Can any accountants or small business owners answer my question?

Discussion in 'Politics' started by Penis Aficionado, Aug 3, 2009.

  1. Penis Aficionado

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    One argument I keep hearing from Republicans is this: Taxes intended for "the rich" end up falling on struggling small business owners. As with most things politicians say, they don't explain themselves, but I assume the reasoning is this: a small business' revenue may go directly into the owner's bank account, making him appear "rich." But the owner doesn't treat that money as income -- most of it goes back into maintaining and building the business (or perhaps repaying the loans with which he started the business.)

    My question is: Surely there are ways around this? Isn't that what accountants are for?
     
  2. Gl3nn

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    Just make sure you've got enough costs so you don't have profit. That way you don't need to pay taxes on that. I know it sounds like you're business won't be profitable when this is the case, but believe me...it is. Buildings are a good way to make your costs higher.
     
  3. t1ctac

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    Having known some small business owners that got hit pretty hard by taxes a couple of times, I can say that yes, taxes do hit them. I believe it was 2 years ago that my step-mom had to pay 60k in taxes on tax day, and this was after paying taxes the entire year, and she only went inside her bracket by a small handful of change. If she hadn't spent about 10k in the last weeks, she would have gone up a bracket and payed ridiculous taxes.

    To an extent, but there's only so much that can be done depending on the type of business and your overhead. If it is a mostly online business, there is very little spent directly "on the business." No stocking costs, no delivery, no employees, and no loan means that a good portion of revenue is going to you and it takes creative "business expenses" to spend some of your dollars as "pre tax." Some accountants are better at being creative, but too creative is bad too.
     
  4. D_Fiona_Farvel

    D_Fiona_Farvel Account Disabled

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    I have a small business and am a salaried employee and get hit hard with taxes every year.

    Refund? What's that? I never get one.
    Not local, state, or federal - and I pay taxes and other fees to each.
    Actually, I pay taxes to two states, so, ugh.

    They all have a very "fuck you, pay me" attitude. I would love to see some reform where the environment would encourage small business owners and entrepreneurship, not fiscally violate us year after year. :no:
     
  5. D_Tully Tunnelrat

    D_Tully Tunnelrat New Member

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    Amen.
     
  6. sparky11point5

    sparky11point5 New Member

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    I have had stints as a sole proprietor and as a principle in start-up for 2 - 35 people, where I was the the unofficial CFO. So, let me try to summarize this issue.

    Gross income is your income less a very limited number of credits or deductions, depending on your business.

    Net income for a business is your gross income less all allowable expenses and other deductions, including salaries, health insurance, depreciation of equipment, and other operational costs. Net income is generally what state or Federal governments will tax. Many small businesses aim to 'break even' to pay no income tax by giving tax-deductible perqs to the owners or principles -- car lease, mobile phone, etc. I actually think this is pretty straight-forward.

    The most significant area for abuse is probably what gets categorized as a capital expense (which can be depreciated or deducted over several years) versus normal expense.

    When Joe the Plumber talked about about a business that "made $250,000 a year" I assumed he meant gross. A gross income of $250,000 for a sole proprietorship or even small company is actually very modest, and likely does not include insurance, equipment, office space, or other expenses. The net, taxable income for such a company is probably $100,000 - $150,000. (Unless the owners take a salary, in which case the net should really be zero, if their accountant is any good.) This is taxed differently than employment income due to social security, but is still a good income for most individuals. If Joe the Dumbass meant net, that is a very profitable business, probably grossing $1.5M or more, and should get taxed appropriately.

    The main reason a small business gets "stuck" with a huge tax bill is poor planning. If you are generating net, taxable income, the company should be filing and paying quarterly. Things can happen, but generally this is the case.
     
  7. D_Tully Tunnelrat

    D_Tully Tunnelrat New Member

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    Nicely done Spark.
     
  8. Penis Aficionado

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    Thanks for that explanation, Sparky.

    So when the Republicans say that taxing the wealthiest 1 or 2 percent of Americans would hurt small business, they are pretty much full of shit? Does that follow from what you posted above?
     
