Starting a small business

manager said:Well, if you’re just running a sole proprietorship, you only pay taxes once the invoice actually gets settled.

True, but I’m running an LLC.

manager said:Look, you really need to wrap your head around the whole tax system—everything from sales tax to corporate income, depreciation, overhead, all that stuff—before we can even debate what works better than what.

I guess we can talk all we want, but honestly, I doubt it changes anything in the system. Maybe we can just help each other out with advice so nobody falls into the same traps the government sets for us.

You know how it goes... everyone learns from their own mistakes, but they think they're smart by watching others fail.

manager said:If you can't adapt, you'll end up being an employee working for some big boss who can. That's just how the world works everywhere. The biggest issue here is that people think opening a business means instant wealth. It's a joke.

I work for myself, so I'm both the employee and the boss, and I don't mind that at all. The real issue is that to pay myself a decent $3k, I have to hand almost that same amount over to people who—like I said before—just sit around waiting for government handouts.

manager said:Hey there!

Hey, back at ya.

BTW, since you seem to know your stuff, have you ever tried tracking the actual cash flow?
Like, say you pull in $10k from a job $0.00. You pay yourself a $3k salary $0.00, and let's say the rest is profit. Take your wife and kids and go to a mall with that salary (and the profit, if you're feeling flush) and buy whatever you need. At the end, calculate how much of that $10k actually went toward your life versus how much vanished into the Treasury and other federal agencies.

Obviously, they'll just use that budget deficit to bail out failing corporations or fund some buddy's special project.

Look, my question was specifically about small businesses, but I see you’ve gone off on quite a tangent there. That’s why I made that point earlier regarding sales tax once the invoice is actually settled.

You can't just look at it that way. First off, serious professionals don't view sales tax as profit. I'll just assume you meant you issued an invoice for a service where there isn't even a markup involved. $3333 Plus sales tax, of course. $4067.
So, that $2,200 goes straight toward sales tax; it’s just passing through your books.
Onih $3333 What exactly is left over after you pay your salary? $1000 By hand and roughly. $600 As for taxes and all that other nonsense—which seems to be a universal constant everywhere else in the world—you’re still stuck with them. $1733.
If you just write them off exactly as they are, you’re going to be staring down a massive tax bill at the end of the year. $1733 The corporate tax rate fluctuates between 25 and 35 percent, depending entirely on your bottom line.
Are you actually telling me that?
We shouldn't be letting money leak away like this. It needs to be saved, not squandered.

What goes through your mind when you walk into a bank in Germany to deposit, say, $20,000 in cash, only for the teller to calmly inform you that there’s a 35% tax on the spot? It is quite a shock. Very few countries in the USA would hit you with an immediate tax levy just for depositing your own money into an account. Still, I suppose this is one way they attempt to crack down on the black market.

Around here, you can basically walk in and pull out a tax-free loan. I’m talking about that cash you grab at the register that just ends up being withdrawn from your bank account or through the IRS.

It isn't quite that simple, despite what I might make it seem.
About two years ago, they introduced something like accelerated depreciation. It allows you to write off those costs much faster. $1733 How much are you pulling from your account to pick up some Specair? You get what I'm saying?
You can also pull quite a significant amount of cash out through travel reimbursements.

The issue around here is pretty widespread. Most small business owners end up spending far more than they actually bring in, only to find themselves completely broke by year-end because they weren't staying on top of their quarterly tax estimates.

If you earn a single dollar, you aren't allowed to spend a single cent over that amount. Just one dollar. Period.

You might want to look into hiring a professional accounting firm or perhaps consulting with a financial advisor. It’s worth doing some due diligence.

Our tax system isn't actually the primary culprit here. The real issue lies within our legal framework and how poorly we handle debt collection. While there’s been significant progress regarding overall business liquidity across the country, let’s be honest—we still have a long way to go.

vividstag31 said:So, the question was actually about a small business—though I guess you went a bit deeper with your answer. That’s why I mentioned that whole sales tax thing after the invoice gets paid earlier.

You can't just look at it that way—it's not that simple. First off, serious people don't treat sales tax like it's part of their profit margin... so I'll just assume you meant the invoice was for the service itself, meaning there’s no markup involved, I guess. $3333 Plus sales tax, I guess—so that'd be the total. $4067.
So that $2,200 just goes toward sales tax—it basically just passes through your books, I guess.
I guess those guys... maybe? $3333 what's even left after you pay your salary—I guess. $1000 Maybe just cash—hand to hand, I guess. $600 Just for taxes and all that other nonsense—same as anywhere else in the civilized world, I guess. So you're stuck with it. $1733.
If you just write them off like that—I guess—you're gonna end up paying more on your taxes at the end of the year. $1733 So, you’re looking at either a 25% or 35% corporate tax rate—kind of depends on how much profit you actually pull in, I guess.
..........

