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Obama got away with it is because he knows that the poor and the middle class are not educated in the difference between w2 wages, sole proprietors, S-Corps, C-Corps. He knows that they don't know that the sole proprietors and S-corp business owner report business profit on their personal income. Lets use the $250. W2 workers think that the business owner gets to keep 100% of that profit (FALSE).
Yes, some of that profit is used for the owner living expenses. A big chunk of that profit pays taxes. To stay in business, that business must retained some of that profit to be able to continue business operations (including paying the employees). Especially in the 1st couple of months of the year. When you are paid twice in the month of January where does the employee think the money for their paycheck is coming from? ...retained earnings.
What would happen if the business owner pulls all the profit out of the company? They would not have money in the company to pay bills and pay employees. Should we tell the employees we have to wait to make profit in the current year before they can be paid? I'll bet that will go over well! If the business owner wants to try to grow the business they use part of the profit to buy more inventory, hire more employees. Tax the business owner more they have less money to invest, pay you a raise or to hire more people.
Obama played on the ignorance of people who do not know taxes, cash flow, balancing books to attack the people who pay your paycheck. If you voted to increase taxes on your employer and they have to pay higher taxes congratulations, you bit the hand that feeds you and your family.
I am not sure that is necessarily how S-Corps, partnerships and other "flow through" entities work. You are taxed on your net profits and if you have any capital assets at all then you get some nice tax help from depreciation. I am not quite as sure on how deductions for payroll work since most of what I have done with that involves large capital assets, and not so much employees, but if you know how to use depreciation on your capital assets that means you are going to get a lot of tax savings. Especially considering that if you have a capital asset heavy business you are always purchasing new capital assets, and or making improvements which keeps the depreciation going.
Basically if you have a business with a lot of capital assets going in you can use your seed money "losses" from depreciation to offset a fair amount of your profits for tax purposes. Especially if you run it in such a way as to avoid depreciation recapture.
I don't know that you understand how S-Corps, partnerships and other "flow through" entities work. You are taxed on your net profits and if you have any capital assets at all then you get some nice tax help from depreciation. I am not quite as sure on how deductions for payroll work since most of what I have done with that involves large capital assets, and not so much employees, but if you know how to use depreciation on your capital assets that means you are going to get a lot of tax savings. Especially considering that if you have a capital asset heavy business you are always purchasing new capital assets, and or making improvements which keeps the depreciation going.
Basically if you have a business with a lot of capital assets going in you can use your seed money "losses" from depreciation to offset a fair amount of your profits for tax purposes. Especially if you run it in such a way as to avoid depreciation recapture.
I do understand but in the way it effects my company. With todays technology a lot of companies have minimal assets so there are limited assets to depreciate... little tax savings = higher taxes. So you see, one does not fit all.
With todays technology a lot of companies have minimal capital assets so there are limited assets to depreciate... little tax savings.
I figured it was the opposite. Especially for flow though entities. Basically because of the tax advantages you want to go for capital assets instead of employees. Additional a fair amount of companies and businesses have or are centered around real estate holdings, which (for buildings) are the mother of all capital assets.
I figured it was the opposite. Especially for flow though entities. Basically because of the tax advantages you want to go for capital assets instead of employees. Additional a fair amount of companies and businesses have or are centered around real estate holdings, which (for buildings) are the mother of all capital assets.
If business does not justify buying equipment and real estate then it does not make sense to buy them for a tax deduction. I do have employees, service company. Hey but thanks, I am open to all suggestions because I am getting slammed. I've been to 3 different CPA's and each say the same thing. Traveling to trade shows is one business expense though.
Again, no real estate holdings, no heavy equipment but do have employees. So very little depreciation.
Even if there are no real estate holdings, or heavy equipment there are a surprising amount of things that are considered depreciable assets. With that said most of my experience around flow though entitles centers around real property, and in that case I don't think the tax is all that heavy especially considering you are always replacing furnishings, and making improvements, and other things help out in terms of tax savings.
If business does not justify buying equipment and real estate then it does not make sense to buy them for a tax deduction. I do have employees, service company. Hey but thanks, I am open to all suggestions because I am getting slammed. I've been to 3 different CPA's and each say the same thing. Traveling to trade shows is one business expense though.
Ryan & Co. is a good sales and use tax firm. They work on a contingency basis, so if they don't save you money you don't pay them. Of course, they don't take every client either.
Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property
.
Most types of tangible property (except, land), such as buildings, machinery, vehicles, furniture, and equipment are depreciable. Likewise, certain intangible property, such as patents, copyrights, and computer software is depreciable.
Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property
.
Most types of tangible property (except, land), such as buildings, machinery, vehicles, furniture, and equipment are depreciable. Likewise, certain intangible property, such as patents, copyrights, and computer software is depreciable.
Yes, because land doesn't depreciate...It just sort of stays there and often appreciates, but you don't realize gain until you sell...which is why if possible you don't sell and try to do other things.
Ryan & Co. is a good sales and use tax firm. They work on a contingency basis, so if they don't save you money you don't pay them. Of course, they don't take every client either.
Thank you. I will keep them on file if my new CPA doesn't work. My first CPA, I may as well went to H&R block. The second CPA also had a retirement business and only advised full contribution, even when meeting through out the year for tax advise, (salesman). I hope the CPA I hired this time will have more advise or guidance.
Consider the boomers born in the mid-1940's to early 1950's: They went to college dirt cheap. Even Ivy League Colleges were much easier to get into. Fewer people with college degrees competing for jobs, unemployment rates not as high. They bought their real estate dirt cheap, and later unloaded it for big bucks. Gasoline/oil was cheap. Many parents today, can't contribute as much to their kids college education, and the loans students are forced to take out are enormous. Colleges intentionally recruiting more foreign students to allow for bigger increases in college tuition. Then older folks call you lazy.
The U.S. population has grown by a whopping 65 million people since 1990, mostly from immigration. We have in no way been able to grow an economy to match it
The vast majority of those males attending college then had the GI Bill... we still have the GI Bill.
Dirt Cheap... I can show you Real Estate in some parts of the Country that is still close to prices back then... what do you do when the major employer leaves a one company town?
30 cents a gallon when you were making 75 cents an hour is about the same as $3.75 when you make $10
I went to college... took longer because I worked my way through and I didn't take a dime of Student Loan money... when it got to crunch time, I sold the car I had restored in High School to finish...
Tonight news talked about the Student Loan Bubble... In the 90's everyone was saying they had to make student loans available to all and cut the red tape...
They actually interviewed a woman who said she should have been warned about having to pay back her 48k loan and they need to make it harder????
I guess I am Gen X
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