What is the difference between paid-in capital and retained earnings?

Definition of Paid-in Capital

Paid-in capital is one of the major categories of stockholders' equity. Generally, paid-in capital reports the amount that a corporation received from its stockholders (or shareholders) in exchange for the newly issued shares of its capital stock.

Paid-in capital is also referred to as contributed capital and as permanent capital.

Definition of Retained Earnings

Generally, retained earnings is the cumulative amount of after-tax net income earned by the corporation since its inception minus the dividends that have been distributed to its stockholders since the corporation began.