs of the enterprise that do not directly relate to the production or sale of goods, the provision of services.
This includes:
Commercial expenses include those that are included in the cost of production and are directly related to the main activities of the company, for example:
In continuation of our example, we will determine the profit from the sale of the Melange confectionery for the 1st quarter of 2019. To do this, we will subtract commercial (costs for the delivery of raw materials, packaging and advertising) and management costs from the gross profit received.
241 - (8 + 12 + 25 + 15) \u003d 241 - 60 \u003d 181 thousand rubles - amounted to profit from sales.
Profit before tax
This is the value that is the base, or the basis on which income tax is calculated. It represents an interim financial result, when all receipts and all expenditures of the enterprise's funds are taken into account before taxes are paid. It is found like this:
- Profit before tax = Revenue + Other income - Cost of sales - Selling expenses - Administrative expenses - Other expenses
In the accounting standards specially developed by the Ministry of Finance and the Central Bank of the Russian Federation, namely in the “Accounting Regulations” 9/99 No. 32n and 10/99 No. 33n, other income and expenses include funds received or retired at the expense of:
- provision of the company's assets for temporary disposal;
- paid transfer of rights to intellectual property;
- sale or write-off of fixed assets, non-financial assets (except for goods);
- interest on loans;
- accrual of penalties, penalties for non-fulfillment of contractual obligations;
- charity;
- other than the main activity.
In our example, for the 1st quarter of 2019, the confectionery received other income from the sale of a dough mixer in the amount of 500 thousand rubles. There were no other miscellaneous expenses for this period in the company.
Profit before tax will be equal to: 650,000 + 300,000 - 175 - 15 - 110 - 24 - 60 - 25 - 8 - 12 - 25 - 15 = 481 thousand rubles - this amount serves as a tax base for paying income tax.
Net profit
This is free cash remaining at the disposal of the company after all taxes and deductions. Calculating net profit, the accountant summarizes the activities for the reporting period. The result obtained is evaluated by the management and the owner of the business for further direction profit received for the development and expansion of production, purchase modern technology and equipment, introduction of new technologies. Investors assess their prospects for investing in the company by the amount of net profit. If the company is solvent, banks agree to issue loans. A good net profit of the company attracts business partners to mutually beneficial cooperation.
How to calculate net income? It is found from the total amount of income of the enterprise for a specific period, taking into account all expenses incurred. At this stage, extraordinary incomes or expenses are added to the previously considered receipts and disposals of funds. These are the consequences of force majeure situations (fires, floods, man-made disasters, terrorist acts), due to which the company incurs losses or receives insurance compensation.
The formula for net profit is:
- Net income = Profit before tax + extraordinary income - extraordinary expenses - income tax
In 2020 legal entities pay tax at the basic rate of 20% (except for preferential categories), of which 3% goes to federal budget, and 17% - to the budget of the region at the location of the taxpayer-legal entity. Thus, the Melange confectionery is obliged to pay to the budget: 481,000 * 20% = 96,200 rubles.
The calculation of the net profit of the Melange company is as follows: 481,000 - 96,200 \u003d 384,800 rubles.
balance sheet profit
The balance sheet profit is reflected in the main documents of the organization's financial statements - form No. 1 "Balance sheet" and form No. 2 "Report on financial results". It is determined by increasing for 1 quarter, half a year, 9 months, a year. This parameter is evaluated in dynamics, that is, for different periods of time, for example, the indicators of the previous and current years are compared. At the same time, various balance sheet items are analyzed, factors that influenced the decrease in profits are monitored. If the profit plan is not met, the business owner can assess the reasons for this and take measures to improve the financial and economic situation.
The balance sheet profit is found by the formula:
- Balance sheet profit = Operating income + Other income – Operating expenses – Other expenses
Many enterprises - representatives of small businesses - use simplified reporting and are not required to draw up form No. 1, therefore they do not use the concept of balance sheet profit.
In our example, the balance sheet profit of the Melange confectionery will coincide with profit before taxes and will amount to 481 thousand rubles.
Operating profit
This indicator is used by companies in Europe and America, and is less common in Russian practice accounting.
In the English version, operating income is called EBIT - Earnings Before Interest and Taxes - literally: earnings before taxes and interest on borrowed funds. Find it like this:
- Operating profit (EBIT) = Gross profit - Selling expenses - Management expenses - Other expenses + Other income + Interest payable
In other words:
- Operating profit = Balance sheet profit + Interest payable
It makes sense to calculate this indicator if the interest on credit obligations is high. If there are none or the percentage of loan payments is insignificant, operating profit will be equal to the balance sheet or profit before tax. That is, the dependence of the enterprise on creditors is reflected. Mainly, operating income is of interest to investors and others interested persons as an opportunity to assess the financial condition and value of the company.
Marginal profit
There is also such a thing as marginal profit. It is equivalent to gross or book profit, but there are differences in the economic meaning of these quantities.
