Sum Dum Gai
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Post by Sum Dum Gai on Jan 16, 2014 14:06:04 GMT -5
Based on the numbers you gave us, you should be able to pull out your $4k, and still have over $12k in profits left, PER MONTH, before you pay your taxes. Since you don't, you obviously didn't give us all of your numbers.
Have you pulled out your banks statements for the last couple months and added up your actual expenses?
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tloonya
Junior Associate
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Post by tloonya on Jan 16, 2014 14:24:54 GMT -5
I have prepared my expenses to show to my accountant. For 2013 of course. it does seemed like I had some profit but now after I found cover for the hole I am $9K short. However I am not counting cash because it is always going to purchase something for business...
I do agree wholeheartedly that my $4K per month x 12 = $48K that I am pulling out of the business as my salary. So it means I am making some money...however if I had those money I wouldn't borrow $16K twice last year to pay my business bills.
I think that this is cash payments that are messing me up...if I had everything going trough the bank I could have seen each dollar!
But some wants to be paid in cash...
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Deleted
Joined: Oct 8, 2024 9:15:12 GMT -5
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Post by Deleted on Jan 16, 2014 14:27:54 GMT -5
I have prepared my expenses to show to my accountant. For 2013 of course. it does seemed like I had some profit but now after I found cover for the hole I am $9K short. However I am not counting cash because it is always going to purchase something for business... I do agree wholeheartedly that my $4K per month x 12 = $48K that I am pulling out of the business as my salary. So it means I am making some money...however if I had those money I wouldn't borrow $16K twice last year to pay my business bills. I think that this is cash payments that are messing me up...if I had everything going trough the bank I could have seen each dollar! But some wants to be paid in cash... You could start. deposit all cash to your bank account. take out money as you need it. That way all of your in and outs flow through your bank account.
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tloonya
Junior Associate
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Joined: Dec 18, 2010 16:22:13 GMT -5
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Post by tloonya on Jan 16, 2014 14:30:07 GMT -5
I have prepared my expenses to show to my accountant. For 2013 of course. it does seemed like I had some profit but now after I found cover for the hole I am $9K short. However I am not counting cash because it is always going to purchase something for business... I do agree wholeheartedly that my $4K per month x 12 = $48K that I am pulling out of the business as my salary. So it means I am making some money...however if I had those money I wouldn't borrow $16K twice last year to pay my business bills. I think that this is cash payments that are messing me up...if I had everything going trough the bank I could have seen each dollar! But some wants to be paid in cash... You could start. deposit all cash to your bank account. take out money as you need it. That way all of your in and outs flow through your bank account. I could. Hmmm...I am thinking about it. Thanks And what is the owner's draw vs salary?
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Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
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Post by Sum Dum Gai on Jan 16, 2014 14:46:23 GMT -5
One of the accountants is going to give you a really complicated explanation, but in a nutshell an owners draw comes last. Tax wise. After all expenses are paid, all taxes are paid, everything, the owner takes a draw from the profits that are left. I take a salary because my salary counts as business overhead. It comes out before the business pays taxes on any profits left. I don't have a pass through tax setup in my business structure, so I get to deduct my salary as business overhead, but I pay taxes on any profit left and pay income taxes again if I take that money out for myself. Most small business don't have a structure as complicated as mine so they don't pay an owner's salary.
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cktc
Senior Member
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Post by cktc on Jan 16, 2014 15:28:27 GMT -5
I agree you need to deposit all cash and track where your withdrawals are going. Maybe write checks to yourself "cash" with a line item for its purpose.
How much are you losing to the loan, interest and merchant service fees?
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Jan 16, 2014 17:57:11 GMT -5
And what is the owner's draw vs salary? Employees get salaries and sole proprietor owners get a draw. Dark is an employee of Dark Inc, which is why he gets paid a salary and why it's a business expense (as all Payroll is) for Dark Inc. If you are a sole proprietorship or an LLC filing as a partnership, you are not an employee but instead are an owner. Owners "draw" their money from their equity in the company, which is why it's called a draw.
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Rocky Mtn Saver
Junior Associate
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Post by Rocky Mtn Saver on Jan 16, 2014 17:58:18 GMT -5
Looney, if you're not counting your cash because you spend it all on food, how do you know what amount to include for tax purposes as both business income and business expenses?
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Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
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Post by Sum Dum Gai on Jan 16, 2014 18:00:19 GMT -5
I've got $5 on make a number up and pray she's never audited. Any takers?
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hoops902
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Post by hoops902 on Jan 16, 2014 18:04:04 GMT -5
I've got $5 on make a number up and pray she's never audited. Any takers? I would take that bet. I'm almost positive she doesn't simply make a number up. She comes to one through some convoluted logic. It's probably not accurate, but I don't think it's just "made up" as I would define that. It's just wrong.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Jan 16, 2014 18:06:13 GMT -5
I've got $5 on make a number up and pray she's never audited. Any takers? Probably. What kind of backroom accountant does the taxes for a business that grosses half a million dollars a year, and just accepts a number written on a piece of paper as documentation for everything?
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Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
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Post by Sum Dum Gai on Jan 16, 2014 18:11:55 GMT -5
Um.. did you just compare me to your mom? *picture me with one raised eyebrow and a kind of wtf bro face*
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Rocky Mtn Saver
Junior Associate
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Post by Rocky Mtn Saver on Jan 16, 2014 18:29:52 GMT -5
I think she compared you to Forrest Gump.
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Sum Dum Gai
Senior Associate
Joined: Aug 15, 2011 15:39:24 GMT -5
Posts: 19,892
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Post by Sum Dum Gai on Jan 16, 2014 18:48:10 GMT -5
Oh, that's cool then.
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tloonya
Junior Associate
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Joined: Dec 18, 2010 16:22:13 GMT -5
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Post by tloonya on Jan 17, 2014 9:58:44 GMT -5
One of the accountants is going to give you a really complicated explanation, but in a nutshell an owners draw comes last. Tax wise. After all expenses are paid, all taxes are paid, everything, the owner takes a draw from the profits that are left. I take a salary because my salary counts as business overhead. It comes out before the business pays taxes on any profits left. I don't have a pass through tax setup in my business structure, so I get to deduct my salary as business overhead, but I pay taxes on any profit left and pay income taxes again if I take that money out for myself. Most small business don't have a structure as complicated as mine so they don't pay an owner's salary.My accountant told me that if that space on the tax form where salary is supposed to be entered is left blank - you are subject for an audit.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Jan 17, 2014 10:12:42 GMT -5
Are you a sole proprietor or partnership, or an LLC filing as a partnership? Or are you filing as a corporation? Because if you are the first, owners don't get "salaries". If you are the second, you would probably get one.
You need to consider finding a different or additional accountant anyway. This one is letting you possibly screw up your business accounting on all sorts of levels.
If anyone knows more about small business owner accounting, feel free to correct me if I'm wrong.
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tloonya
Junior Associate
What status?
Joined: Dec 18, 2010 16:22:13 GMT -5
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Post by tloonya on Jan 17, 2014 10:18:24 GMT -5
Looney, if you're not counting your cash because you spend it all on food, how do you know what amount to include for tax purposes as both business income and business expenses? I have receipts for all the stuff I am buying. If that's what you were askin'
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