Every professional, when undertaking and setting up his company, has a common goal with all the others: to obtain profitability.
Therefore, it is essential to have an efficient financial control, so that disorganized withdrawals are avoided.
In this sense, understanding the main differences between pro-labore and profit distribution becomes essential. Check out the main differences below and understand how each type of remuneration works. Follow!
Differences between Pro-labore x Profit distribution
Pro-labore is understood to be the remuneration paid to the incumbent entrepreneur, as well as to its partners. This remuneration must be paid according to the business activity performed.
Therefore, it is of fundamental importance that in the social contract you have defined the amount to be paid for each partner entrepreneur, if any.
Therefore, the pro-labore does not have a recommended periodicity, however, it must appear on the company’s payroll.
Charges on pro-labore
The following are social charges related to the payment of the pro-labore:
- National Social Security Institute (INSS);
- Personal Income Tax (IRPF).
Thus, for those who opt for the Simples Nacional tax regime, payment will be made through DAS, with the exception of companies taxed in Annex V.
Therefore, for such companies, the amount increased in the collection of taxes will be increased by a retention rate of 11% on the equity value of the INSS Guide.
On the other hand, with respect to the collection of the IRPF, and the withholding of this tax will depend on the amount of income earned.
Take the opportunity to learn more about: Financial restructuring: Learn how to plan finances in adverse situations
What is profit distribution?
The distribution of profits is also known as the distribution of dividends. This remuneration model can be paid to both legal entities and individuals.
This is because the distribution of profitability must be made among the members of a society, so that all business activities can be remunerated.
Therefore, its periodicity must be established during the preparation of the social contract. In this way, it can be monthly, semi-annually or annually.
If an option is not established, the distribution of profits will be made on an annual basis, always after the closing of the balance sheet.
Charges on profit sharing
Now the reader already understands how the distribution of profits is made , from the legal point of view.
Thus, unlike the pro-labore, for this remuneration model, there is no incidence of taxes such as the social security contribution (INSS) and the Income Tax (IR).
Therefore, the distribution of profits will depend directly on the positive results obtained over a year by the company.
Recalling that there is no law that requires the realization of profit sharing among employees. However, this can be an important tool to encourage increased productivity.
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But after all, which one is better: pro-labore or profit sharing?
Throughout this content, we present all the differences between pro-labore and profit distribution . So that the reader can identify which is the best model for his enterprise.
On a daily basis, many businessmen prefer the sharing of profits, because it is free from taxation, thus enabling a reduction in costs with the payment of taxes.
However, there is a significant portion that prefers to receive a fixed monthly fee.
Finding the best type of remuneration for you and your partners is not a simple activity. But, when decided in a manner guided by an accounting professional, it can ensure the financial health of an enterprise.
This is because, regardless of the option chosen, it is of fundamental importance that cash withdrawals, made in a disorganized and unplanned manner, are avoided. Since this impairs your understanding of profitability as well as your financial health.
Finally, now that the reader already knows what are the differences between pro-labore and profit sharing , how about continuing to read our content and learn what cash generation is: a plan for when it seems that there are no alternatives ?
