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re: *Updated* Life changing income about to happen and I need advice
Posted on 12/28/20 at 7:44 pm to NOSHAU
Posted on 12/28/20 at 7:44 pm to NOSHAU
Reducing from gross to net. Yes ultimately trying to make net income as low as possible. We are able to write off a lot of expenses.
This post was edited on 12/28/20 at 7:46 pm
Posted on 2/24/21 at 5:30 pm to Mariner
quote:This is going to be my last post on this because we obviously don't get much from the OP. But I think this quote might explain a lot about the actually finances of this business. Of course, there are some deductions that are more or less an expense that was already going to be spent in the first place. For example, I take the home office deduction for my consulting work. It's not a lot (since it's only a portion), but the expenses that fall under that, were going to be paid (taxes, mortgage interest, utilities, etc.) regardless. And some businesses have more favorable deductions than others (real estate for example). And some expenses (CAPEX) can actually grow the business in the future.
Reducing from gross to net. Yes ultimately trying to make net income as low as possible. We are able to write off a lot of expenses.
But based on what you've described, the expenses you're "writing off" are probably actual expenses (costs of goods sold, fees, products, etc.) that are true expenses that actually cutting into the income. In other words, in an ideal situation, you wouldn't have those expenses in the first place. And people seem to assume a "write off," (like when a rich person donates to charity) results in MORE net income. But in reality, it just lowers the tax expense by the marginal rates (so a percentage) but the expense is 100%. So one would still have more net income paying the highest amount of taxes possible than spending it on an expense.
So based on your posts, it kind of reminds me of those MLM "businesses" (not saying that your wife's is that), where they brag about how much they're bringing in, but they don't take into consideration the expenses they're paying, often resulting in a loss or very little at all.
This post was edited on 2/24/21 at 5:32 pm
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