Wait, isn't it an incomplete example? How much money did you start with? In other words, you had to pay the developer some salary before any revenue came in.
I built a prototype for a potential customer and they agreed to pay me 100k to develop it. Let's say they're my only customer - we're a boutique shop. I didn't need any startup capital - just needed to promise to solve one person's problem.
That comes off the balance sheet which doesn’t impact taxes. Eg if they raised $100k from friends/family to start the company, that equity investment has no bearing on the P&L or taxes owed.