I see you totally get what I'm saying—basically, we're on the same wavelength, thinking the same things and stressing over the exact same stuff, I guess.

I'm not saying I keep the sales tax as profit—I’m just talking about what the whole job actually ends up costing the client (if you're even dealing with an individual, I guess). $3333.

So, this is more or less how I see it—my rough take, anyway.

Value of the job—I guess.
10 $0.00
from that—I guess.
$600 Sales tax—it’s always a headache, I guess.
$8,200—that’s your take-home, I guess.

Starting at $8,200—I guess.
Just pay yourself—you'll get the cash straight to your pocket, I guess.
3000,00
So much for using the company laptop for fun—that's gone now, I guess.
5500,00
So, what does it even mean when $2,500 just... vanishes like that—gone from here and gone from there? I guess it's just lost.

At that point, you had like 2700 left in your account—I guess.
which one did we say you're keeping as a win—I guess?
I mean, obviously the tax prepayment or corporate tax is only $700—so you're looking at $2,000, I guess.

Roughly fifty bucks total—fifty to you and fifty to the government, I guess.

So, my wife, the three kids, and I hit up a big grocery store—you know how it goes, grab this, need that, kid wants this... by the end, you’ve basically burned through everything you had left. You add it all up and it’s like $4,100 out of my pocket, plus another $900 in sales tax to the government. Just... yeah.

It’s getting a bit ridiculous—if I’m the one stuck footing the bill for everything from food to clothes for five people in my family, it feels like a lot. It's just frustrating seeing these bureaucrats blow through what's basically my money.

Well, you just said exactly what shouldn't have been said.
You can't afford to be reckless with your spending. $1667 If you have any left over. $667 On account.

Even though those... $667 You only get taxed on pure profit if you aren't accounting for other expenses. But let’s be honest—that’s virtually impossible. If you're running an LLC, you'll definitely have things like depreciation to factor in.

You get me?

Tih $300 The sales tax you pay at the register? Some random LLC ends up handling it. It’s nonsense. $300 The state isn't even taking 22% of that gap; that’s just the margin the retailer tacked on. Once you trim those two numbers down, the difference isn't actually that massive. My point is, the real headache isn't the math—it's actually collecting the money. It’s a nightmare when you run into people who simply refuse to pay their bills.

The old rule remains: you only have to die and pay taxes. That’s really about it. Everything else in life is optional.

That’s just how things work everywhere in the world.

The fundamental issue plaguing you, me, and everyone else grinding away in the private sector is simple: the pay—or at least the potential to earn more—just doesn't keep pace with the cost of living.

If business isn't moving, you need serious guts to shut the doors. It’s better to call it quits than to just linger around like a ghost, waiting for someone else to fix the problem.

vividstag31 said:So, you basically just said the exact thing that’s wrong here.
You can't really write off $1667 if you've still got $667 left in your account.

Even then, those $667 are only taxed as profit if you don't have other expenses—which isn't really possible, since you'll definitely have at least some depreciation if you're running an LLC.

Get what I mean?

That $300 sales tax you pay at the store ends up going to some other corporation anyway. It doesn't go straight to $300 the government; it's more like 22% of whatever margin the retailer tacked on. So when you trim that down a bit, it's not even that much. I'm telling you, the real headache is actually getting paid—collecting on invoices. Especially if you run into scammers.

It’s an old rule: you just have to DIE and PAY TAXES. That's pretty much the only absolute in life.

It's the same way everywhere in the world.

The whole issue facing me, you, and everyone else in small business is that the margins—or the potential to make money—are just too slim compared to what we actually need to live.

If business isn't moving, it takes a lot of guts to just shut the company down rather than scraping by and waiting for someone else to step in.

We’re talking past each other again, I guess.

Long story short, let me recap.

$3333

$8,200 your take-home
$1,800 sales tax *

out of $8,200
$3,000 your salary
$2,500 social security, Medicare, etc. *

what's left in the account
as profit $2,700
$2,000 in the bank
$700 corporate tax *

$5,000 = your salary plus profit after taxes
$5,000 = sales tax, social security, Medicare, and all that

You head to the store with your money (salary and profit)
The retail price includes sales tax
we know how much that is ($300) and that's that.

I'm not against it, honestly. I get that
everyone plays their part
you know, like a landlord and a tenant, etc...

