[TheForge] Was tax status now profit vs wage

Sat Dec 28 11:04:01 2002

It's not the tax that I was addressing, it's profit and rather or not your
really making any.  If you are only making a wage, your business is NOT
proftable.  It's just surviving.

-----Original Message-----
From: Ray Baker <[email protected]>
To: [email protected] <[email protected]>
Date: Saturday, December 28, 2002 12:57 AM
Subject: Re: [TheForge] Was tax status now profit vs wage

>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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