Marginal profit is found as the difference between the company's revenue from its core activities and part of the costs, called variables. These include expenses that directly depend on the volume of manufactured products and are not allocated in Russian accounting as separate category and are included in the cost.
- Marginal profit \u003d Revenue from core activities - variable costs(Cost price)
Marginal profit is good because it helps to calculate profit not only in relation to the total volume of goods produced, but also in the context of a particular type of goods or per unit of production.
- Marginal profit per unit of production \u003d Selling price of goods (one trade item) - Cost of a unit of goods (one trade item)
For example, in the Melange confectionery they produce cakes and you need to find out which one is the most cost-effective.
Brownie cake brings the smallest marginal profit, knowledge of this allows the owner of the confectionery shop to plan production in a new way. You can remove this nomenclature from production or increase the final price for it.
Profit margin is interesting for investors when planning new projects and investments in investment areas.
Factors affecting profit
Any enterprise constantly interacts with various phenomena that can positively or negatively affect the result of the company's activity - profit. This influence can be external, independent of the enterprise itself, and internal, when a change in the situation within the company can increase or, conversely, reduce business efficiency.
What can be external factors influencing profit
We list the main external factors:
- Inflation.
In conditions of economic instability, high growth rates do not allow the enterprise to develop, the priorities are aimed only at “staying afloat”. Inflation "eats" all savings, the entrepreneur does not have the opportunity to capital investments into production.
- Increasing tax rates, changing the preferential taxation policy.
In 2018, a single tax on imputed income was increased by 3.9%, which is actively used by small businesses. At the same time, at the regional level, privileges on the tax on movable property of legal entities were canceled. It is clear that such changes can negatively affect profitability, especially in small businesses.
- Adoption at the state level of legislative acts relating to business issues.
For example, the law obliging all entrepreneurs (with some exceptions) to use online cash registers since July 2018. Thus transparency of payments is achieved and immediate receipt of information in tax office. On the other hand, many representatives of small businesses, especially in the regions and on the periphery of the Russian Federation, are not able to financially pull the introduction and maintenance of new technologies, so the small profit of such companies may go into the red.
- Change in the cost of raw materials and materials.
It is obvious that an increase in the cost of production resources affects the increase in cost, and entails an increase in the cost of the final product. This, in turn, reduces the volume of sales, that is, it will negatively affect the size of the company's profit. Conversely, the conclusion of a contract for the supply of affordable raw materials (subject to the quality of resources) will allow to expand production or change pricing policy companies. Such measures can attract buyers and increase profits.
- market situation.
Profit is influenced by the number of producers and consumers in the market, the possibility of entering the market, high or low in the industry.
This is where creating a unique selling proposition can help. The buyer needs to offer a new interesting product that will be in demand. For example, in the Melange confectionery they bake personalized children's cakes. This idea attracted many mothers to order such cakes for the birthday of their child in this pastry shop.
No less than external factors, the size of profit is also influenced by the situation developing within the enterprise. There are the following internal factors:
- Company turnover.
An increase in the number of products produced at a constant cost can lead to an increase in profits. But first you need to predict the demand for the product, or find additional distribution channels.
- Expansion of the commodity nomenclature.
A wide range of products gives the buyer a choice. If you rely on quality and prestige certain types product can attract high-income buyers.
- High level professionalism and quality of service
This factor is very important. Personal qualities service personnel V trading company or managers manufacturing enterprises affect the attraction of customers or their departure due to the inept work of the firm's employees.
- Technical equipment
Modern equipment helps to save time and speeds up the process of product development, which positively affects the company's turnover.
- The business reputation of the firm.
If the company has made a "name" for itself, the owner values business reputation, business partners will be interested in cooperation with this company. When the company has established itself with better side, buyers become regular and bring relatives and friends. This increases the demand for products and profits.
External and internal factors influencing profits must be analyzed at all stages of the company's activities.
Why you need to calculate and evaluate the company's profit
Various situations may arise when it is necessary to estimate profit:
1 To find out how the company has fulfilled the profit plan, whether the reality matches expectations. At the beginning of work or at the start of a project, a business plan is drawn up, in which a development forecast is made, costs and profits are calculated, and deadlines for the completion of work are assumed. In the business plan, they try to take into account all possible factors influencing the development of the enterprise.
Having calculated the real, after all the necessary deductions and payments, that is, net, profit, it is compared with the planned one, and conclusions are drawn. If the profit is less than originally expected, the manager or owner of the business can understand what was done wrong, what decisions are wrong.
2 Determine reserves for further profit growth. If during the calculation it became clear that the cost of production is high, then you need to look for new suppliers of raw materials. Reducing costs at a constant price will lead to an increase in profits. Development marketing activities: advertising and promotions, presentations of goods will attract the attention of buyers to the company and products. Sometimes new packaging helps to increase interest in a product.
