PeterS

Say your company makes widgets. You have fixed and variable costs on your widget. How much will your income taxes be and how much per widget will they run?

Super Dave Loc: Realville, USA

I'll try to speak down to you so you understand.

The point of investing in a business is to get a return on your investment and/or income stream. People don't start a company just to pay more or less taxes, they start a company to earn income. If you're starting a company that manufactures products, you will most likely have to put up investments in capitol and time. The return on those investments is what determines the success or failure of the company.

The return on investment depends on many factors, but the one you presently can't grasp is cost, so for this lesson that's what we'll speak about, but only in elementary terms in hopes that you can grasp it.


1) Everything the company pays for reduces the return on investment.
2) All costs have to be paid before the return on investment is realized.

Examples:
1) If you're paying $1.00/unit for domestically made widget parts but could buy the same quality parts for $0.50, then you are reducing your return on investment.
2) If you're paying $10,000/mo for a building downtown in walking distance to a swanky bar instead of a building on the outskirts of town costing $5,000.00, then you're reducing your return on investment.
3) If you're paying 35% in taxes instead of moving to a business friendly company that only takes 10% you're reducing the return on your investment.

If you borrow $100,000.00 @ 5% interest to start a company, then the interest payments have to be paid before you realize a return on investment.

If you quit your job where you net $50,000.00 then that investment in time has to be paid back to you before you realize a positive return on investment.

So..

1) You've got the choice of an expensive part, loyalty to that parts company and less return on investment or cheaper parts and higher return on investment.
2) You've got the choice of a lush building downtown and less return on investment or a run down building farther away and a higher return on investment.
3) You've got the choice of staying in America with a lower return on investment or moving to Ireland and having great scotch and a higher return on investment.

If you have shareholders that rely on your stocks for their retirement, they don't want to have to move in with their kids because you chose the stupid business model.

CounterRevolutionary

I am telling you the truth. I will not print my home town address.
This is why I support president Trump's tax cuts to help the destitute people:

https://whitehouse.gov/1600daily
12/5/2017
SMALL BUSINESSES ARE CRITICAL TO THE ECONOMY: Small businesses are a primary driver of the American economy and when they succeed so does the country.

• There are nearly 30 million small businesses in the United States, employing 57.9 million American workers, according to the U.S. Small Businesses Administration.

o 48 percent of all American workers are employed by small businesses, defined as firms employing fewer than 500 employees.

o Historically small businesses are responsible for two out of every three net new jobs created in America.

• Over half a million new small businesses are launched each year in the United States, creating more than 2.5 million new jobs per year, according to the Bureau of Labor Statistics.

• Nearly half of the United States gross domestic product (GDP) is driven by small businesses, according to the U.S. Chamber of Commerce.

o Over 97 percent of United States exporters are small businesses, according to the U.S. Small Business Administration.

TAX REFORM FOR SMALL BUSINESSES: The tax reform plans in the House and Senate would cuts taxes for small businesses.
• Under the House tax reform bill, businesses organized as sole proprietors, S corporations, or partnerships would have their top marginal tax rate capped at 25 percent for qualified business income.

o This would be the lowest top marginal tax rate in more than 80 years.
o Over 99 percent of American businesses are incorporated as one of these “pass-through” firms and currently face a top Federal marginal tax rate of 39.6 percent.

• Under the House bill, small businesses that file a joint return would have their first $75,000 of income taxed at a low rate of 9 percent.

• Under the Senate bill, businesses organized as sole proprietors, S corporations, and partnerships would be able to deduct 17.4 percent of their qualified business income with some restrictions on high-income households.

• For the next five years, American businesses will be able to immediately write off the full cost of their heavy equipment and other capital investments.

o This will help American businesses afford the heavy industrial machinery and other capital investments they need to grow.