  9. B_Enough_for_Me

    B_Enough_for_Me New Member

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    Simply put: No. Those evil rich people have accountants, too. Those accountants know that when you raise taxes on the rich, which are a sort of umbrella species, then the cost trickles down to the next person with money.

    In a sole proprietorship the income of the company is the income of the owner. As we all know, not only does the business owner have to make enough to support themselves but they also need to have a profit for their company. So, say Company A has $300,000 in revenue (well within the ire of greedy politicians). The owner of Company A takes $50,000 for a salary and the cost of doing business (in addition) is $200,000. So, in theory the company is left with $50,000 and so is the owner. But, the company is the same entity as the owner. When the IRS comes to take away Company A's owners money they see that he/she made $100,000k, and put them in a higher tax bracket.

    In a C-Corporation the leftists have generously gave us Double Taxation on capital gains. So, in the same way that owners got screwed in the previous example, they again get screwed by the higher tax rate.

    On top of all this you have the Laffer Curve. Rich people will stop doing business when the taxes get to a certain point. In many cases you see small business existing solely to service larger businesses. So, when the government decides to squeeze the rich members of it's population the rich people fight back by moving, slowing down, or shifting production to something less taxable. This, in turn, screws the small business owner who is dependent on the larger entity.
     
  10. sparky11point5

    sparky11point5 New Member

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    PA, in my opinion the Republicans are basically using scare tactics, and trying to align any policy. Consider that the top 1% of US taxpayers (individuals and families) earn $382,600 or more per year, and this income is 24% of the *total income for all taxpayers. Moreover, this top 1% owns approximately 50% of the *total personal wealth of all taxpayers* By any measure, this part of or society has done very, very well over the last 30 years.

    (BTW, taxpayers earning more than $250,000 is approximately 2.7% of earners.)

    No one likes taxes, but this discussion has to be in the context of overall tax burden. The fact is that the US is at or near historic lows for overall tax burden on the wealthy. The Republicans are just trying to portray any tax as bad, period. The poor and middle class tax payers are much worse off, since they have payroll taxes and income taxes. (At least our system exempts many of the working poor from income taxes, but they generally pay a large share of their icome to social security, medicare, and sales taxes.)

    Sparky
     
  11. invisibleman

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    If Uncle Sam, Uncle State and Uncle Local taxes large corporations at a large rate, more tax revenues go to government, respectively. Things do get tighter to spend in the economy. But money does go into the economy in other ways. But things do get tighter.

    Accountants with good tax law education can provide your business with some great tax strategies. But if you like to do things hands on as business owner. Read your Federal tax and State tax publications. They have the new tax laws and have the information you'll need.

    But small business owners DO have to form their businesses right. Sole proprietorships are risky. Corporations, Partnerships and LLCs help dilute and offset some risks. But those formations are a lot better than being a sole proprietor. YOU take the risk for EVERYTHING.

     
    #11 invisibleman, Aug 5, 2009
    Last edited: Aug 5, 2009
  12. B_Enough_for_Me

    B_Enough_for_Me New Member

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    Thought you might find this interesting: Who Pays Income Taxes? See Who Pays What

    It shows the tax burden by percentage rank.

    This Income Mobility and the Fallacy of Class-Warfare Arguments Against Tax Relief is also good, it shows income mobility.
     
  13. B_VinylBoy

    B_VinylBoy New Member

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    Again, if anyone that makes six figures or more feels as if they're being unfairly taxed and think us lower 5-figure people got it all easy, then by all means let's switch incomes. Any takers?

    Anyone?

    The silence is deafening... please, ANYONE??!?

    I thought so. You make more money, you pay more taxes. Deal with it.

    You worry about whether or not you can go on a luxurious vacation. We'll worry about whether or not we get to live to see another day. It's that simplistic and that realistic. And you'd be fooling yourselves if you think that because you have money means you work harder than others.
     
