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    Article On Business Setup

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    Evans Corp
    The standard profit sharing is based on the capital contributed, such that if an investor contributed 35% of the total capital, they would receive 35% of profits. However, if additional capital is needed and an investor cannot contribute, their share of profits would decrease proportionally. Additionally, investors involved in management would receive a monthly salary approved by other partners, plus a share of profits. It is also possible for an industrial partner to not contribute capital but receive a share of ownership and profits in exchange for organizing and managing the business, in addition to any management salary.

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    Article On Business Setup

    Uploaded by

    Evans Corp
    28 views2 pages
    The standard profit sharing is based on the capital contributed, such that if an investor contributed 35% of the total capital, they would receive 35% of profits. However, if additional capital is needed and an investor cannot contribute, their share of profits would decrease proportionally. Additionally, investors involved in management would receive a monthly salary approved by other partners, plus a share of profits. It is also possible for an industrial partner to not contribute capital but receive a share of ownership and profits in exchange for organizing and managing the business, in addition to any management salary.

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    The standard profit sharing is based on the capital contributed, such that if an investor contributed 35% of the total capital, they would receive 35% of profits. However, if additional capital is needed and an investor cannot contribute, their share of profits would decrease proportionally. Additionally, investors involved in management would receive a monthly salary approved by other partners, plus a share of profits. It is also possible for an industrial partner to not contribute capital but receive a share of ownership and profits in exchange for organizing and managing the business, in addition to any management salary.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    28 views2 pages

    Article On Business Setup

    Uploaded by

    Evans Corp
    The standard profit sharing is based on the capital contributed, such that if an investor contributed 35% of the total capital, they would receive 35% of profits. However, if additional capital is needed and an investor cannot contribute, their share of profits would decrease proportionally. Additionally, investors involved in management would receive a monthly salary approved by other partners, plus a share of profits. It is also possible for an industrial partner to not contribute capital but receive a share of ownership and profits in exchange for organizing and managing the business, in addition to any management salary.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    The standard profit sharing is based on the capital that an investor has contributed to

    the business. For example, if the total capital of the business is P1 million and you
    contributed P350,000 of it, your share in the company\\\'s profits would be P350,000 ÷
    P1,000,000 or 35 percent. Your company will then issue stock certificates indicating that
    you own 35 percent of it.

    However, in the event that the company needs additional capital during the year and you
    are unable to contribute your proportionate share because you happen to be short of cash,
    your share in the profits would be reduced because your percentage share of the expanded
    capital would decrease.
    For instance, if the total capital of the business is increased to P1,500,000 with all of the
    additional P500,000 coming from your partners and none from you, your share in the
    profits would go down from the original 35 percent to P350,000 ÷ P1,500,000 or 23
    percent.

    Of course, if you will be involved in managing the business apart from being one of
    its investors, you would also be entitled to a monthly salary, the amount of which needs
    to be approved by majority of the partners. Thus, when the company distributes to its
    investors the net income it earned during a particular year, your total earnings will be
    your proportionate share of its profits plus your salary package as one of its managers.

    It is also possible for someone to be simply an industrial partner in a business. An


    industrial partner is one who does not put up any capital in the business; instead, he or
    she solely puts in time and effort to organize and manage the business. In such cases, the
    financial investors usually will give the industrial partner a certain share of ownership in
    the company, say 10 percent. This share of ownership then allows the industrial investor
    to a proportionate share of the company\\\'s annual profits. This is in addition to whatever
    salary the industrial investor is entitled to as a member of the company\\\'s management
    team.
    Henry Ong, CMC, CMA, is president and COO of Business Sense
    (www.businesssense.com.ph ), a business advisory firm that provides expert solutions to
    small and medium sized companies. You may reach him at [email protected].

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