I know stocks are traded to raise funds and help operate the business better, but can companies use the money to directly pay their employees? Or does all payroll come from revenue?
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While there’s no restriction on where the money used to pay employees has to come, it only happens in certain situations, for instance when the company just started and doesn’t have the business cycle already established, or when a company buy another one that’s doing bad.
This is because your employees exist to help you do normal business, and this means that typical business operations should cover that cost. Imagine you have an employee to help you do your job, and every time you have to pay their salary you need a loan. Having an employee is not a charity, they do things because it’s convenient for the company, so unless you’re hoping that your activity grows and your employee’s work becomes self-paying, it’s not sustainable at the long term.
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