Do you know what pro-labor is?

The definition of the pro-labor value is essential to guarantee the financial stability of the company.

What is pro-labor

Do you know what pro-labor is? Different from what many think, it is not the company's profit, but the amount that must be paid monthly to the partners for the administrative work carried out. The definition of the pro-labor value is essential to guarantee the financial stability of the company.

In this article, we will explain what it is and its main features. Good reading! 

What is pro-labor?

The pro-labor is the remuneration received by the company's partners/managers for their services rendered. It is a monthly withdrawal and differs from the distribution of profits and dividends.

Although from a practical point of view it is very similar to salary, about labor legislation, there are no obligations such as the Severance Indemnity Fund (FGTS), paid vacation, 13th salary, etc.

Is withdrawal mandatory?

According to Art. 152 of Law 6,404/7 6 pro-labor is mandatory, and its value must be greater than the value of the current minimum wage.

The importance of defining value

It may be that entrepreneurs who are starting their businesses do not understand the importance of properly defining pro-labor. However, this is a very important step for the company's financial health.

The pro-labor is fundamental because the financial organization is very important. It is common for the entrepreneur to use the company's cash whenever he feels the need, or even pay the bills and withdraw all the profit. 

Personal and business financial life must remain separate. In addition, it is essential that the company has a financial plan, in which the profit is reinvested, so that the business expands.

How is the value of pro-labor determined?

Labor laws do not establish the ceiling value of pro-labor, only the floor (greater than a minimum wage). Thus, it is up to the company's partners to determine the fair value they should receive.

However, the most recommended thing is always to look for a finance specialist who can assess the company's revenue, analyze the whole scenario and establish a value that is compatible with the financial reality of the business.

How to calculate pro-labor?

The first point is to know that the pro-labor value is not fixed and permanent. The partners can always reevaluate and increase or decrease the value, according to the company's moment, which is recommended.

Also, if you are the only member you can follow the same steps that we will list below. 

  1. Define the functions of each partner;
  2. Survey the current situation of the company, financial health, and what is the viable possibility for withdrawal;
  3. Search the market for the average salary of a worker in the CLT format who performs the same function;
  4. Since labor benefits are not paid, 20% to 30% of the amount paid in the CLT can be added.

What is the difference between pro-labor, salary, and profit?

The big difference between pro-labor and wages is in the legislation. While the first consists of the monthly withdrawal of partners, the other refers to the payment of employees and suffers a series of interferences from labor laws.

Profit, on the other hand, is surplus value. That which exceeds the debts of the company. 

For example, a small stationery store has monthly expenses of around R$ 10,000 to keep running. That is, this money goes to fixed and variable expenses. However, the monthly revenue is R$ 22,000. 

Thus, the profit is R$ 12 thousand per month and R$ 144 thousand per year. Good financial practices indicate that part of the profit should be reinvested in the company, to expand the structure, inventory, improvements in service, etc.

Are there taxes on pro-labor?

Yes. Both the partner and the company pay taxes on the value of the pro-labor.

The company pays 20% referring to the INSS, except for companies that opt ​​for the Simples Nacional tax regime and those exempt from INSS. Partners pay 11% of INSS on the value of pro-labor, and from 0% to 27.5% of IRRF.  

How is the proof of payment?

The Income Perception Evidence Statement (decor) must be issued after payment of pro-labor. This is a way of proving the income of partners and managers since the amount must be declared as revenue.

Now that you know what pro-labor is and what it's for, how about getting to know the tools that can help you organize your business?

Muhammad Naeem Sajid