[TheForge] Was tax status now profit vs wage

[Walter L. Mullett]

I think you really mean that income above costs of doing business is taxable
but please don't call it all profit.  I think too many small businessmen
make that mistake.  In reality, you may have a loss on your investment but
someone like Dave would have to tell you what affect that would have on your
taxes.

If you want to see your profit or loss, subtract your "wage" from your gross
income amount.  Your wage should be a reasonable amount and what you think
you should earn.  Whatever is left is profit or loss and should be compared
with what your money could make if it was invested elsewhere.

If your just making a good wage, your not doing much better than a hobby
blacksmith.  You need to look at your prices because if you don't have some
return on your investment, you probably won't get past your first hard
times.

I'm sure Dave can give more detail on how to look at this.

Walt


>
>Dave Brown wrote:
>> Larry,
>>
>> The difference between cost of materials, coal and such and the selling
>> price and the selling price is your taxable profit in the case
>> outlined.  That is unless the "forge time" is for someone else that you
are
>> paying a reportable wage to.  If you are the "forge time" then the total
>> difference is considered as paid/earned by you and therefore taxable,
>> income tax that is.  Sales tax, as some others have mentioned, is a
>> different ball game altogether.  In that case the sales tax is applicable
>> to the whole price that you charged the customer.
>>
>> Dave Brown
>> Accountant/Auditor
>