  14. B_Enough_for_Me

    B_Enough_for_Me New Member

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    Fair is fair, not fair minus your feelings of inadequacy because you don't make enough money. If you want more money then you need to make better, or different, decisions. Otherwise accept your position without bitching about how those who chose a different path need to give up the benefit of their decisions. Especially, using that tired old "woe is me" argument to justify your unjust taking of their money.
     
  15. B_VinylBoy

    B_VinylBoy New Member

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    First off, I don't feel "inadequate" to anyone who makes more money than me. I don't label or identify myself just on the dollar signs in my bank account. Don't mistake an obvious post of sarcasm as some kind of complaint regarding my own financial struggles.

    I could say the same exact thing about people who make more money and complain about how "unfair" the current tax system is.

    If you make a solid six figures in this country or more, then I don't want to hear about your so-called "life struggles". Don't bitch to me about how you can't take a vacation or maintain the condo you spent too much money on. Don't whine to me about your car payments. Don't talk about your student loans and credit card debts. And don't mask your own financial insecurities as some kind of social superiority, then TRY to talk down to me as if I'm the problem. If you can't take care of your necessities with what you have left after taxes, then the person who needs to learn how to budget and watch their money is you. Again, I don't see anyone with money even trying to switch places with those who they say have it easy, so stop the bullshit. And contrary to belief, NONE of your tax dollars come to me in any way because I'm not on Welfare or any government sponsored program to help the poor. But I'm sure you immediately assumed that because that's what socially inadequate people like yourself do.

    Know your place in this discussion... even with money you could NEVER walk a mile in my shoes. I'm sure you wouldn't know what to do with yourself if you woke up right now and found out you only had a $14/hr day job and random freelance work to try and make ends meet in New York, the most expensive city in America to live in, plus pursue your life goals. I'd advise you to learn what a sarcastic joke is when you read it, and not respond in such a ridiculous matter when you misinterpret the message. And if you can't, I'm sure with your cash flow you could buy yourself a clue. :rolleyes:
     
    #15 B_VinylBoy, Aug 7, 2009
    Last edited: Aug 7, 2009
  16. B_Enough_for_Me

    B_Enough_for_Me New Member

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    Thanks for the lecture, Dad.
    1) Don't tell me what to do.
    2) If you read the post it is (mostly) about fairness. Yes, I had to take a jab at you personally only because I need that to feel better about myself.

    I especially like how you end this post with a long whiny bitch about how you make horrible life decisions (living in NYC on an unstable $14/hr).


    Do you see the moral dilemma with this statement? You can't just tax away everything somebody has because they make more than you. Right now rich people carry almost all the tax burden. You still get to drive on their roads, send your (adopted) kids to their schools, and use their police force; but you don't have to pay for it. Look at that link I posted earlier. 97% of income tax revenues are paid by the top 50% of wage earners. You can't just keep taxing them till they have nothing left then say "don't cry to me, I make less than you." Your tax burden at $14/hr should be $0; unless you are doing something horribly wrong. What you are saying is, from a moral standpoint, that you deserve some portion of peoples income (those richer than you) to pay for the services you need to survive, but you won't be contributing because you want to 1) make bad life decisions, and 2) follow your dreams. But those making more than you should have to give up what they have earned by 1) making better life decisions, and 2) foregoing one's dreams. Fair is fair, they work just as hard as you so they should get to keep the same percentage of their income as you do.


    Dear, I wouldn't presume to know your life, as you shouldn't presume to know mine.

    P.S. Telling people to know their place is a sure way to paint yourself as an egotistic asshole.
     
  17. sparky11point5

    sparky11point5 New Member

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    You cannot simply ignore social security, medicare, state, and local taxes when you attempt to discuss tax fairness. This is disingenuous to take income taxes, which are progressive and therefore do fall more on high income earners.

     
  18. B_VinylBoy

    B_VinylBoy New Member

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    No problem, son.

    Don't make assumptions about me.

    No it's not. It's a bullshit rant about rank and social class. Nothing fair about it. And believe me, I can jab just as much as you if not more. Think long and hard before you want to engage me in that kind of battle.

