First of all install VirtualBox guest additions (goto “Devices” -> “Insert Guest Additions CD Image…”) and reboot your machine. In VirtualBox goto “Devices” -> “Shared Folders” -> “Shared folder settings..”. Press the “plus” button to the right of the (empty) folder list. Choose your path and type a folder name (select auto mount and make permanent for convenience). Press OK

Now the shared folder is created but not active yet in your guest. Reboot your guest machine and go to the folder /media/sf_Sharename  (virtualbox creates a folder in /media with the name of your share with a sf_ prefix.

When you cd into this directory you probable get an access denied error.
To solve this add your account to the vboxsf group with this command:
sudo usermod -aG vboxsf [username] 

To mount the shared folder with specific gid  (change gid to your desired value):

sudo mount -t vboxsf Downloads /mnt/shared -o umask=0022,gid=999

When you get the infamous “protocol error” double check your shared folder name.
Be sure to use the uid and gid assigned to your account (check /etc/passwd and /etc/groups for your uid and gid). If you do not use uid and gid the shared folder may have the wrong access rights.