For all of you small business owners, you can relate to this

http://www.fivemilliondots.com/archive/2008/12/27/for-all-of-you-small-business-owners-you-can-relate.aspx

by edw519 • 18 years ago

45 67 18 years ago

fivemilliondots.com

koraybalci• 18 years ago

I get 403 on that link..

fallentimes10• 18 years ago

Works for me. I recreated it here for you as well:

http://tinypaste.com/pre.php?id=3b399

fallentimes10• 18 years ago

This exemplifies why tax avoidance (NOT evasion) has become one of my favorite pastimes.

modoc2• 18 years ago

Any tips? We have what I think are a good group of accountants doing our books and taxes, and yet beyond basic business expenses (computers, attending a conference to sell our stuff, cell phone bill, etc...) we're pretty much paying a TON of taxes.

Maybe that's all there is, but if you have any advice, I would be very interested in hearing it. (devon@digitalsanctuary.com)

fallentimes10• 18 years ago

Fair warning: I am not an accountant, the below information is just from my own experiences and does not constitute professional advice. Talk to an accountant.

The biggest one is expensing things you'd have to pay for anyway (e.g. health club memberships [if applicable], insurance, cell phones, health savings account, home internet & computers [if you work at home enough], parking passes, subway cards, business mileage on your cars and lumping personal trips & business trips together [careful with this one]. These take advantage of pretax dollars. I encourage you to do same for your employees since you're offering real perks with pretax dollars. Just make sure you talk to your accountant first

If you operate on a cash-basis (as opposed to an accrual basis) make any capital improvements/major purchases at the end of the quarter or fiscal year instead of the beginning of the next quarter or fiscal year. You can get around some of the 401k limitations if you own your own business. Finally, sometimes it's cheaper, in a tax sense to issue dividends to yourself and fellow equity holders. All of this varies significantly by legal formation and state.

Finally - and I can't emphasize this enough - invest in a good accountant. There's so many write-offs & tricks that the average person would never even think of and the laws, in typical US fashion, are filled with red tape & loop holes. Having someone to help you navigate them is crucial.

noonespecial• 18 years ago

That's a little over the top. Almost Rand-ian at the end there. I think small business owners should, however, start to cultivate a difference in perception between small business and "big" business.

There is a substantial difference between the startup founder who employs 15 and is the hardest working guy in the bunch and the executives of something like GM or AIG who are still not quite sure why its wrong to ask for a bailout while flying around in multiple corporate jets and taking fancy executive retreats.

Its going to be very important in the next couple of years to be sure that the needed reforms that will reign in the recklessness of the latter does not adversely affect the former.

mrkurt2• 18 years ago

That guy sounds like a passive aggressive, condescending dick. He may have some nuggets buried in there, but they're difficult to find when he drops phrases like "while you get here at 9, and mentally check in at about noon".

I worked in an environment where the business owners subtly questioned the worth of all of their employees once and I'll never do it again. I hope that I'll treat people differently if I'm ever in a similar position.

fallentimes10• 18 years ago

I agree, but man I'd be beyond pissed if the government was taking 50% of my money.

modoc2• 18 years ago

One of my biggest shocks of running a profitable small company is how much of that profit vanishes into (Iraq, GM, Bank Bailouts, etc....).

It seems that the large companies have enough accountants, divisions, and clever ways to avoid taxes that they pay a tiny percent, but small business don't really have much available and end up eating the full bill. I'm paying about 55% between federal and state taxes.

mattmaroon• 18 years ago

If the government takes >50% of your money, you make enough that you'll never be pissed about anything. You're somewhere over the $300k mark.

swombat• 18 years ago

My thoughts exactly. This guy is a dick. If I were working for him and got this letter, I'd hand in my resignation.

