Profit Sharing

Profit sharing in a business among the investors is really common sense. It is obviously the percentage of your investment versus the total amount of the capital. But even though we can go through with it without going to the standards, it is better to have it in order for us to deal in harmony with our business partners. According to the standards, if for example the total capital of a business is Php100,000 and your contribution is Php25,000, you will get the percentage of your share by dividing 25,000 to 100,000. In this case you will get 25% of the profit.

It is really common sense if you look at the standards. In case the total capital increased because other investors contributed an addiitonal capital, then your share will decrease. For example another Php50,000 was added to the initial capital, then it will become php150,000 which you have to divide 25,000 to 150,000. Your percentage of profit share will be 16.7%.

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If one of the investors was delegated or volunteered to manage the business, he or she will also get a monthly salary which will be approved by the majority of the investors. I think there is another option like having a higher percentage of profit instead of having a salary but I’m not sure it is standard. I just heard it from my father which he have agreed with his business partners during my childhood years.

But what if you didn’t have a capital? can you be a business partner also? Again, their is a term called “Industrial Partner” where you get percentage of the total capital provided that you will put your time and effort to manage the business.