Distribute benefits among partners or self-financing?

The primary purpose of anyone who starts a business is to maximize the benefit of the business with the ultimate goal of being able to increase their income once they have satisfied all legal obligations and this benefit distributed among the partners or shareholders of the company .

However, the overall objective of all the partners in a company must also be the company moving forward. For this reason, it is important to note that a portion of the financial resources generated within the company should be used to help finance it. That is, it is recommended that the company is self-financing under the profits. But what policy should continue my business in terms of profit allocation?

There are three options when it comes to distribution of benefits is concerned: the company can finance itself , i.e. , to use the benefit as an economic resource to get on with their business , deliver these benefits between partners or shareholders or a combination of both. In fact, the law requires that a portion of these benefits is used to provide the legal reserve and other statutory and mandatory before they can spread the benefits provisions.

The decision to distribute profits to shareholders or partners and self-financing option depends on the policy pursued by the company and the particular circumstances of each moment. On the one hand, self-financing or internal financing has great benefits for companies that have great difficulties in raising external financing by strong guarantees generally requested, and in times of crisis.

However, this advantage can become a disadvantage because they lack these resources an explicit cost to invest can be reached without applying stringent criteria or appropriate assessment. Also, the more resources are spent on self-financing , less will go to dividends to shareholders , which may lead many investors to withdraw their capital from our company to not see profited investment or even separation from partners .

Ultimately, the decision as to distribution of benefits depends on the policy of our company and the needs of funds necessary is concerned, once they have fulfilled their obligations in legal matters . In any case, it is best to a combination of both depending on the needs of the company.

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