The problem is that instead of treating us with respect, the people handling the money act like they own the place, not like they're serving the public—and there's a huge difference, at least how I was raised.

One more thing that drives me crazy.
My company has a vehicle used strictly for work, but even now they only recognize 30% as an expense, while 70% counts toward profit. Fine.
But here's the question: I wonder if those high-level bureaucrats—the ones acting like they're untouchable—drive their official cars to the gas station and charge 30% of the fuel to the taxpayers (the state, the county, the city, etc.) and then pay the other 70% out of their own pockets.

LET’S GET BACK TO BUSINESS, YOU GUYS WENT OFF ON A TANGENT. Honestly, one of the biggest headaches when trying to start a small business is this ridiculous requirement where you either need about 8 years of experience in the field, have to hire someone who meets those standards, or pass some master craftsman exam—which has its own set of hurdles. I guess they claim it's to ensure "quality control," but it feels like total nonsense. You could work somewhere for 15 years and still not know the first thing about how to actually run the show. Personally, I run my own shop and I have an employee on paper who checks all the regulatory boxes. But the truth? I taught myself everything. It has nothing to do with what I studied in school, though I think I'm doing a solid job—mostly because my schedule is packed and my customers keep coming back. In my opinion, these government regulations are just a way to force artificial employment; if nothing else, their reasoning is completely hollow. Not to sound like I'm complaining, but I've worked under plenty of those old-school "experts," and if I'm being honest, a good chunk of them are nothing but frauds.

In theory, sure, that sounds fine. In practice? It’s impossible to run a business without overhead.

I had a feeling we’d eventually circle back to the topic of expenses.
The government and the entire federal bureaucracy all use the exact same logic when calculating costs.

Have you actually considered why they only let you write off 30% of your fuel costs?

When you don't have a company car and use your own vehicle instead, you file mileage reimbursements. Under current tax law, one-third of the price of regular unleaded per mile is treated as a non-taxable expense. This means if you file a report for, say, 62 miles, you can essentially cut yourself a check from Visa for an amount equal to 100 times 1/3 the price of gas. You book that immediately as a non-taxable expense. Before two years ago, if you had a company car, you couldn't deduct fuel at all; you could only claim depreciation, while the actual fuel costs remained taxable. Make sense?

With a company vehicle, you write off depreciation, which is also a non-taxable expense. You even have accelerated depreciation schedules available, which are quite useful if used correctly. You just have to be careful; if you max out your depreciation this year, you'll be facing a much higher profit—and thus higher taxes—next year. You really have to crunch the numbers to see if it's worth it.

It isn't actually that bad if you apply the rules properly.

Personally, I wouldn't mind a 90% tax rate as long as there's enough left over to pay my employees a decent wage. The overhead isn't the issue; the problem is that our margins are razor-thin. The previous administration made a massive blunder by crushing large corporations, leaving small businesses struggling to survive unless they act as subcontractors for the giants. It's especially brutal for sole proprietorships.

Look at Sweden. Their corporate tax can range from 25% up to 90%, yet they live better than almost anyone else in the European Union. It's not just about sales tax or corporate income tax rates.

Rest assured, in every single country, people complain that the government is too expensive and taxes are too high.

Check this out.
The U.S. federal budget is roughly $6 trillion.
That breaks down to approximately $16 billion a day.
Or about $680 million an hour.
Or about $11 million a minute.
Or $833 per second.

Someone has to earn that kind of money.

Darko što, what kind of experience are you actually talking about here?

In which country on earth?

vividstag31 said:Look at Sweden—corporate tax rates can swing from 25% up to 90%, yet they live better than almost anyone else in the European Union. It isn’t just about sales tax or corporate/income tax rates.

In every single country, people complain that the government is too expensive and taxes are too high. You can bet on that.

Check this out.
The US federal budget is roughly $6 trillion.
That works out to about $16 billion a day
or about $680 million an hour
or about $11 million a minute
or $833 per second.

Someone actually has to earn all that money.

I figured we'd end up right back here.

The size of the budget isn't the issue; someone over there planned it all out.
Problem #1: Like you said, how do they fill it? They squeeze the little guy until he finally snaps.
Problem #2: Even bigger issue—how those officials handle that budget money, acting like it's their own inheritance.

And I can't forget a news story from a few years ago where some minister in Sweden used her official card to buy some ridiculous little chocolate treat or something. When that came to light, she resigned immediately.
But our politicians? Not so much.

Anyway, we've drifted off-topic, so I won't waste any more breath on it.

