Kyle Wilson7 said:I can't quite catch what you mean by "banderas"—not sure if you're talking about flags or something else entirely—but I'm all ears if you want to clear that up! kaže:
It doesn't even have to be subject to Sales Tax—honestly, there's zero difference from running a small sole proprietorship until you actually cross that revenue threshold. $28 Annual revenue—doesn't even have to include Sales Tax.
True, but with an LLC you don't have to pay those self-employment taxes on yourself—whereas with a sole proprietorship, you're stuck paying them no matter what, even if you've got another job elsewhere. Honestly, running a small business while being employed somewhere else just doesn't make much sense that way.
I honestly don't get why people act like owning a business is just some status symbol to brag about. I don't know what your experience with running a private company is—seriously—but how are you even supposed to hold down a regular job elsewhere while keeping a business afloat? Unless you're some local government official or working for a massive state agency, it feels shady. It’s like you only need that side hustle to pull off little scams—not to mention the actual criminal stuff, like taking bribes or funneling contracts away from your employer and straight into your own pocket.
Being in the Sales Tax system isn't always a bad thing—even if you aren't pulling in huge numbers yet. $28333 Honestly, even if I was terrible at math—which, let’s face it, I am—trying to survive on $85k a year sounds brutal. Even if you have zero overhead and a killer margin, once you take that $50k pre-tax profit and split it by twelve after the IRS takes their cut... man, you're left with peanuts. If you're running a serious operation, though, being able to write off Sales Tax on your purchases is a huge plus. Just doesn't really apply to people like dentists or GPs working under Medicare & Medicaid contracts, since they aren't part of the Sales Tax system.
I still don't get how you can score cheaper beer if you aren't in the sales tax system—like, even if the wholesale price hits you the same, you just lose out on the tax credit. If you're staying out of the system, the brewery or the shop is still gonna charge you sales tax, so you end up paying more for that brew instead... $2.75 With that 22% sales tax kicking in—adding $1.76 to bring it up to $9.76—you’re basically stuck... you won't even be able to flip it for a profit. $3.25 So if you sell something for $12, you're looking at a $2.24 profit—but once you factor in being in the Sales Tax system, you’ve got an $8 input and then $1.76 in Sales Tax. If you sell it again for $12, that's $2.16 in Sales Tax, but since you already paid the $1.76, you still owe the government another $0.40... so it looks like you made less, but hey—like my massage therapist always says—business requires overhead. I don't know any coffee shop owners who don't drive a car, but they'll happily hop on a scooter that costs maybe $26,000 just to save a buck—on a $26k purchase, that's $4,400 in Sales Tax alone. Ex $7.4 =$10853 What can you actually claim as a tax deduction—go ahead and split that up with the others. $0.13 What kind of sales tax do you gotta cough up first? $0.13 You gotta pay up once you sell 81,400 cans—so basically, you either drop your prices or end up ahead of where you’d be if you stayed off the grid... assuming you bought the exact same truck.
I honestly jumped into this whole business thing just to see if I could actually save more than I would working some corporate job—which, let's be real, is why pretty much everyone thinks about going solo in the first place. But man... just thinking about how many beers you'd have to move to pay off all the bar equipment, let alone trying to scrape together enough to actually buy the building itself? It's a lot.
So, my take—just keep up with the Sales Tax and get as much done as possible. Honestly? I wouldn't even mind paying more if it meant things actually worked. $333333 Sales Tax—just so I can actually make some decent money...
Look, you’re missing the point entirely. Once you hit that threshold, being part of the Sales Tax system isn't optional—it's mandatory. $28 But that doesn't kick in until January 1st.
NEXT Look, here’s how it works. I could start a business right now, stay under the sales tax threshold, and still pull in a billion dollars in revenue this year. Legally speaking, I’d remain completely exempt from collecting sales tax until January 1st of next year. It’s a loophole that works just fine.
Just so you know, there are vastly more business owners out there who aren't actually on the payroll of their own companies than those who are. Following your logic, I guess people just wouldn't be allowed to own multiple businesses at all—because how could they possibly dedicate themselves to every single one if they weren't technically an employee in all of them?
If you can't grasp the concept of sales tax being applied only to the added value—using a simple example like a beer—then you clearly don't understand the absolute basics. You have to actually generate some kind of added value if you want to make a living as a bartender. Trying to claim sales tax as a pre-tax deduction within the final price is just fundamentally flawed. $1.00 It’s irrelevant what the sales tax will be on whatever you end up selling. $4.00Good grief. If you’re actually finding it more profitable to dodge input sales tax during procurement than to simply operate without sales tax while maintaining the same end prices, then you aren't running a business—you're hemorrhaging money. Period. Every single time you reject an input tax credit when selling to non-taxable entities, it only makes financial sense if your expenses are higher than your revenue. In other words, you're only "winning" if you're operating at a loss. All that nonsense about how being in the red is a strategic move because of heavy investments? That’s fairy tale stuff for children.
Why do you think the local concert hall stays outside the Sales Tax system? You think they just screwed up and realized it doesn't make financial sense? They’re probably running seminars about how much cheaper they could buy supplies if they actually joined the tax net 😁
It’s simple: 99% of their ticket buyers are just regular people. As an institution, they aren't required to register for Sales Tax regardless of their revenue. Of course they won't join—it would basically slash their bottom line by 18%.