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?
In: 8
There is no rules saying that you can not use money raised by issuing stocks for your payroll, in fact it is not that uncommon to issue stocks as part of a payroll. And for businesses which are in their startup phase and growing rapidly they have to spend the investors money on their payroll because growing takes a lot of employees but few paying customers. The logic behind this is that the work that is being done by the employees is assets that the company will make money from in the future. So spending investors money on the payroll will pay off as you will be able to pay dividends to the investors in a few years.
Latest Answers