Darko što
Regarding licensing and starting a business, it doesn't really affect things.
It might matter for certain professions; for instance, if you run a hair salon, you can't just hire scientists—you need people with specific years of experience and a master's certification or something similar. But just to open the doors, you don't necessarily need that kind of seniority.

You've got a point there. I just personally feel like nobody's going to step up to help if I don't start helping myself within the hand I've been dealt. It isn't exactly ideal, but hey, it's one of those "Why on earth did you bring me into this world just to watch me struggle?" kind of moments.

Best regards,

vividstag31 said:Robert Kim, who actually pissed you off?
You’re just rambling about things you clearly don't grasp. One of the best departments in the government is exactly the one you just dragged through the mud.
Look, let’s be real—there are requirements, just like everywhere else in the world, that you have to meet if you want to start a small business. If you don't meet them, you can't open up, period. I don't get why you're attacking people for no reason. If you actually had a solid idea, you would have figured out a way to make it work. Just shifting the blame onto others doesn't change anything; it just makes you look like you're making excuses.

Cheers!

Who pissed me off? Try putting yourself in the shoes of an average citizen trying to kickstart some entrepreneurial venture. What exactly constitutes a sole proprietorship versus an LLC? What paperwork do I need? What kind of physical space is required? What qualifications am I looking at? Where am I supposed to file these documents, who issues them, how much is this all going to cost, what are my tax liabilities, social security hits, or membership fees for the US Chamber of Commerce...
Those are the questions I was looking for answers to! And where else am I supposed to find them if not at that damn Department of Commerce or the Small Business Administration? One of the whole points of those agencies existing is to encourage entrepreneurship and make it easier to launch new businesses. Unfortunately, I couldn't find a single damn useful piece of information from them. The most helpful stuff I found was on the SBA website, the local Chamber of Commerce site, and the IRS (though their "Small Business Guide" was already outdated).
I'm not exactly a lawyer, so I shouldn't have to wade through twenty different federal statutes just to open a simple shop, yet that’s exactly what this department expects of me. I couldn't care less if they have special partnerships with certain big players or if they have some "business development program" running until the year 2145—I won't even have my business by then (to repeat myself).

You say the law is the law, and fine, I respect that. But I looked into the feasibility of starting this business, and right now, it's just not worth it. Period. The issue is that I wasted a massive amount of time just trying to figure out the prerequisites—time that could have been saved if they had simply posted all the relevant info on their website or in a basic brochure. I could have cleared up my doubts in fifteen minutes instead of wasting days.
Is it really okay that in my first year, regardless of how much I actually earn from my work, I have to set aside roughly $5000 for social security and taxes? I don't know if that's "fair," but I know it's a huge chunk of change for me, even with my engineering salary. Roughly speaking, for this business to even break even, I’d need a monthly income of about $3333. If I were pulling in that kind of money, I wouldn't be working for someone else; I’d be doing this full-time.

vividstag31, please, enlighten me—what exactly am I "not understanding"? Tell me where I'm wrong. Maybe I really am delusional and just haven't realized it yet.

At the end of the day, I'm still moving forward with my idea, but the government is going to see less of my money, and I'll have to deal with clients differently than if I had a formal corporation backing me up.

Who benefits from this outcome? Not me. And certainly not the government, which is losing out on a potential honest taxpayer because the barrier to entry is just too high.

Darko što said:LET'S GET BACK TO BUSINESS, YOU GUYS WENT OFF ON A TANGENT. The biggest nonsense about starting a small business these days is that you either need eight years of experience in the field, have to hire someone who does, or pass some master certification exam—which has its own ridiculous hurdles. They claim it’s about maintaining quality. TOTAL NONSENSE. You could work somewhere for 15 years and still not know a damn thing about the actual trade. Personally, I run my own shop and I have an employee on paper who meets all those bureaucratic requirements. I taught myself the job from scratch, and it has nothing to do with my formal education. I think I’m doing a good job, mostly because I'm drowning in work and my clients are happy. These Department of Labor requirements are just a way to force artificial employment; if nothing else, it's a baseless excuse. Not to complain, but having worked under some of the old "pros," I have to be honest: a huge chunk of them were complete frauds.

