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Comment by Tehchops | Hacker News Reader

I'm curious if the $3,500 figure is raw monthly revenue, profit, or monthly take home for the two founders.

If it's raw corporate revenue, then their take home should be much less than that after taxes.

Hey! Author here. It's monthly revenue. You get to write off expenses from your revenue before paying taxes. Also for our bracket, tax is only 15%.

Thanks for the reply!

Is the corporation listed as a C-Corp? Doesn't the business have to pay taxes on profits, then pay employment taxes on what it pays to employees as well, on top of what the employee must pay?

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

How can it be so low? What about social security fees?

Corporation tax, right?

No, I mean the fee you need to pay on salaries. 30% in my country. So if you pay $100 gross salary you need to pay an additional $30 to the state. On the $100 the employee will pay normal taxes but the cost for the company will be $130. I'm presuming they "take out" the money as salaries here. Or is it done by dividends? 15% sounds low for that since you, in my country, need to pay corporate tax first and then taxes on the actual dividends themselves.

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