Own funds

In the life of the company, self-funding are the funds that the owners themselves make available to the company. Self-funding can be generated in two ways, from the registered capital and from the reserves left in the company.

The assets of the enterprises are recorded in the in the balance sheet. One side of the balance sheet is the source side. This page basically shows the funds available to the business, i.e. the resources. The other side of the balance sheet is the asset side. Among the assets, we include the same goods as on the resource side, but we examine them based on their role in production. The sum of the two sides must always match. 

The liabilities consist of two parts. From own resources and liabilities. The latter are also known as external funds. The most important part of self-funding is the registered capital. The amount of this is decided by the owners at the time of establishment, but they can may increase or decrease this amount later. 

The other items of self-funding consist of reserves accumulated in the enterprise. The most typical reserve is the accumulated profit reserve. This arises when the owners decide on the use of the after-tax profit or loss, P&L. The owners have the option to take this amount or a part of it out of the company when the profit or loss, P&L is distributed. This can take the form of, for example, the payment of dividend. The amount not taken out of the profit goes in retained earnings.