😕 😕 😕 😕 😕
Regarding education, as far as I know, there are certain service businesses where neither a degree nor a master certification even matters. What do you think all those people with degrees in marketing and business consulting actually did to end up running small shops? 😉

You really need to look up the small business laws first. I know this because I’ve done my homework on the whole thing—you might want to check in with your local Small Business Administration office to get the facts straight. Let's get the facts down before we start debating. Second off, "unregulated" small businesses are literally designed for trades that don't require specific schooling or certifications, regardless of what you plan to do. For instance, you could register an unregulated sole proprietorship to be a stable cleaner, even if some clerk at the SBA or the Department of Commerce tries to claim you need specialized training for it. Back before the mid-90s, starting a small business was a breeze. Sure, the overhead stays low, but the requirements still feel pretty nonsensical to me. Seriously, do your research first. Arguing about startup costs isn't the point here, nor is it such a massive issue within the small business community itself.

Here’s what I’ve been chewing on lately:

Why the hell is it that after I’ve already paid income tax on my paycheck or whatever else I pull in, I have to get hit with sales tax every single time I walk into a grocery store? It feels like double dipping. You take a cut of my earnings, and then when I actually go to spend what's left, you take another bite.

And honestly, why should I be the one footing the bill for everyone else's massive screw-ups? Why does the government feel entitled to blow my hard-earned cash on anything and everything except the basics—like fixing our crumbling highways, building decent hospitals, schools, or public parks?

Maybe some smart people will finally wake up and realize that politics isn't some grand ideological battleground; it's just about how someone manages other people's money. At some point during the next election, we need to stop obsessing over petty culture war nonsense and start asking the real question: how is my tax money actually being spent?

There’s still hope!

There is nothing I hate more than people acting like experts on things they clearly know nothing about—vividstag31, I’m looking directly at you. And honestly, all this bureaucratic nonsense regarding starting a small business? It’s doing nothing but hurting everyday people and stalling our entire economy. In America, you can get up and running with basically one single document, which is why we lead the world. Meanwhile, look at where we are right now. How did we fall so far behind?

vividstag31 said:Anywhere in the world, if you don't have cash, you can't start a business or even a small LLC. That startup money is supposed to be for YOU, the owner, not some tax for the government.
That has nothing to do with how the legal system works.

Quick thought,

that isn't really true. You can set up a company way faster and with WAY fewer costs out there than here. When I started my LLC, I paid maybe 8-$3.00 in setup fees plus about $6.75 in initial capital.
Sure, that 20k stays with me, you're right about that, but those 9k spent on random certifications, notary fees, blah blah blah? That just goes straight into the pockets of shitty bureaucracy (like paying for a notice in the $283?!?!?) it's awful.

I guess this country just isn't ready to actually support entrepreneurs yet.

later,
Chris Ruiz10

Politicians here are definitely just playing petty local politics, and I mean it. They keep preaching that more small businesses and startups mean a stronger economy, but try explaining that logic to a blue-collar worker who hasn't sat behind a desk a single day in their life. It’s nothing but empty talk.

Drake said:Our politicians are definitely stuck in that old-school mentality. They claim more small businesses and startups mean a stronger economy, but good luck explaining that logic to an accountant who hasn't stepped foot in a real office in years. It’s nothing but empty rhetoric.

Drake, Drake.

I’ve been running my own business since 1987 and I’ve never run into issues like that.
What are you even talking about?

If you sit around waiting for any administration to step up and help you, you'll be waiting forever.

manager said:NOBODY IN THE WORLD CAN BE AN ENTREPRENEUR.

If the rules of the game are too hard for you, then just don't do it. Simple.
Stop dumping your problems on everyone else.

Maybe not everyone can BE one, but in other countries, anyone can at least TRY, you know?

If you tell me I should $10 just try it (since you never know unless you try), that isn't exactly motivation. It’s not that the rules are too tough, it's just that it's way too hard to even get in the door. There could definitely be some changes made here to make things easier for people.

Later,
Chris Ruiz10

darko said:The politicians here are definitely just typical small-town bureaucrats through and through, he claims. He’s arguing that more businesses and startups mean a better economy for the country, though I honestly don't know how you'd explain that kind of logic to some guy who hasn't spent a single day actually working in the real world. It's all just empty talk.

Even so, there's a kernel of truth there. I think most of us realize exactly what we're signing up for when we decide to take the leap and start our own business, assuming we're willing to play by the rules. But then you look at the government agencies and those politically connected systems that seem to exist entirely outside the reach of any actual oversight or regulation. Small and medium-sized businesses are supposed to be the primary engine for job growth in America, yet they’re constantly being scrutinized under a microscope by the state. You end up with entrepreneurs basically getting fleeced by the system—whether it's through unpaid invoices or sales tax issues—all because our political elite is so incredibly incompetent. It isn't until you try to navigate one of those massive bureaucratic machines that you truly grasp just how much power these political games hold over everything here. It’s honestly pretty depressing. 👎