The normal balance in a company’s retained earnings account is a positive balance, indicating that the business has generated a credit or aggregate profit. This balance can be relatively low, even for profitable companies, since dividends are paid out of the retained earnings account. Accordingly, the normal balance isn’t an accurate measure of a company’s overall financial health.Conversely, if a company’s retained earnings account has a negative balance, this is called a “deficit” or “accumulated deficit.” A negative retained earnings balance is common for startups since the company incurs losses before turning a profit.