DUmp Accountants Explain Corporate Taxes

[GOBUCKS]

I'm about as skilled at accounting as DUmmy PCIntern is at dentistry, but this thread set my teeth on edge. 

DUmmies conduct a discussion of corporate taxes, and not one single solitary DUmbass in the house has a grasp on the concept of
gross vs. taxable vs. net.

Only one DUmmy has a vague recollection of something called "taxable income". 

Otherwise, it's just a bunch of terms the rich use to avoid paying their fair share.

Don't hire a DUmp accountant to prepare your taxes.

The simplest stab at "the google" would increase their comprehension of these elementary terms immeasurable.

Nadin wept.

bklyncowgirl (1000+ posts)        Mon Sep-19-11 11:31 AM
Original message
Small business owners, please help me understand how business are taxed
 Listening to a Republican congressmen bemoaning the lot of the small businessman under Obama's tax plan I find myself very confused. I always thought that business owners were liable for taxes only on their net profit (what's left over after business expenses are deducted) but this guy made it sound like he was going to owe taxes on his gross income.

Let's say I'm a small business owner who's business makes $600,000 a year. That's my gross income.

I deduct my business expenses, payroll, supplies, equipment, rents, etc. and I end up with $300,000 That's my net profit.

Am I taxed on my gross income in this case $600,000 or my net profit i.e. $300,000?

Also if I know that I'm going to be taxed at a higher rate at any profits over $250,000 would it not make sense for me to put that $50,000 back into the business instead of taking it as profit?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1965260
DUmmy bklyncowgirl sounds more stupid than stevenumbers. I think she is.

Tesha  (1000+ posts)      Mon Sep-19-11 11:43 AM
Response to Original message
1. Essentially all businesses are taxed on their net profits.
There are tricky rules, of course, as to what constitutes
a deductable[sic] expense against your revenues.

In the DUmmy world, you pay taxes on net profit.
The money left over after you subtract taxes from net is called "stash".

EC  (1000+ posts)        Mon Sep-19-11 11:47 AM
Response to Original message
3. Net profit.
And yes it would be wiser to put the extra $50,000. in improvements or hiring.

 


I didn't know we had a DUmp CPA:

postatomic  (417 posts)      Mon Sep-19-11 11:48 AM
Response to Original message
4. You are taxed on the net Income
And it depends on how your company is structured. Sole Proprietorship, S-Corp, LLC, or C-Corp.
You really can't put money back into your company to avoid paying taxes.

 



This DUmmy comes closest to understanding. Somewhere he heard the concept of "taxable income". But he's clearly a DUmmy.

lumberjack_jeff  (1000+ posts)      Mon Sep-19-11 11:49 AM
Response to Original message
5. I own an LLC
Whatever money is left over expenses becomes taxable income to me.

If taxes go up, I'm motivated to turn more of the gross income into business expenses. If taxes go down, I put the profits in personal savings.

You want to encourage hiring? Raise taxes.

 

Liberal In Texas  (1000+ posts)        Mon Sep-19-11 11:55 AM
Response to Original message
7. It's on net profits. And the RW noise machine as successfully got people believing
that it's on the gross.

My brother runs a small business and because his net sales were a bit over $250K he thought his taxes would be going up under the old dem tax plan. I tried to explain that it would be on what he made net and only go up on what he made over $250K gross.

bklyncowgirl (1000+ posts)        Mon Sep-19-11 12:01 PM
Response to Reply #7
8. Yes, the Republicans are very good at confusing the issue
I was pretty sure that you paid taxes on net profit but listening to this guy you would have sworn he was going to get hit on the whole thing. He was practically chewing the carpet at the thought of having to feed his family on a mere $400,000.

[NHSparky]

Newsflash for DUmmies:

Corporations do NOT pay taxes.  They merely collect them from their customers or consumers of their products.

[Ralph Wiggum]

Liberal In Texas  (1000+ posts)        Mon Sep-19-11 11:55 AM
Response to Original message
7. It's on net profits. And the RW noise machine as successfully got people believing
that it's on the gross.

Taxes, another issue that DUmmies should simply not discuss.

[Erasmus]

Whatever money is left over expenses becomes taxable income to me.
If taxes go up, I'm motivated to turn more of the gross income into business expenses. If taxes go down, I put the profits in personal savings.
You want to encourage hiring? Raise taxes.

