The distribution of a company's profits according to certain criteria is called profit sharing.
Distribution is the process and result of distributing (the action that consists of distributing something in different places or that involves its division into various pieces or fragments). Utility , on the other hand, is the gain or benefit that can be obtained from something.
The concept of profit sharing refers to the distribution of the profits that a company achieved or that a certain operation or activity produced. In several countries, profit sharing is an obligation that companies have met by certain legal criteria.
What is profit sharing?
In this sense, profit sharing consists of a payment that the company makes to its employees according to the profits obtained in the market. In other words: a certain percentage of those profits is distributed among the workers.
Companies' tax returns determine whether or not they are required to share profits. The amount to be distributed, on the other hand, also arises from these statements , since it depends on the profits achieved and recognized by the firm.
The distribution of profits is regulated by laws and regulations.
Scope and characteristics
In addition to all of the above, analyzing the different regulations and international laws in this regard, these other data of interest regarding the distribution of profits are determined:
-The amount of money to be distributed can be divided in different ways, although the usual thing is to do it in two: one that will be distributed among the workers according to the days they have performed their duties throughout the year and another that will be granted proportionally. at the income level.
-Employees who have worked a minimum of sixty days a year are those who must be included in the distribution of profits.
-In Mexico it is established that both newly created companies and those with capital less than that established by the Ministry of Labor for that purpose or public institutions that are decentralized and carry out work are not required to undertake the aforementioned distribution. welfare, cultural or social.
-In the aforementioned country it is also determined that temporary workers who have been there for less than sixty days, domestic workers, partners and shareholders of companies and technical professionals who provide their services in the company in question but they are not part of your staff.
-It is important that the workers' representatives are up to date with the entity's annual tax return, where they can discover if it made profits, and that they conveniently inform the employees so that they can know if a distribution of profits will occur.
How the distribution of profits is carried out
The method of distribution is associated with the worker's salary and the number of days he or she worked during the period in question. The company must present workers with a copy of its tax return so that everyone can know what amounts are involved in the distribution of profits.
Then a commission made up of representatives of the company and the workers is created to establish the participation of each employee in the profits. If an agreement is not reached, the State , through certain labor authorities, must intervene to mediate.