To the author: You're not the navel of the universe. I'm oh so sorry you've had to work hard for your shit. So has everyone else. In your darkest hour of disdain for the hapless employees you've hired to help expand your business, never forget: if it wasn't for all these people, you wouldn't be rich, because you wouldn't be able to hire all those people to make money from you.

brentb3• 18 years ago

If this guy actually sent that note to his employees (and I don't doubt that he did) he is absolutely a passive aggressive, condescending dick... couldn't have put it better myself. He's also a whiner and an idiot who obviously doesn't trouble himself with facts or history.

First of all, Dick (which is what I'll call the author, since I don't know his name) writes: If you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever.

Within the context of the article, Dick isn't referring to any actual steamrolling of the constitution that has taken place at the hands of the Bush administration (as long as there are terrorists out there... and there are always terrorists out there... it's apparently un-American to defend the Constitution, civil liberties, etc.). No, in the article, Dick is referring to changes in the tax code that the Obama administration has proposed (though they may not act on them for a year or two).

The funny thing is that Dick appears to believe that these tax hikes will be unprecedented. He believes they will streamroll the constitution and change its landscape forever. In fact, all Obama plans to do is return the top two tax rates to what they were in 2000 (and throughout most of the 90's). Taxes will still be lower than they were in 2000 because he plans to leave the other brackets (which are now at lower rates than they were in 2000) untouched. Even the wealthiest 1% of households (with an average income of $1.6 million per year) will pay less than they paid in '93-'00. So the idea that Obama's tax plan will streamroll the constitution and change its landscape forever is hogwash. His proposed taxes are lower than they were just 8 years ago and in any case, there is absolutely nothing unconstitutional about taxes. I've read the constitution; obviously this guy hasn't.

Even stronger evidence of the ridiculousness of this claim can be found if we look at history. Let's look at the top marginal Federal tax rates seen in recent history:

50% (1982-86) 70% (1965-85) 77% (1964) 91-92% (1946-63) 94% (1944-45)

Under Obama's plan, the highest marginal tax rate starts at an income of $357,700 (in 2008 dollars) and will only be 39.6%. And it's important to note that this is the marginal rate, not the average rate. Someone making $400,000 won't be paying 39.6% of her income to Uncle Sam, she'll be paying 31.6%, making the absurd assumption that she has no deductions. In reality, she'll almost certainly be paying less.

Finally, I'd just like to point out that two people with perhaps the highest tax burdens in the United States (Bill Gates and Warren Buffet) both support Obama and his tax hikes. In fact, Buffet has said it's ridiculous how little tax he is expected to pay. I tend to agree, especially considering our budget deficit (not to mention our national debt). I for one would be happy to pay higher taxes... if I'm doing well, a large part of that success is owed to the country that provided me with my education and the infrastructure and opportunities to make a success of myself. I'd like to see that education and infrastructure get even better. I'd like to see poor kids get preventative health care. It may not be a popular sentiment, but I agree with Biden: paying taxes is patriotic.

jbjohns• 18 years ago

What's so great about being patriotic? I'm American by birth, so I guess my views are pretty uncommon but I just don't personally see the point in being proud of something that happened by complete chance, and I certainly don't feel like I owe the place I was randomly born something.

About taxes; I don't mind paying taxes if I see some benifit for it. In e.g. Sweden you pay 40-50%, but for this you have free healthcare and free education (plus lodging and food!) for as far as your willing/capable of going.

The US, on the other hand has taxes higher then I would pay in e.g. Switzerland, Lichtenstein, etc. while having a much worse health care system, a much worse public school system, etc., etc.

(NOTE: These comments don't have anything to do with Obama/McCain, just patriotism and taxes)

anamax13• 18 years ago

> Finally, I'd just like to point out that two people with perhaps the highest tax burdens in the United States (Bill Gates and Warren Buffet) both support Obama and his tax hikes.

It's relevant to remember that neither Buffet nor Gates will be paying those rates.