I was in public accounting for 7 years, with a Masters of Taxation.  At no time while managing a 1,300 client book of business did our firm ever advise people to HIRE someone for tax planning purposes.  Not once, EVER.  What people WOULD do, depending on their accounting methods, would be to accelerate already planned-for purchases to take advantage of getting those deductions on the current year's tax return.  Especially frequent-to-annual purchases.  If the construction company felt they were going to have to outfit their trucks with new tires, or buy new trucks, we advised them to do so before their year end if they could to accelerate the deduction by a year.  Never, not once, did we EVER advise a client to hire someone for tax planning purposes.  Not once.

Hiring someone and then firing them a year later is an expensive and difficult proposition. So some small amount of expense that can be written off this year ends up costing the company quite a bit of money in the long term.  Ridiculous idea.  Completely and utterly ludicrous and a tax adviser that advises someone to hire someone as an employee simply for the tax deductions is incompetent and dangerous.


 

[Celtic Rose]

Believe it or not DUmmies, but business don't usually function on the money that they brought in during a particular month.  If a major expense comes up (large order needing to be placed, repairs, etc.) they would prefer to have that money in their business account.  When a company has $300,000 net profit, that money isn't going directly to line the pockets of the owner, at least not if the owner has any business sense.  The owner probably has a percentage of the profit that he allocates to himself, and the rest goes into the business account.  When it looks like the money in the business account is steady, and that money is still coming in, he might start to consider hiring if the need is there.  No employer is going to hire unnecessary workers to "save on taxes," why would they pay someone if there is no work to do?  Also, and employer who needs workers will hire as soon as their budget will allow for it.  

[Ralph Wiggum]

lumberjack_jeff  (1000+ posts)      Mon Sep-19-11 11:49 AM
Response to Original message
5. I own an LLC
Whatever money is left over expenses becomes taxable income to me.

If taxes go up, I'm motivated to turn more of the gross income into business expenses. If taxes go down, I put the profits in personal savings.

You want to encourage hiring? Raise taxes.

So you have less money and that will encourage you to hire more workers?

The stupid is strong in that thread.

[JohnnyReb]

You buy something from a business fo $100. The owner just made $100....ask most any democrat voter. The owner is getting rich....

Tell the damn DUmmie, you had the same chance he did, why aren't you in business and getting rich....spit...sputter...slobber...the man held me down... 

Stupid walks among us.

[Karin]

Hiring someone and then firing them a year later is an expensive and difficult proposition. So some small amount of expense that can be written off this year ends up costing the company quite a bit of money in the long term.  Ridiculous idea.  Completely and utterly ludicrous and a tax adviser that advises someone to hire someone as an employee simply for the tax deductions is incompetent and dangerous.

But Erasmus!  That's one of their cherished beliefs!  You just shot holes through it!   

They believe that by hiring a bunch of useless employees to loaf about, whether or not there's any productive work to be done, will rake in boatloads of cash for the business owner.  Who are you, with that so-called "Masters of Taxation" to question the DUmmies' collective wisdom?

[MrsSmith]

You buy something from a business fo $100. The owner just made $100....ask most any democrat voter. The owner is getting rich....

Tell the damn DUmmie, you had the same chance he did, why aren't you in business and getting rich....spit...sputter...slobber...the man held me down... 

Stupid walks among us.

Because even the most jealous DUmmy knows he doesn't want to risk his own money and work 16 hours a day, 6 or 7 days a week, getting his business going just so he can "donate" all his profit to Uncle Sam (at gunpoint.)

[Wineslob]

EC  (1000+ posts)        Mon Sep-19-11 11:47 AM
Response to Original message
3. Net profit.
And yes it would be wiser to put the extra $50,000. in improvements or hiring.

Wait a damn minute here. I thought you DUmpmonkiees wanted those EVIL RICH PEOPLE to pay "fair" taxes.

Someone needs their butt kicked for advocating sheltering.   

[Carl]

The only entities that hire people that they don`t need are in the public sector.

[JohnnyReb]

Because even the most jealous DUmmy knows he doesn't want to risk his own money and work 16 hours a day, 6 or 7 days a week, getting his business going just so he can "donate" all his profit to Uncle Sam (at gunpoint.)

