That’s not correct, not even a little. How would a company stay afloat without reinvesting profits into themselves. At the very least, they have to keep their equipment working.
Or growth? Does every company need to stagnate soon as they are developed and never grow or change?
If a company spends money on itself, that money isn’t profit. Profit is the money left over which the business has no better use for (usually decided as being excess by people who will share in the profit when it is distributed)
And this line of thought is one of many ways how companies avoid taxes despite raking in ungodly amounts of money. Instantly throwing “all” that potential profit into expansion.
‘We didn’t make any profit for the past 5 years. Yes, we have grown the company 5000% since we started but we’ve made no profit, so wages will stagnate. In fact, we might have cut some positions if the stakeholders don’t see some profits soon.’
I was under the impression that investing in your employees counts as investing in your business.
If people do their jobs so well that a company is raking in profits they deserve a raise.
That’s how the job I work at functions. It’s smallish company, but we get more raises for being competent than our larger, more established competitors give… so I’ll be staying at my current place of employment since they treat us like people.
Correct.
This would be very deep to a 12 year old.
That’s not correct, not even a little. How would a company stay afloat without reinvesting profits into themselves. At the very least, they have to keep their equipment working.
Or growth? Does every company need to stagnate soon as they are developed and never grow or change?
If a company spends money on itself, that money isn’t profit. Profit is the money left over which the business has no better use for (usually decided as being excess by people who will share in the profit when it is distributed)
And this line of thought is one of many ways how companies avoid taxes despite raking in ungodly amounts of money. Instantly throwing “all” that potential profit into expansion.
‘We didn’t make any profit for the past 5 years. Yes, we have grown the company 5000% since we started but we’ve made no profit, so wages will stagnate. In fact, we might have cut some positions if the stakeholders don’t see some profits soon.’
Or worse: “invest” it in stock buy-backs and thus allow shareholders to realize the profits indirectly anyways.
But that doesn’t invalidate the original observation that investments into the company and maintenance costs are not paid from profits.
I think you need to educate yourself what “profit” actually means 😜
Maintenance of equipment costs and most investments are subtracted from a company’s revenues before calculating profits.
I was under the impression that investing in your employees counts as investing in your business.
If people do their jobs so well that a company is raking in profits they deserve a raise.
That’s how the job I work at functions. It’s smallish company, but we get more raises for being competent than our larger, more established competitors give… so I’ll be staying at my current place of employment since they treat us like people.