My corporation is making a profit but its cash is not going anywhere is that possible?
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My corporation is making a profit but its cash is not going anywhere is that possible?
Corporations sometimes make a very nice profit, but they pay a lot in taxes and most of what they do not pay in taxes, goes to the owner. The setting of taxes is 30%. You can change it, but initially it is 30%. The rest of the profit (70%), can remains in the corporation. In general, large part of the remaining profit goes to the owner. (You may change this percentage). It means that if profit payments are at 80%, only 14% (20% of the 70% remaining profit) of the profit of the corporation remains in the corporation.
Corporations are not always profitable and one month of losses can easily wipe out the 14% of the profit resulting from 6 months. In addition, many corporations spend large amounts of money purchasing upgrades. If a corporation had 500 millions in profits, it pays 150 in tax, 280 it gives to the owner, and the remaining 70 millions will not pay even for one quality upgrade.
This can be changed. You can reduce both percentages and keep more money in the corporation. But is it needed there? The money paid to the government or enterprise, increases the assets of the government (or enterprise). Most corporations pay large part of their profit to their owners.
You can reduce the percentages and more cash will remain in the corporation. You can pay back the loans of the corporation and purchase all the upgrades you want. In the long run, paying back the loans will increase the profitability and value of the corporation.
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