OT: Illinois fair tax: yes or no?

[InsideInfo]

I think a lot of people who vote yes to this are doing it from a point of view that "rich" people should pay more.

What I don't think they understand is how it affects small business.

My family owns a company that makes about $800k in profit per year on paper. It does not mean there is $800K in cash sitting in the bank at the end of the year. The money gets reinvested over the course of the year back into the business and there is a couple hundred thousand that is always needed in the bank to avoid cashflow problems.. such as paying bills and payroll.

Regardless, my parents who pay themselves about 150K a year in salary are left to pay personal income tax on the profit the business made. Therefore, their personal income goes from 150k to about 950k.

Every April they need to come up with 200-300k to pay their personal tax bill. Often, they must take money out of the company to cover the taxes.

This isn't meant to be some sob story, but I do think this is a story that happens to many people who own small business and it ultimately hurts growth of the company as well as the economy. When taxes when down a couple years ago, my parents used the extra money to offer health insurance to the employees for example.

My parents are being told by the company accountant that this tax hike would raise their taxes about 30k a year on top of what they already pay. I personally have no faith or trust in giving that money to the state.

I may be speaking out of pure ignorance here so please forgive me if my questions are just out right wrong. You say that much of the on paper profit of the business is actually reinvested in the business. What is preventing them from writing that reinvestment off as a legit business expense?

Are or were there other options in terms of how to structure the business entity so as to not incur personal income taxes by the profits?

I would think that the 200 Grand in spare capital to meet rolling expenses would not be reflected in yearly profit if it's a static thing .

I'm not trying to expose you as having misled anyone but more so trying to learn how things actually work for small businesses.

Frankly, I think the kid is speaking out of ignorance from something his father might have been complaining about at the dinner table. He hardly sounds like he has access to the books. Not trying to be rude but we're trying to guess why does the business pay so much tax from scraps of scraps.

Not a kid. I’m 34, and I’ve been doing this since my mid 20s. I do have access to the books as I am on the board of directors and have a profit share in the company. Additionally, I manage the company cashflow, inventory, and production. I’m not sure how I gave you the impression I was a child... maybe Bc I have parents? I don’t know.

Additionally, referring to the other post you made, the building/property tax does not come from the business or it’s profit. The building is rented to the business, just so happens that the building is owned by my parents under a separate entity... it’s ok, I know you were speaking from a place of ignorance.

The profits a business makes is taxed as personal income to the shareholders. When I sat with my accountant we had a long conversation, as I was offered a choice between stock and a profit share.

I’m not sure why you’re struggling to wrap your head around this. My parents own 100% of the company and must pay personal income tax on all of the profit from the company. That’s how it works.

[InsideInfo]

No disrespect, but I found that really hard to follow and I'm not sure what your point it.

150k in salary + 800k in profit = 950K... that is 950K is what they owe tax on. the first 150k they have tax taken out of their paychecks like anyone else, but the other 800K they owe the money on. 37% or so to federal, plus state taxes. 37% federal tax on 800k is 296K alone.

Another thing that I didn't mention in the OP is that our business invoices our customers and gives them 30 day terms. That leaves us with large amount of money in receivables(money owed to us but not yet paid) Our receivables number is usually between 600-800k.

Keeping in mind needed to have money for cashflow, and all the money in receivables, it takes some planning and budgeting to make sure the massive tax bill is paid.

They also own the building we operate out of...another 65K property tax bill there that gets added on.

My point to all this is that people who say the "rich" need to pay their fair share, are misguided. This kind of tax will hurt small business.

It sounds like your parents should incorporate immediately if that is true (or go to a full corporation rather than S corp). The corporate income tax rate is 21% and much lower than 37% fed rate you're quoting. Corporate tax rate is also different from this fair tax act at the state level but is expected to go up 1% or so.

Also, they have to pay taxes quarterly, and of course there is planning issues in terms of saving money for tax bills that are due, but typically you make estimated payments based on last years taxes and have to keep the money out. In terms of receivables vs cash, there are multiple accounting strategies you can choose on how to handle this and when you recognize the money.

There are strengths and weaknesses to each, but you could pick one where you don't recognize it until you collect vs one where you recognize it at time of sale (though this generally isn't done by most businesses) because you can also deduct costs at time of booking but not time of payment, so most people book costs/sales at the time made not the time paid/collected.

Without digging in two deep into your parents finances based on your post, my guess is if they are making that much money they have hopefully hired a worthwhile tax advisor/accountant to help them set all this stuff up well, if not, they should, because they could save a ton of money if they are making mistakes there.

