Contribution in kind

The contribution in kind is a form of contribution which consists in pouring goods into the capital of a company. It can be carried out by a partner, a legal person or a third party and is carried out in exchange for shares in the company. Contributions in kind are often used by companies to obtain goods that would otherwise allow them to have to spend more money. They are useful for businesses because they can provide a tax advantage and greater liquidity.

Definition of Contribution in Kind

A contribution in kind is a contribution that a partner makes to a company in the form of goods or services, instead of paying a sum of money. The good or service provided then becomes the property of the company and can be used by it for its activities. Contributions in kind are frequently used during the creation of a company and allow the partners to enrich themselves without paying money.

The example of a contribution in kind

The contribution in kind consists for a company to contribute non-monetary assets to its capital. Contributions in kind can be made through the introduction of goods, securities or rights. For example, an entrepreneur can contribute land and buildings in kind to the business he is creating.

These contributions in kind can be made when creating or increasing the share capital. In return, the entrepreneur receives stocks or shares. Contributions in kind must then be valued in order to be recorded on the company's balance sheet.

The stages of the contribution in kind

Identification of contributions in kind
Valuation of goods contributed
Drafting of a deed of contribution
Registration of the deed of contribution
Recording of contributions in kind in the balance sheet

Contributions in kind are very interesting for companies, as they can greatly facilitate their lives and allow them to concentrate more on their activities. They therefore represent a considerable contribution to business activity. However, this type of investment can be very risky and it is therefore important to think it through before committing.

Contributions in kind can be of various kinds: a product, a skill, knowledge, etc. Once well thought out, it is a good way for the company to reduce its costs and increase its productivity. One of the keys to business success is finding a balance between in-kind contributions and the time and energy the business is willing to invest. Sleep is part of it. as the Entreprise Ricard Foundation reminds us, so it's important to strike the right balance to keep the business running smoothly.