    And you omit the "freelance part". Wow, and it was already typed out for you and everything. Lemme guess, that part landed in the blind spot in your brain and you jumped to making yet another bad assumption about me? Silly son, you'll learn not to do that over time. :rolleyes:

    What you don't know is that I own a small business on the side. The day job is there to make steady money while I develop the other.

    Bullshit. Before I decided to go into business for myself, I did have a full time job that paid me a great salary back during the dot com boom. I made more money and I owed more in taxes in April. However, I had more money throughout the year to take care of my necessities and still get many of the things that I want.

    So, who's being the whiny bitch now, son? Just because you're a prejudicial miser who thinks you're "entitled" to keep every single dime you make (or steal) doesn't make you exempt from your own responsibilities.

    Boo hoo! :rolleyes:

    I don't own a car. You'd be silly to do that if you lived in Manhattan. :biggrin1:

    I have no children of my own. And I know the conditions with many public schools because I'm a product of one. If it's "your" tax dollars putting my nieces and nephews through school, then I can file complaints with YOU in regards to their horrible conditions, lack of modern learning materials, overcrowded classrooms, lack of security, the constant financial cuts in after school programming, and yes the cafeteria food does suck.

    You want to wear this title and try to rub it in the face of someone? Be prepared to take your "share" of the responsibility and have answers. If you're not willing to, then shut it.

    Uh oh... the prejudicial miser is attempting math. Let's see where this goes.

    Yep. MATH FAIL! I knew this was coming! LOL!!
    Listen, moneybags, at $14/hr, before taxes, that would be a little more than $29K a year. That puts me above the poverty line and firmly in the lower, middle class. I do pay my share of taxes every year through my day job. I have no children or dependents. My tax burden is higher because of it and that does result in me getting taxed more every paycheck. And no, it doesn't all get returned to me at the end of the year but I do claim less exemptions so that more is taken from me per check. That ensures me a refund every April, but that's due to an overpayment of tax throughout the year. NOT a reimbursement of every tax dollar I've paid out. My burden is NOT $0, Einstein. But your stance in this argument is. :rolleyes:

    What's next? Should we grab the rulers and see who has a bigger dick here? I don't care if you make more money and pay more taxes than me. As I continue to make more, I'll be paying more myself. You'd be a fool if you think I wouldn't want to make more money and assume the responsibilities that come with it.

    Such a feeble minded soul to assume that I'm making bad life decisions. And on what? My bank account? Wow, son... you DO have a lot to learn.

    I know what I need in order to be happy, and that has nothing to do with any income that comes from the rich. I don't want what they have. If I can generate the money I had back when I was climbing the corporate ladder through my own small business than I would be perfectly happy. I could take care of the things I need and get everything that I want. And that dollar total is nowhere near what a "rich" person wants because all they want is more.

    Get that, son? In my life and my finances, it about MY happiness. Not the acceptance of a socially ignorant person such as yourself who only uses money as the benchmark towards success.

    Do they? :rolleyes:
    Let's not assume that all people who have all the money worked hard to get it because you and I both know that isn't always true. Many people are born in this world with money. Others win it. Others lie, cheat & steal along the way and cause financial ruin to others in order to pad their own pockets. IMO, that's not work. Then again, I am talking to a silly child who has done nothing but make sweeping generalizations about the rich and the working class since you've engaged this dialog with me.

    But you already made a presumption with your first post addressed to me. My post wasn't targeted at anyone specifically. Like I stated before it was a silly, sarcastic joke and YOU are the only one that didn't get it. I know damn well that nobody "with money" would switch places with someone with less. That was the whole point of making the statement. However, you thought it was an insult on YOUR personal beliefs and now you're here trying to tell me to know my place in the world and stop acting like a bitch.

    Ask yourself... who's the one whining and bitching in this thread? Me? That's not my reflection in your mirror. Go wash your face and let me know what you see, OK? :rolleyes:

    So why did you bring it up first? Or did you forget that you typed this line when you addressed me: Otherwise accept your position without bitching about how those who chose a different path need to give up the benefit of their decisions.

