Payroll is an expense that gets deducted from revenue before calculating taxes.
They pay employer contributions/insurance/deductions but you pay the tax on it. It’s to avoid double taxing that money (corp pays tax and you pay tax).
Edit for replies: yes, they pay payroll tax but that is based on payroll, and is a percentage of payroll. The other replies were referring to bottom line tax and revenue/profit. Maybe I should have been clearer but I was trying to keep it easy and not muddy the waters.
I have run payroll myself. When you run payroll, a company pays taxes to the government. Every paycheck. There are taxes the company is liable for and not employees.
I thing comparison to the employee salary makes no sense whatsoever. Different businesses have different expenditure structures depending on various things, like the type of business their are doing. In some companies, salaries might be dominating expense, in some others barely noticeable. Says nothing about how “fair” the business is.
Even if we compare it to profits the time frame just switch to minutes. Walmart made a net profit after taxes of 14 billion. That translates to 26k per minute.
I seriously doubt that these are profits. These are revenue.
Shouldn’t the discussion revolve solely around SPENDABLE income? Am I misunderstanding something? I’m sure I am.
No, salaries are based a pre-tax basis. In other words you’re told you’ll make $120,000 per year, that amount is before taxes.
But companies also pay taxes before even paying you. So they’ll pay 140k to pay you 120k which you’ll earn 100k (along those lines)
They pay tax after paying you.
Payroll is an expense that gets deducted from revenue before calculating taxes.
They pay employer contributions/insurance/deductions but you pay the tax on it. It’s to avoid double taxing that money (corp pays tax and you pay tax).
Edit for replies: yes, they pay payroll tax but that is based on payroll, and is a percentage of payroll. The other replies were referring to bottom line tax and revenue/profit. Maybe I should have been clearer but I was trying to keep it easy and not muddy the waters.
Companies pay tax on employees as well.
I have run payroll myself. When you run payroll, a company pays taxes to the government. Every paycheck. There are taxes the company is liable for and not employees.
I thing comparison to the employee salary makes no sense whatsoever. Different businesses have different expenditure structures depending on various things, like the type of business their are doing. In some companies, salaries might be dominating expense, in some others barely noticeable. Says nothing about how “fair” the business is.
And two companies with the same proportional structure, but of different number of employees, will have different numbers in this representation.
Even if we compare it to profits the time frame just switch to minutes. Walmart made a net profit after taxes of 14 billion. That translates to 26k per minute.
Yes, it’s a big company.