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0 pointsmytailorisrich11mo ago0 comments

Generating profit is highly desirable for any business.

For tax purpose you need to differentiate between "profit" and "taxable profit". You can try to lower your taxable profit to minimise tax, e.g. by re-investing your profits, but ultimately it is better to turn a profit and to have to pay some tax on it that to have an unprofitable business.

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Etheryte11mo ago

Not necessarily, this is a classic misunderstanding. As a famous example, Uber did not make a profit for 14 years, all the way up to 2023. For taxable profit it's even more severe, they've built up a considerable backlog of losses, so they'll pay very little in taxes for the foreseeable future, even though they're now profitable.

mytailorisrichOP11mo ago

Uber, like Amazon before, had the strategy to forego profit in the short term to focus on growth. Ultimately the goal is to be profitable because that's the point of a business.

I think the misunderstanding is to confuse this for "profit isn't desirable".

Sure you may try to minimise your taxable profit for tax purposes but that means you are turning a profit, and that may be impossible if you intend to pay dividends.

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