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Tax-dodging seems plausible, but money-laundering seems like it would be tricky. The income is very consistent, and the buying a lot from an existing owner wou

Tax-dodging seems plausible, but money-laundering seems like it would be tricky. The income is very consistent, and the buying a lot from an existing owner would be pricey. It is much better to buy something like an unprofitable nightclub. It doesn't raise any alarms when a nightclub goes from $300k/year to $1M/year in cash under new ownership. The same can't be said for a parking lot. Strip clubs are also pretty good. It is really hard to prove that the VIP room gate wasn't $1000/night.

jbigelow76 13y ago
>money-laundering seems like it would be tricky. The income is very consistent, and the buying a lot from an existing owner would be pricey. If you're the type of person that needs to do a lot of money laundering you might also be the type of person that wouldn't mind negotiating with existing owners demanding lots of money as you would probably have some unorthodox means of swaying negotiations in your favor.
sfall 13y ago
the difference between night clubs and parking garages is that night clubs use more consumables you can take an average performing and up the price but maintain the level of business on the books (cars per day) but in reality fewer cars enter. another aspect to make cash flow set up a contract for parking with another of your shady businesses and money can start to flow to one legit business (garage) from any shady business
silencio 13y ago
> It doesn't raise any alarms when a nightclub goes from $300k/year to $1M/year in cash under new ownership. Actually, these things can happen. It's a bit anecdotal (then again, most of the "wisdom" I have to part from running a retail biz is) but no end of business brokers and fellow business owners talk about being cautions regarding taxes and reporting right around a change of ownership. Combined with the fact that people don't report as much as they should in the first place... At least in California, the BOE and IRS and any other relevant agencies (ABC for alcohol, the banks used for funding, the city giving out business permits, etc.) like to pay special attention to these kinds of businesses. Even if the business is actually doing better, I was told to not deviate from the previous owner's numbers too much unless I have concrete proof of purchasing more than usual from easily traceable sources (so probably not the shady small warehouse store, but Costco Business and Sysco instead). I've seen a friend be audited because she wasn't reporting anywhere near what seemed right for the amount of groceries she was buying, and a former owner of another business because the new owner reported way more in sales for the same amount of business (only because the new owner was stupid enough to try to flip the business looking like it was in better shape in a year). All that said, it's probably easier to eventually raise a nightclub's "profitability" than it is to do the same for a parking lot.

jbigelow76 13y ago

>money-laundering seems like it would be tricky. The income is very consistent, and the buying a lot from an existing owner would be pricey. If you're the type of person that needs to do a lot of money laundering you might also be the type of person that wouldn't mind negotiating with existing owners demanding lots of money as you would probably have some unorthodox means of swaying negotiations in your favor.

sfall 13y ago

the difference between night clubs and parking garages is that night clubs use more consumables you can take an average performing and up the price but maintain the level of business on the books (cars per day) but in reality fewer cars enter. another aspect to make cash flow set up a contract for parking with another of your shady businesses and money can start to flow to one legit business (garage) from any shady business

silencio 13y ago

> It doesn't raise any alarms when a nightclub goes from $300k/year to $1M/year in cash under new ownership. Actually, these things can happen. It's a bit anecdotal (then again, most of the "wisdom" I have to part from running a retail biz is) but no end of business brokers and fellow business owners talk about being cautions regarding taxes and reporting right around a change of ownership. Combined with the fact that people don't report as much as they should in the first place... At least in California, the BOE and IRS and any other relevant agencies (ABC for alcohol, the banks used for funding, the city giving out business permits, etc.) like to pay special attention to these kinds of businesses. Even if the business is actually doing better, I was told to not deviate from the previous owner's numbers too much unless I have concrete proof of purchasing more than usual from easily traceable sources (so probably not the shady small warehouse store, but Costco Business and Sysco instead). I've seen a friend be audited because she wasn't reporting anywhere near what seemed right for the amount of groceries she was buying, and a former owner of another business because the new owner reported way more in sales for the same amount of business (only because the new owner was stupid enough to try to flip the business looking like it was in better shape in a year). All that said, it's probably easier to eventually raise a nightclub's "profitability" than it is to do the same for a parking lot.