Select Your Location
There is no concept of profit sharing in a Pvt Ltd company, you cannot share profit in a profit sharing ratio in a private company.
The concept of sharing of profit arises only in case of Partnership Firms.
Before understanding the concept of profit sharing among partners you need to understand these things:
In companies, profit is distributed in the name of Dividends based on the percentage of Shares held by them.
To share profits means sharing dividend. It will be decided based on the % of the shareholding each of you holds.
If it is seen technically then it can be said that whole profit accruing to the company belongs to the shareholders of the Pvt ltd company and if the shareholders want they can declare a dividend as the distribution of profit subject to the legal compliances.
Private Limited Company an entity and it has to follow stipulated rules and regulations, starting with the registration of the firm. As a firm needs to establish and continue, there should be initial investment from the shareholders, and the people involved in its operations could be paid salaries, which will protect the firm and the investors as well. In due course of time if there is sufficient profit then in that case dividend could be paid to shareholders of the company, and that dividend shall be based on the number of shares they hold. This dividend shall be declared after setting aside the needed share of profit for the firm’s growth and expansion.
How much should be the initial investment of the Private Limited company is usually decided prior to the company’s registration, although it may also be revised based upon the suggestions as agreed upon in the Meetings of the Board and the Members.
Profit sharing can be done in many forms and the percentage of profit that shall be given to members/shareholders is mostly in a written form/agreement between the stakeholders in return for their respective contribution to the Pvt Ltd company.
In case of companies, sharing of profit is not a regular feature. In Companies, profit sharing is done in the form of dividend as recommended by Board of Directors and approved by the members (Shareholders). Shareholders may or may not increase the recommended dividend.
Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommend...
The objective of the enactment of the Prevention of Money-laundering Act, 2002, i.e. PMLA (the...
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Infrastructure and real estate have been regarded as India's "sunshine sector" since the turn o...
On 22nd May 2023, the Central Board of Direct Taxes (CBDT) issued a new circular under secti...
Anyone can have different sources of income. With globalization and the opening up of economies...
Are you human?: 8 + 9 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The state of Malta is known to be one of the most attractive destinations for starting a gaming company. Malta has...
20 Jul, 2022
One Person Company Sec 2(62) Of Companies Act 2013 Defines OPC As: A CompanyWhich has only ONE Person as a MEMBE...
12 Dec, 2020
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!