And, even if the proposed laws would affect them, it's worth noting that nothing stopped Buffet or Gates from paying those rates in the past.

anamax13• 18 years ago

> 50% (1982-86) 70% (1965-85) 77% (1964) 91-92% (1946-63) 94% (1944-45)

Never confuse marginal rates with average rates.

The fact is that the top few percent pay a huge fraction of the income taxes. (SS is retirement and the return is skewed towards low income folks, so it's reasonable to omit it.) When folks don't spend their money, they buy dumb.

> paying taxes is patriotic

If it's so patriotic, why do you want to exclude people from it?

anamax13• 18 years ago

> Even stronger evidence of the ridiculousness of this claim can be found if we look at history. Let's look at the top marginal Federal tax rates seen in recent history

How about we look at the taxes paid by income cohort? We now have a greater percentage of people paying no income taxes than we did when the top rates were higher.

> making the absurd assumption that she has no deductions

Since deductions phase out as income increases, that's not an absured assumption.

> I'd like to see poor kids get preventative health care.

Poor kids are eligible for free preventative health care and have been for years. We're currently arguing about tax subsidized health care for families above middle income.

If your best arguments are falsehoods....

> I for one would be happy to pay higher taxes

Are you happy enough that you're actually doing so? After all, nothing is stopping you from paying as much (more) as you'd like.

Feel free to downmod me for being mean.

Buzzbomb• 18 years ago

This isn't about taxes at all but is a statement about how some who believe in "entitlement" think that if they don't get what they want they can threaten others to vote their way or face unemployment. It's also a jab at those he consider his inferior who have worked to keep his business viable while their boss has obviously become a well-funded lamprey ready to cut-and-run rather than to struggle for those who got him to where he is. If he thinks he got his success from pure hard work he's insane! There are plenty of businesses who struggle day to day to provide wages and work for employees and doesn't skim the cream away because he thinks he's "worked" harder. This crap would've cost him his head 220 yrs ago in France. This human garbage is about as un-American as one can become. The faster he leaves a nation that believes in equality the better for all. He's the diseased coward that needs to be cured. You either get it or you don't.

humanzee• 18 years ago

This is pretty clearly a chain-email written months ago by a McCain supporter, breathlessly warning of the dangers of electing an Obama administration.

The "...this is the type of change you can keep" is a dead giveaway.

zupatol• 18 years ago

That explains why the author is not known, and why the whole point is that you will get fired if taxes increase.

I don't find that threat credible. If the guy wants to retire, he will sell his company, not shut it down. Even if it's unprofitable, he might still find a buyer who hopes to turn it around, or values a part of it. This often comes with layoffs, but firing every single employee would probably be stupid.

fallentimes10• 18 years ago

With the hyprocrisy being that both parties are indisputably big government.

gruseom• 18 years ago

Thank you. The article screamed "fake" pretty loudly at me as soon as I started reading it.

jbrun• 18 years ago

That is a ridiculous letter and should not be on HN. Fist, it disrespects others, which is bad for business. But more importantly, he fails to aknowledge the roads he takes to work, the water he drinks, the electricity, the schools he went to.... you get the idea.

I don't think government is the most efficient thing in the world, but I do think they have an important role in business development, if not the most important.

After living in developing countries (China, Turkey, Ethiopia), you come to appreciate the little things that our taxes pay for - firemen, policemen, roads, schools, hospitals. I am a small business owner and do not enjoy parting with money to an arguably inefficient government either, but taking it out on employees like that is childish at best.

fallentimes10• 18 years ago

Maybe, but it's sparked some pretty good conversations. I've always found the discussions on HN to be better than the articles/news anyway :).

Prrometheus3• 18 years ago

>"But more importantly, he fails to aknowledge the roads he takes to work, the water he drinks, the electricity, the schools he went to.... you get the idea."

All paid for by local taxes and usage fees.