Let me tell you about one such DUmmie.....votes democrat because they look out for the working man....

This DUmmie has did nothing but drive a truck all his life. I've known him all of my 65 years of life. He started drivig as a teenager. He drove for the same man off and on most of his life. That's except for shorts stints when he thought he wasn't being treated right....meaning no one would kiss his ass and help him hold the steering wheel. He was constantly bithing about having to work to much, wasn't being paid what he was worth, other companies paid more, "I'm not taking that load", "I'm not going there", "I deserve a new truck", etc constantly.

Well, the man he had worked for most of his life decided to retire at 80+ years. He offered all the fellows that had worked for him for years the truck they were driving. He also offered to sell them the trucks and trailers at below market value and finance them at a low interest rate. He also offered to keep the office personel for a year to line up loads and such until they got the hang of the self employed trucking business. Only a couple of the best drivers took him up on his offer and they have done well. The other drivers just went to other trucking companies....So did the malcontent S.O.B.. When he talks about how he never had a chance or how "the man" took advantage of him I ask, "Why didn't you take XXXXX up on his offer and get into the big bucks too?" He always has some excuse and it's never the same as the last time I asked. He knew that the way he operated working for "the man" was not going to make him a living much less rich.....

DUmmies just want to be born with a silver spoon in their mouth.

[Erasmus]

But Erasmus!  That's one of their cherished beliefs!  You just shot holes through it!   

They believe that by hiring a bunch of useless employees to loaf about, whether or not there's any productive work to be done, will rake in boatloads of cash for the business owner.  Who are you, with that so-called "Masters of Taxation" to question the DUmmies' collective wisdom?

I could possibly fathom advising a client to hire someone at year-end to take advantage of a tax credit IF that client was already in the process of hiring someone anyway.  It would be advise along the lines of "if you get them hired by X date, you will get a credit of Y."

It's like the chronic shopper who buys shit just because it's on sale and then runs around talking about saving $1,000 buy spending $30,000 on crap they didn't need.

[JohnnyReb]

I could possibly fathom advising a client to hire someone at year-end to take advantage of a tax credit IF that client was already in the process of hiring someone anyway.  It would be advise along the lines of "if you get them hired by X date, you will get a credit of Y."

It's like the chronic shopper who buys shit just because it's on sale and then runs around talking about saving $1,000 buy spending $30,000 on crap they didn't need.

You've met my wife, I see.






Now I shall go out in the backyard and practice my "Duck and Cover" exercises.

[Freeper]

I could possibly fathom advising a client to hire someone at year-end to take advantage of a tax credit IF that client was already in the process of hiring someone anyway.  It would be advise along the lines of "if you get them hired by X date, you will get a credit of Y."

It's like the chronic shopper who buys shit just because it's on sale and then runs around talking about saving $1,000 buy spending $30,000 on crap they didn't need.

It makes perfect sense, if a new employee is needed to take advantage of the $4000 tax credit to hire someone. Other than that who is going to hire someone at 20k (plus whatever other costs for benefits and govt regulations) or so in order to get 4k back?

0bama continues to show just how clueless he is.

[DumbAss Tanker]

I was in public accounting for 7 years, with a Masters of Taxation.  At no time while managing a 1,300 client book of business did our firm ever advise people to HIRE someone for tax planning purposes.  Not once, EVER.  

Yes, it's ****ing insane.  The only way such 'investments' would make economic sense would be if the effective tax rate on the top-end dollars was actually OVER 100%.

The fact that several of the DUmmies claim to actually run businesses, or to have learned their alleged 'Knowledge' from relatives who do, goes a long way to explaining the failure rate of small businesses.

[JohnnyReb]

Yes, it's ****ing insane.  The only way such 'investments' would make economic sense would be if the effective tax rate on the top-end dollars was actually OVER 100%.

The fact that several of the DUmmies claim to actually run businesses, or to have learned their alleged 'Knowledge' from relatives who do, goes a long way to explaining the failure rate of small businesses.

Hey, the way most DUmmies think is, the day you pronounace yourself self employed, you are instantly rich and no longer have to work. If you do work, then you are getting filthy rich and you're just greedy. Honestly, that's the way they see things.