What is paid in capital?

Paid-in capital is the amount of money raised by a company through the purchase of common and preferred shares. Paid-in capital is not received from open-market operations; it comes from the private market only, directly from the corporation itself.

Many states require stock issuances to have a par value attached to each share. Often, the stock price is above the par value, so the paid-in capital is tracked within two sections: the par value paid-in and the paid-in capital that is in excess of par. The paid-in capital value is listed on the stockholders' equity section of the balance sheet.