Now what, exactly, does he get for the 40% of his income that he sends to the federal government?

patio11• 18 years ago

Chain letter politics emails aside, if your business looks like this, you're probably doing it wrong. I don't understand why people think being married to a business is healthy or necessary. (It might be in some businesses. If you're the sole employee keeping a hospital's generators running, yep, you just bought yourself a very stressful lifestyle. Don't be the sole employee keeping a hospital's generators running.)

I love my customers. They are very important to me. If there is a bonnie lass who has booked my evening, then their emails can wait a few hours. I'm an engineer -- I'm perfectly capable of creating automated systems which generally function whether I am physically present Right This Minute or not.

If they tend to not do that, you can either code better (not sarcastic -- every time I lose money or time on date night as a result of a bug, my appreciation for proper testing increases) or pay somebody to worry about it for you.

natch• 18 years ago

I can't believe this is on HN. He writes as though he didn't get the memo on the fact that the McCain plan was much worse than the Obama plan. Why are we discussing this?

Prrometheus3• 18 years ago

The McCain plan was an attempt to equalize the tax incentives facing individuals and large businesses looking to buy a health insurance plan, thus severing the tight link between employment and health care which hinders potential startup founders. Obama's plan, as far as I can tell, is "more subsidies".

ajkirwin• 18 years ago

He mentions the 50% figure a lot of times and it's one I find particularly interesting, because in a lot of countries which tend to have good socialized healthcare, social security, et al and don't have to run deficits or anything like that, tend to have personal tax rates of AROUND 50%.

pedalpete• 18 years ago

Yup! As a Canadian we can pay more than 50% income tax plus Provincial taxes, sales taxes and all the other taxes.

It doesn't stop Canadians from operating businesses. RIM is Canadian, EA has a huge operation in Canada. When you hear of companies moving from Canada to the US, I believe it is more often brain drain than due to the taxes.

jdminhbg• 18 years ago

> I believe it is more often brain drain than due to the taxes.

Maybe the two are related somehow.

Maascamp2• 18 years ago

I'm Canadian living in Vancouver and certainly do NOT get taxed 50%. In fact, my income tax (percentage) now is less than it was a year and a half ago when I lived and worked in New York city.

cvg• 18 years ago

The Western provinces have lower tax burdens than many states in the US. I compared a few income and family situations with my California income, and there's a 5-10% savings in taxes. Add in the free healthcare and the option to get a 15% rate on small business and British Columbia is looking really good. If only the weather was good.

Canada Tax Estimate Calculator: http://www.ey.com/GLOBAL/content.nsf/Canada/Tax_-_Calculator...

sachinag• 18 years ago

Fine, I hope all the people who feel this way leave. Go. Get the fuck out.

I believe in American exceptionalism. I believe that there's something about the immigrant experience that allows people to pull themselves up and live their dreams with lots of hard work. Yes, it takes luck - but so does everything else worth having, including love and health. You can become rich and fabulous and no one will fault you for your accent or your class.

So take my taxes - I'm happy to have a profit enough to pay them. I'm safe in my country's borders, I have 500 channels of TV available to me, I can eat meat every day for every meal if I wanted to, and I get to watch my two favorite teams play baseball day and night during the season.

My father chose to move here for me, before I was even born. Not that India is some kind of hellhole - far from it - but, today, on what would have been his 60th birthday were he alive, I know what gift he gave me.

edw519• 18 years ago

Great post! Thank you sachinag.

When things get tough and my motivation ebbs, I think of my 2 grandfathers. As teenagers, they left everything and everyone they ever knew with no assurance of ever seeing them again to come here. Why? So that I could have a better life. I have to get back to work; I simply can't let them down.

danteembermage• 18 years ago

I believe there's something about the immigrant experience too, but we don't let immigrants in anymore (I'm being a bit sensationalist but even if you include all of the tacitly allowed illegal immigration we are accepting four or five times less immigrants than we did before the 1920 act) I'm not at home but it's something like 15% pre and 3% post.

And to be really controversial I think we are perilously close to creating ethnic Americans and I don't think that's what we should want.

