3 ms·

Being a little pedantic, but I think the usage is important: Profit is not counted before wages. Wages are the primary expense in a software company. This me

by wheels 11y ago

Being a little pedantic, but I think the usage is important: Profit is not counted before wages. Wages are the primary expense in a software company. This means that the company is sort of break-even, but only when paying below market rate wages. Perhaps a little confusing is that the term "ramen profitable" is mostly a euphemism, not actual profitability.

beachstartup 11y ago
in a one or two man shop this is actually called the sdi: https://www.quietlightbrokerage.com/resources/sellers-discretionary-income/ https://www.quietlightbrokerage.com/resources/sellers-discre...
jakobegger 11y ago
The owner of a business is not an employee (at least in Austria). Therefore a one man company doesn't pay any wages. The owner just gets the profit that the company makes.
- pbhjpbhj 11y ago
  AFAICT he's in Madrid, Spain? Anyway, it's different in the UK, a company needs a minimum of 2 officers, you can be a sole-trader though. A sole-trader takes drawings from their business account, but it's not necessarily the whole revenue less costs - you might be saving for capital investments and you wouldn't want to pay income tax and Nat.Ins. on that money. In the UK the owners of a company can be employees too, you can then get money as wages as well as getting dividends as an owner. [Disclaimer: I'm not a financial advisor, check this detail before relying on it.]
  - srgseg 11y ago
    In the UK you can have a one person limited liability company, where the same person acts as the sole director and the company secretary. That sole director can either be an employee and a director or just a director. The difference is that their portion of income from being a director will be in the form of dividends, and the income from being an employee will be salary.
    - pbhjpbhj 11y ago
      That must have changed (in the Companies Act 2006?)? I'm director and secretary of a ltd co but when we formed our company I'm almost certain we needed two officers at minimum? [http://www.companybug.com/how-many-officers-must-a-limited-company-have/ http://www.companybug.com/how-many-officers-must-a-limited-c... - suggests I haven't dreamt it up!] You're quite right though, see Ch.2 at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418150/GP1_Incorporation_names_v5_4-ver0.29-4.pdf https://www.gov.uk/government/uploads/system/uploads/attachm.... or see https://www.gov.uk/limited-company-formation/appoint-directors-and-company-secretaries https://www.gov.uk/limited-company-formation/appoint-directo.... Unfortunately I can't add an errata above as editing that post is no longer allowed.
anjc 11y ago
To be more pedantic, if you're talking about gross profit, it can be counted before wages, depending on the attributes of the wage.

by wheels 11y ago

beachstartup 11y ago

in a one or two man shop this is actually called the sdi: https://www.quietlightbrokerage.com/resources/sellers-discretionary-income/ https://www.quietlightbrokerage.com/resources/sellers-discre...

jakobegger 11y ago

The owner of a business is not an employee (at least in Austria). Therefore a one man company doesn't pay any wages. The owner just gets the profit that the company makes.

pbhjpbhj 11y ago
AFAICT he's in Madrid, Spain? Anyway, it's different in the UK, a company needs a minimum of 2 officers, you can be a sole-trader though. A sole-trader takes drawings from their business account, but it's not necessarily the whole revenue less costs - you might be saving for capital investments and you wouldn't want to pay income tax and Nat.Ins. on that money. In the UK the owners of a company can be employees too, you can then get money as wages as well as getting dividends as an owner. [Disclaimer: I'm not a financial advisor, check this detail before relying on it.]
- srgseg 11y ago
  In the UK you can have a one person limited liability company, where the same person acts as the sole director and the company secretary. That sole director can either be an employee and a director or just a director. The difference is that their portion of income from being a director will be in the form of dividends, and the income from being an employee will be salary.
  - pbhjpbhj 11y ago
    That must have changed (in the Companies Act 2006?)? I'm director and secretary of a ltd co but when we formed our company I'm almost certain we needed two officers at minimum? [http://www.companybug.com/how-many-officers-must-a-limited-company-have/ http://www.companybug.com/how-many-officers-must-a-limited-c... - suggests I haven't dreamt it up!] You're quite right though, see Ch.2 at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/418150/GP1_Incorporation_names_v5_4-ver0.29-4.pdf https://www.gov.uk/government/uploads/system/uploads/attachm.... or see https://www.gov.uk/limited-company-formation/appoint-directors-and-company-secretaries https://www.gov.uk/limited-company-formation/appoint-directo.... Unfortunately I can't add an errata above as editing that post is no longer allowed.

anjc 11y ago

To be more pedantic, if you're talking about gross profit, it can be counted before wages, depending on the attributes of the wage.