    Trust me, son... I know exactly where I am and where I've come from. And it doesn't need interpretation from someone like you who makes sweeping, prejudicial generalizations of those who make less money than others. I've been called a lot worse than "asshole" on this thread, so to receive that comment from one of the prejudicial variety doesn't phase me in the least.
     
    #18 B_VinylBoy, Aug 7, 2009
    Last edited: Aug 7, 2009
  19. B_Enough_for_Me

    B_Enough_for_Me New Member

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    My goodness. Do you feel better? I feel like I should be charging you an hourly rate.

    We made a lot of progress this session. I think we can recap:

    1) You are going to tell people not to do exactly what you do; repeatedly.

    2) You have no concept of fairness. The whole idea that you have to take someone else's money to support your life (yes, at $29k you suck down a whole bunch of tax dollars) seems completely acceptable because you have the following arguments:

    2a) Don't bitch. Apparently, having money means you can't complain about life. As we all know, and you have so generously repeated over and over, money doesn't make you happy. Even if the poor "dream seeking" masses take almost all your money, you still have no complaints. Money = No Complaints. It's that simple.

    2b) If the government takes more of your money, thus you have no say in it, then you are responsible for how that uncaring bureaucratic monster spends it; it's the rich peoples fault.

    3) You are not recognizing that there are different paths in life. You chose to go down a path that makes you less money. Or course, you don't want to give up your government services, but you previously chose to not make enough to pay for them. So, what to do? Well, we'll just stick somebody who chose to make more money with the entire bill. And I quote: "In my life and my finances, it about MY happiness," not about society, fairness, or equality. Thank God others are willing to pay those higher taxes.

    4) Rich people (which is roughly defined as anyone who makes more than you) bother you. They steal, cheat, and lie. Of course, in you're lecture you made sure to tell me not to make generalized sweeping statements about rich people. Then you did it just as plain as day. Over and over and over. This sure sounds like recap 1, but is worth mentioning.

    5) You are having trouble reading. Although I tried to understand the part about math, I think you lost me. I have no idea where there was any math. There were some statistics, but I wasn't part of the calculations . Additionally, I told you to accept your place in society, not in this conversation. You told me to get in my place. Two totally different things. If you'd like I could refer you to a reading tutor and we could mark your progress at our weekly sessions.

    Thats all for this session. We really opened up some issues, and made a little progress. The first step to healing is knowing where the hurt is. Make sure to take those meds, they will keep that rage down.

    See you next session.
     
    #19 B_Enough_for_Me, Aug 7, 2009
    Last edited: Aug 7, 2009
  20. invisibleman

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    Oh, boy.

    I feel for all of you.

    Don't kill yourselves over income taxes, social class and WHO'S THE DADDY? WHO'S THE SON? issues. There isn't any need for the haterade.

    There are serious problems in the world people need to work them out. As long as you are hating, you aren't looking at the issues.

    Income taxes. There are many issues. Fairness. Percentages. Why is there a need for so much tax revenue? If businesses--large and small--are suffering...that is a problem. Businesses cannot grow if their finances are taxed out. Should large businesses and higher earning individuals be taxed more? Should everyone else be taxed more? No. I think government needs to cap taxation. Give a fair tax percentage for everyone. Whether you are married, single, or whatever. People should all be taxed fairly. And maybe reward people who pay more taxes than what they pay. People need to invest in their future. I think that Americans need a government that is not sucking the money out as Americans are making it. That doesn't give incentives for Americans to work or to bring forth ideas to generate businesses. And especially if the petroleum industry is gonna jack the gasoline up to five dollars/gallon.

    I think that Americans should really discuss tax laws. Should Americans vote to decide on lessening taxes? Can Americans deal with less government intervention and programs? Should Americans be responsible for their own militias instead of a tax supported government controlled (third-party) militia? Americans are supposed to know what their government does and is doing with their tax monies.

    Again, Americans need to look at the tax codes. They need to really ask questions about where in the heck is all of this money (tax revenues) going. Call up, write some Senators.

     
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