Jump to content


From: economics 1

Posted by danielost , 24 June 2010 · 66 views

i am starting this thread because it seems some people do not know how a company stays in business and makes money.

a company stays in business by bringing in more income than expenses, this is try for for profit companies and non-profit companies.  the difference between the two is how much profit said type brings in.

business income comes in two flavors.  a business either sells something or provides a service, sometimes it does both.

business expenses are far and varied.  they are(i wont remember them all) cost of the product or service they are selling, utilities, employee wages, health insurance, fuel for vehicles, maintenance on vehicles, office equipment, office supplies, employee taxes(ssi, Medicaid/Medicare, employers pay the same amount that their employees pay to these),  income tax state and federal and local if any and there are other expenses.

for this discussion i am going to focus on income taxes, but my numbers can be used for any and all of the above expenses.

OK what a company usually does is figure out what the base cost of doing business is and the doubles it, then splits it over what it is selling by unit what ever the unit is.

in this case we will just it 1 unit, the price on one unit is 10 dollars.  this is what you pay the company to buy their gadget.  

tomorrow income tax will be going up 1 percent.  so the company does a quick figure on what that will cost them,  that being 10 cents more per gadget.  so they charge you 20 cents.  the first 10 cents is to pay for the new taxes, the second 10 cents is the profit that they feel they need to make off of the new expense.  plus remember when they raised the price to 10.10 dollars they had new income that was going to be taxed.

this is the simply way that business works.

it matters not if my numbers are off a little or not.  the idea is right.

Source: economics    1

Recent Entries

Recent Comments

  • Photo
    By danielost
    Jul 04 2008 09:54 AM
  • Photo
    By danielost
    Jul 04 2008 09:52 AM
  • Photo
    By distortedpandy
    Jul 01 2008 07:00 PM
  • Photo
    By tcgram
    Jun 30 2008 12:18 PM