C corps pay taxes on operating profits which are gross revenues (that is, revenue less cost of goods sold, which for software companies is usually 0) minus oper

C corps pay taxes on operating profits which are gross revenues (that is, revenue less cost of goods sold, which for software companies is usually 0) minus operating expenses. Operating expenses include salaried employees. Then you take out interest from any debt you have and pay a percentage on that towards taxes, to get your net profit. Net profit is the amount available to actually take home for shareholders. Once you make your distributions to shareholders, you are left with retained earnings. https://en.wikipedia.org/wiki/Net_profit#Example https://en.wikipedia.org/wiki/Net_profit#Example