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I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business. A tax break would have absolutely no effect on
by chairface 15y ago
I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business. A tax break would have absolutely no effect on the ability to afford these things in the scenario you described. The "found" money is therefore more analogous to a loan than a tax break.
- maratd 15y agoThe way a one-man operation works is that you file taxes once a year. For you to be able to pay your income taxes, you need to save up the money you will fork over, otherwise your ass goes straight to jail. There is no withholding or anything like that. So you set up two bank accounts and deposit say 30% of any money you would use for your non-business expenses. That money is forbidden. You cannot touch it. > I believe they are saying that you would have bought the chainsaw, ladder, etc tax-free already, as a business. Pay attention. With what money? You have no money. ZERO. All your money goes toward your business expenses and the rest goes toward non-business expenses and taxes. You have no business credit. The only credit you have is personal and that's maxed out. The overwhelming majority of one-man operations are not drowning in cash. > A tax break would have absolutely no effect on the ability to afford these things in the scenario you described. This makes ZERO sense. With a tax break, I can withdraw some of the money from my tax bank account and use it for whatever I want. It is found money. On top of that, spending that money on my business means I have no tax obligation on those found funds.
- chairface 15y agoIf your business expenses are higher because you're buying chainsaws, then you're putting less money in your 30% "forbidden" bucket. It's a wash.