Share capital is the money a corporation raises by issuing shares to its owners, forming part of shareholders' equity on the balance sheet.
Share capital is the amount shareholders have contributed in exchange for shares. It sits in the equity section of the balance sheet alongside retained earnings, and it represents the owners' invested capital as opposed to profits the business has retained.
For tax, the related concept of paid-up capital tracks what can generally be returned to shareholders tax-free. Share capital and its structure, the classes and rights defined in the articles, underpin dividends, ownership changes and reorganisations, making it a foundational element of corporate and tax planning.
When a founder subscribes for shares by paying $100,000 into the company, that $100,000 is recorded as share capital in equity, distinct from any profits the company later retains as retained earnings.
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