[TheForge] Was tax status now profit vs wage

Sat Dec 28 00:58:01 2002

But if you take a wage out of the business to reduce taxable income, then
you must include that amount in your personal income tax. It's usually a
wash on the bottom line.

Ray Baker
Frontier Forge
Olympia, WA

----- Original Message -----
From: "Walter L. Mullett" <[email protected]>
To: <[email protected]>
Sent: Friday, December 27, 2002 5:43 PM
Subject: [TheForge] Was tax status now profit vs wage

> 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
> >
>
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