Prrometheus3• 18 years ago

I believe in competent government. I believe in getting what you pay for. I believe that I have huge advantages as an American because of past capital investment in this country, but those advantages are becoming more and more likely to disappear as capital becomes global and mobile and the cost of doing business here increases.

Finally, I believe that any business that can afford to do so can instantly increase its profit by 25% simply by moving to Ireland. That's my strongest belief of all, simply because it's based on running the tax numbers.

rw5• 18 years ago

If you were born elsewhere, and could never get to America, would you be fine with American exceptionalism?

anamax13• 18 years ago

> If you were born elsewhere, and could never get to America, would you be fine with American exceptionalism?

Sure. Why would I care what Americans think about themselves? Why would I care what Americans think about me?

And, on a more objective note, the argument for American exceptionalism isn't that America does so well, but that other countries do so badly.

After all, let's compare the stereotypical American with the stereotypical European and then look at the aggregate results. Some might argue that the stereotypes are wrong. Others give credit to the flying spaghetti monster. Maybe the Illuminati are to blame. And so on.

anthonyrubin• 18 years ago

Have you considered that the US is a desirable place to be because of dissent and people acting upon dissatisfaction? The tiresome rhetoric encouraging people to leave because they disagree with the status quo is antithetical to the principles this country was founded upon.

anamax13• 18 years ago

> Have you considered that the US is a desirable place to be because of dissent and people acting upon dissatisfaction?

So, dissent against Obama is necessarily good, right?

Dissent, like change, isn't necessarily good or bad. The specifics matter.

xal• 18 years ago

I find these anti-tax sentiments nuts. My recent history is essentially the same he describes. I currently employ 12 people.

My attitude is the polar opposite however. I worked so hard over the last couple years so that I could create the best environment on earth for me and my friends/employees. We have fun at work and because of that our products are excellent. There is no debt or guild about them having a good time while I wasn't, in fact I do have a good time now because they do.

Outside of the business, the reasons we live well, are directly related to the taxes we pay. Can you imagine stepping out of your office and hitting a dirt track? Taxes payed the paved street. Can you imagine that sprawling towns, such as the ones we live in, would function for a moment without Police and oversight? Do you think software businesses could be made outside of sprawling towns?

There is a certain basic infrastructure that needs to be in place to get the best out of people and that's what good government provides. I lived in Germany and Canada, both countries with welfare systems and health systems that the states now finally aspires to, and I have enjoyed (relatively) good government for my entire life.

If we cut out taxes of all kind we will end up without those basic infrastructure and the foundation on what the OP build his business will no longer exist.

gfodor• 18 years ago

This, of course, is a strawman. The taxes being railed against are not the libertarian-esque ones like infrastructure and defense, but more controversial ones like corporate bailouts.

fallentimes10• 18 years ago

And the allocation and efficiency of the taxes already in place. If you work for the government, largely due to lack of competition & indifference, there's very little meritocracy and it's hard to fire people.

mmmurf• 18 years ago

Roads are about 1% of all taxes... Your tax dollars are paying for a massive war and a massive bailout.

Maascamp2• 18 years ago

Interestingly the higher taxes will in part be used to raise the standard of education which will result in a more dynamic and entrepreneurial work force, which will in turn result in more business owners looking for employees. He simply sounds mad because he'll be making a few dollars less.

He's using a straw man argument to cover for his personal greed and ideology. Randian indeed.

anamax13• 18 years ago

> Interestingly the higher taxes will in part be used to raise the standard of education which will result in a more dynamic and entrepreneurial work force, which will in turn result in more business owners looking for employees.

Yeah right.

While Obama didn't go with the worst from Chicago's education gang, their best isn't all that good.

A convincing counter-argument will cite actual results from Chicago, a noted bastion of educational excellence....

quoderat• 18 years ago

Are people still shilling for McCain at this late date?

The election is over, you know.

For all of you small business owners, you can relate to this

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