Financial management of a business requires organization and knowledge about the different types of remuneration. For entrepreneurs and managing partners, one of the most important concepts to understand is "pro-labore." Many questions arise about how to define it correctly and how it differs from a salary. Additionally, it is essential to know which taxes apply and the best way to manage it to avoid tax issues.

If you own a business and want to ensure that your remuneration is in compliance with the law, this complete guide on pro-labore was made for you. Keep reading and discover everything you need to know.

What is pro-labore?

The term "pro-labore" comes from Latin and means "for the work." In a business context, it refers to the remuneration paid to a partner who works in the company, whether in administration or another specific role.

Unlike the salary of an employee hired under the CLT regime, pro-labore does not entitle the recipient to labor benefits such as FGTS, 13th salary, and paid vacation. However, it is essential for the partner to contribute to Social Security and ensure the company's tax regularity.

Who should receive pro-labore?

Pro-labore should be paid to partners who effectively work in the company. This means that if a partner only invested capital without active participation in the business operation, they do not need to receive pro-labore. In this case, their remuneration may come from profit distribution, which has different tax rules.

How to define the amount of pro-labore?

Brazilian legislation does not establish a minimum amount for pro-labore, but it cannot be less than the current minimum wage. To determine a fair amount, it is recommended:

1. Analyze the market – Research how much professionals in similar roles earn in the market.

2. Consider the company's financial capacity – Pro-labore must be sustainable for the financial health of the business.

3. Evaluate the tax burden – Since there are taxes on pro-labore, it is important to take this into account when defining the amount.

Difference between pro-labore and salary

Many entrepreneurs confuse pro-labore with salary, but there are fundamental differences between these two types of remuneration:

Taxes on pro-labore

Amounts paid as pro-labore are subject to mandatory taxes, which vary depending on the company's tax regime:

• INSS (National Institute of Social Security): The partner must contribute 11% on the amount of pro-labore, ensuring their social security contribution.

• IRRF (Withholding Income Tax): If the amount of pro-labore exceeds the exemption threshold of IRPF, tax will be withheld according to the progressive table of the Federal Revenue.

• Employer contribution: Companies under the Presumed Profit regime must pay 20% INSS on the amount of pro-labore. In Simples Nacional, the incidence depends on the company’s tax attachment.

How to make the payment of pro-labore?

The payment of pro-labore should be made in an organized and transparent manner, following some important steps:

1. Define the amount of pro-labore – Based on the criteria already mentioned.

2. Record in accounting – Keep clear and organized records of the payments.

3. Generate and pay the GPS Guide (Social Security Guide) – This guide is mandatory for INSS collection.

4. Make the payment via bank transfer – To maintain traceability and avoid tax problems.

Alternative to pro-labore: profit distribution

Partners who do not work in the company can receive their remuneration through profit distribution. Unlike pro-labore, distributed profits are not subject to INSS or Income Tax, provided that the company has regular accounting and declared profits.

However, it is important to remember that if a partner is involved in the management of the company, they must withdraw pro-labore before receiving profit distributions.

How Beorange can help?

Maintaining tax compliance and managing pro-labore payments correctly requires organization and accounting knowledge. Beorange offers complete solutions to simplify the management of your business, including:

• Automated management of tax documents – Our platform helps keep organized records, avoiding errors and inconsistencies.

• Calculation and issuance of INSS and IRRF guides – We automate the calculations and generate the necessary guides to keep your company up to date with the Federal Revenue.

• Specialized accounting monitoring – Our specialists ensure that all financial movements of your company comply with tax regulations, reducing risks and optimizing the tax burden.

If you want security in the financial and accounting management of your business, talk to Beorange and see how we can help you manage your pro-labore efficiently and without complications.