Method of calculating charter capital for each type of enterprise

For startups who want to start a business or administrators who are in the early stages of operating a business, knowledge of how to calculate charter capital is very important. This is an indispensable concept in the process of managing financial accounting activities as well as evaluating the company's business scale. So to better understand this issue, let's explore the article below with 1C Vietnam!

1. What is charter capital?

Charter capital is the capital that members or shareholders contribute and commit to contribute when establishing the company. Charter capital can be valuable documents and ownership of assets or cash is declared in detail in the minutes of capital contribution ratio, with time and obligation to contribute. This capital plays a role in maintaining the company's business activities.

Pursuant to Article 112 of the Law on Enterprises 2020, the charter capital of a joint stock company is the total value of shares of all types sold, understood as the total value of capital that shareholders have contributed to the enterprise over a period of time. certain.

At the same time, charter capital is also the number of shares when registering to establish a business, the total par value of shares registered to buy and recorded in the company charter. In case the committed capital contribution is not met, the enterprise must adjust its charter capital according to the actual value.

So why must businesses understand how to calculate charter capital ? This is an indispensable element in the capital structure of an enterprise, especially in determining the capital contribution ratio of owners as well as company members. Charter capital is also the basis for businesses to carry out the process of dividing profits and obligations among capital contributing members.

Besides, this is also an important index reflecting the company's scale, position and capacity compared to competitors in the industry. Based on the charter capital, customers and partners can have more confidence in their transactions with the business. The larger the charter capital, the higher the company's position and attracts more quality contracts.

2. How to calculate charter capital for each type of enterprise

Depending on the business model of the company, the way to calculate charter capital is also different. Below are detailed suggestions.

2.1 How to calculate charter capital of a joint stock company

A joint stock company is a type of enterprise with charter capital expressed in the form of shares that the company has the right to issue and sell to investors. Each share has its own par value, which is the minimum value that shareholders must pay to own a share in the business.

Charter capital in a joint stock company is the total value of all shares sold to investors. This total value will be clearly stated in the business's legal documents such as the Charter Capital Report or the Company Charter. In this case, the charter capital calculation is determined as follows:

For example, company X sells 1,000 shares to the market with the value of each share being 20,000 VND, then the charter capital of company

2.2 How to calculate charter capital of LLC with 1 member or more

According to Article 74 of the Enterprise Law (2014), the charter capital of a one-member limited liability company is determined to be the total value of assets the owner commits to contribute and recorded in the company's charter at the time of registration. . This is the amount of money that will be used for business operations and is responsible for the company's debts. The owner must contribute all types of assets correctly and as committed within 90 days from the date of issuance of the Business Registration Certificate.

In this case, charter capital is calculated as follows:

For example: Mr. A commits to contribute 3 billion in cash and 2 billion for the value of the apartment owned by Mr. A to establish company X. At this time, the total charter capital of company X is 5 billion VND.

2.3 How to calculate charter capital of a partnership company

A partnership is a type of enterprise invested by two or more organizations and individuals who commit to contribute capital to participate in business activities. The charter capital of a partnership is the total value of assets that the members commit to contribute, which is specifically stated in the partnership contract.

For a partnership company, charter capital is calculated by:

For example: Mr. A cooperates with Ms. B to establish company X. In which, Mr. A commits to contribute 5 billion VND in cash, and Ms. B commits to contribute 3 billion VND in cash. Then partnership company X will have a charter capital of 8 billion VND.

2.4 How to calculate charter capital of LLC with 2 or more members

Article 48 of the Enterprise Law (2014) stipulates that the charter capital of limited liability companies with two or more members is the total value of the capital contributions committed by members at the time of registration. Members must contribute all types of assets correctly and as committed within 90 days from receipt of the Business Registration Certificate. Each member will have rights and obligations corresponding to the capital contribution ratio.

How to calculate charter capital for a 2-member limited liability company is as follows:

For example: Limited liability company term. At that time, the total charter capital of company X was 9 billion VND.

3. The role of charter capital for businesses

Charter capital is an important indicator in financial and accounting activities, playing an important role in the process of business management and operation. Below is the prominent role of the charter capital index:

3.1 Demonstrate the responsibilities of shareholders

Charter capital is the amount of money that shareholders commit to contribute to demonstrate responsibility for the company's business activities. This helps businesses calculate to ensure that shareholders will bear part of the responsibility for maintaining operating costs as well as paying the organization's debts.

3.2 Ensuring transparency

Charter capital is the minimum amount of money required for the company to be established and enter official operation. This amount will ensure honesty and transparency in business operations, from establishment to day-to-day transactions. Charter capital shows that the company has a solid financial foundation and does not operate under debt or fraud.

3.3 Determine the company's financial health

Charter capital reflects the company's financial capacity. If the charter capital is strong, the company can carry out large projects, expand quickly and meet financial obligations. On the contrary, if the capital is low, the company may have difficulty implementing large campaigns to capture business opportunities.

In the above article, 1C Vietnam has compiled ways to calculate charter capital according to each business model of each enterprise. Charter capital plays an important role in the company's financial and accounting activities as well as showing the commitment and responsibility of members to the overall operations of the enterprise. Hopefully through this article, businesses have gained more useful knowledge. If you have any questions, please contact 1C Vietnam for support.