3 Adjust the company's development strategy (develop successful areas). The calculation and evaluation of profit indicators will help you decide in which direction to move forward in order to increase the profitability of the company. For example, if it is revealed that one of the types of products makes little or no profit, this is an occasion for management to think about whether it is necessary to produce this product, is it not better to remove it from production, and use the freed resources to produce products that are more profitable and in demand among buyers.
Profits and taxation
Any company operating in Russia is required to pay income tax. This is stated in Chapter 25 of the Tax Code of the Russian Federation.
The object for paying tax is the profit received for a specific period as the difference between income and expenses.
Income is taken into account:
- from product sales own production;
- from the resale of purchased goods;
- from the sale of property and securities;
- costs not related to implementation (non-operating). They are spelled out in Article 250 of the Tax Code of the Russian Federation and they include, for example, income from the rental of property, property or work (services) received free of charge, exchange differences, and income from previous years.
Expenses accepted for tax purposes include:
- for raw materials and materials;
- employee salaries;
- depreciation deductions;
- other expenses;
- non-operating costs, for example: the cost of issuing securities, legal costs.
If the firm did not make a profit, but a loss, then the tax base is considered equal to zero.
Income tax is calculated at the basic rate of 20%.
Preferential rates are set at 0% - for medical, educational and social institutions, as well as on income from equity participation in other organizations, and upon receipt of dividends.
13% is paid by those Russian legal entities that received dividends (except in cases of taxation at a zero rate), and income from shares certified by depositary receipts.
Features of taxation at a rate of 0% are disclosed in article 284 of the Tax Code of the Russian Federation.
15% is paid by foreign companies on dividends received on shares of Russian companies, in accordance with Article 275 of the Tax Code of the Russian Federation.
Income tax is charged for a quarter, half a year, 9 months (these are reporting periods) and is displayed on an accrual basis for a year (this is a tax period).
Enterprises are required to make monthly or quarterly income tax payments to the budget, the tax for the year is transferred before the end of the 1st quarter of the year following the reporting year. Simultaneously with the payment of the tax, the corresponding tax declaration is also submitted.
Answers on questions
What is the difference between profit and profit
In a general sense, income is all the financial receipts of an enterprise from various operations, including non-production ones. Whereas revenue is cash received only from the production or sale of goods, that is, from the main activity. Both revenue and income reflect financial influences in the company, while profit is formed taking into account both cash receipts and cash expenditures. Thus, income and revenue serve as the basis for calculating profit, this final measure of the firm's performance.
Is it possible to include in the income tax expenses the passage of a training session by an employee of the company?
Article 264 of the Tax Code of the Russian Federation states that advanced training courses are included in expenses. At the same time, an agreement is concluded with the organization implementing the training program, and a certificate is issued upon completion of the training. If these conditions are not met, then training costs cannot be recognized for tax purposes.
Employees of the company spent the weekend resting at a recreation center outside the city; a bus was ordered for the trip on behalf of the organization. Can the money spent on transportation be included in the expenses?
tax code The Russian Federation unequivocally gives a negative answer, since such expenses are not related to official activity companies.
How to correctly attribute the payment for mobile communications to expenses?
Payments to mobile operators are included in the management costs of the enterprise. In order to prove to the tax authorities the validity of these costs, it is better to officially approve the list of employees who will be used in their work. mobile communications. To confirm the use not for personal purposes, but for commercial activities, order call details from the operator.
Remember
- Profit is the main component of any business. Without it, the meaning of entrepreneurship is lost, if we do not keep in mind the first steps of the existence of commercial activity. A negative result is possible at the very beginning of the project, in the future it is an indicator of the acceptance of incorrect management decisions, inexpediency of expenses material resources and financial assets of the company.
- Each owner seeks to achieve economic solvency, freedom to dispose of profits. But for this, you first need to get it, and then learn how to count.
- The calculation of business profitability indicators is based on revenue, that is, those incomes received from the sale or production of products, as well as related costs. These expenses must be directly related to the activities of the company, be justified and documented.
- There can be a great variety of both income and expenses in a company. Based on these differences, gross, balance sheet, accounting, economic, operating, net and other types of profit are determined.
- Each of them can be used by the head of the enterprise, its owners and investors, shareholders of the company. Inspecting and regulatory authorities, counterparties and partners of the company can understand how effective the business is, how to build a strategy further development whether the dividends will be high, whether the reporting is transparent and whether it is worth maintaining partnerships with this company.
- Each entrepreneur is obliged to pay income tax deductions to the budget on time. This is usually 20%, but reduced rates apply.
- The formation of profitability is influenced different factors both internal and external influences. The instability of the political or economic situation, high inflation, the introduction of legislative initiatives that restrict or support business development, competition, technological innovations - these are far from complete list factors that affect the performance of the company. Properly using the changes and fluctuations of the internal and external environment, the owner or manager of the business can maximize profits.
