{"id":4811,"date":"2014-03-05T08:19:32","date_gmt":"2014-03-05T06:19:32","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=4811"},"modified":"2014-03-02T13:20:05","modified_gmt":"2014-03-02T11:20:05","slug":"payments-out-of-equity-when-and-why","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/payments-out-of-equity-when-and-why\/","title":{"rendered":"Payments out of equity \u2013 when and why?"},"content":{"rendered":"

Equity is not \u201cmarried\u201d to the company indefinitely; it can be decreased just as it can be increased. Now, to focus on the negative change in equity, decrease can happen in two ways:\u00a0<\/p>\n

    \n
  1. Losses accumulated within retained earnings;<\/li>\n
  2. Payments being made out of equity.<\/li>\n<\/ol>\n

    Losses being earned and covered by prior period profits are something that\u2019s happening more regularly, however payments out of equity are not so common in everyday business.<\/p>\n

    Why would you make payments out of equity?<\/p>\n

    For one you\u2019d pay out dividends, that\u2019s the most common type of payment. The second and not so common is payment out of actual capital and\/or share premium. Now you may ask why someone would do that.<\/p>\n

    The reasons why people pay out capital itself are different, but most common are as follows:<\/p>\n

      \n
    1. Capital requirements changed for the company \u2013 no need for such amounts after a while;<\/li>\n
    2. Owners restructure the capital due to whatever reasons they have;<\/li>\n
    3. Owners need money.<\/li>\n<\/ol>\n

      Obviously there may be other reasons, but those are the ones most common as I have come by equity payments.<\/p>\n

      Don\u2019t be afraid equity payments, but do consider all regulatory requirements \u2013 declarations to statutory bodies, taxes to be paid etc.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Equity is not \u201cmarried\u201d to the company indefinitely; it can be decreased just as it can be increased. Now, to focus on the negative change in equity, decrease can happen in two ways:\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[83],"tags":[],"class_list":["post-4811","post","type-post","status-publish","format-standard","hentry","category-1-20-capital"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4811","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4811"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4811\/revisions"}],"predecessor-version":[{"id":4812,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4811\/revisions\/4812"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4811"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4811"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4811"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}