Either way, if their business turns 800k a year in profits, that's amazing, and even if they invest the profits in the business to grow it, they're still making that much profit, they're just reinvesting it and building equity (and if they're truly reinvesting, then they aren't actually recognizing those profits because they will be raising capital expenses, at the point where its really profits that means its going into corporate accounts, dividends, etc rather than reinvestment).

This isn't to say your parents won't be hurt by this bill, but if their business is turning an 800k a year profit then they are pretty wealthy and not just small business owners. The business may be small, but that is a ton of money to make if you own the whole thing and probably closer to a mid size business in terms of profit. Granted if you made 800k in one killer year due to exceptional circumstances and your norm is a lot less that might be totally different.

It is an S corp, but you can’t simply switch that. It’s filled when you open the business and you can’t change that.

We do have an accountant.

This isn’t a killer year. Steady growth for 17 years.

[2018C3]

When I said average middle class, I, was describing a average household salary under $60,000. My best year ever was higher, the average over a 20 year career, is lower.

Every tech company I have worked for eventually crashed, and I have had to look for a new job several times, It bothers me that I never was able to help them succeed.

Especially the last one. I can't even tell you how many times I told my manager the customers were not happy.

The company I worked for was content just meeting the bare minimum contractual requirements. I told them many times we should be blowing these numbers out of the water. Management did not listen to me and every time we exceeded the numbers in a quarterly review they fired good employees, and replaced them at a lesser cost and reduced the teams cumulative skills.

After a few years of this, the next thing you know the entire team was out out a job. At least 20 employees including myself were all gone when we lost a primary customer to a rival company that provided similar services.

I tried to tell them over and over again this was going to happen, and know one listened, People a few steps higher than me, and everyone lower lost there jobs in this move.

I was working in the office 55+ hours a week over a 4 year span, and also doing additional tasks after I got home to try to try and keep it all together, but it ended up being not enough.

It sucks to give a company everything you got, and then find yourself out of a job after you prepared to plan your future around its success.

[InsideInfo]

I think a lot of people who vote yes to this are doing it from a point of view that "rich" people should pay more.

What I don't think they understand is how it affects small business.

My family owns a company that makes about $800k in profit per year on paper. It does not mean there is $800K in cash sitting in the bank at the end of the year. The money gets reinvested over the course of the year back into the business and there is a couple hundred thousand that is always needed in the bank to avoid cashflow problems.. such as paying bills and payroll.

Regardless, my parents who pay themselves about 150K a year in salary are left to pay personal income tax on the profit the business made. Therefore, their personal income goes from 150k to about 950k.

Every April they need to come up with 200-300k to pay their personal tax bill. Often, they must take money out of the company to cover the taxes.

This isn't meant to be some sob story, but I do think this is a story that happens to many people who own small business and it ultimately hurts growth of the company as well as the economy. When taxes when down a couple years ago, my parents used the extra money to offer health insurance to the employees for example.

My parents are being told by the company accountant that this tax hike would raise their taxes about 30k a year on top of what they already pay. I personally have no faith or trust in giving that money to the state.

I may be speaking out of pure ignorance here so please forgive me if my questions are just out right wrong. You say that much of the on paper profit of the business is actually reinvested in the business. What is preventing them from writing that reinvestment off as a legit business expense?

Are or were there other options in terms of how to structure the business entity so as to not incur personal income taxes by the profits?

I would think that the 200 Grand in spare capital to meet rolling expenses would not be reflected in yearly profit if it's a static thing .

I'm not trying to expose you as having misled anyone but more so trying to learn how things actually work for small businesses.

A lot of the reinvesting is growing out inventory. Inventory value is up several hundred K this year alone. Without growing inventory, we can’t meet order demand and the business would get stagnant.

I’m not 100% an expert on their taxes but I do know they are taxes as personal income on business profit. I’ve seen the bill as well as have had this conversation with the accountant when I had the opportunity to receive shares in the company.

[League Circles]

I think a lot of people who vote yes to this are doing it from a point of view that "rich" people should pay more.

What I don't think they understand is how it affects small business.

My family owns a company that makes about $800k in profit per year on paper. It does not mean there is $800K in cash sitting in the bank at the end of the year. The money gets reinvested over the course of the year back into the business and there is a couple hundred thousand that is always needed in the bank to avoid cashflow problems.. such as paying bills and payroll.

Regardless, my parents who pay themselves about 150K a year in salary are left to pay personal income tax on the profit the business made. Therefore, their personal income goes from 150k to about 950k.

Every April they need to come up with 200-300k to pay their personal tax bill. Often, they must take money out of the company to cover the taxes.

This isn't meant to be some sob story, but I do think this is a story that happens to many people who own small business and it ultimately hurts growth of the company as well as the economy. When taxes when down a couple years ago, my parents used the extra money to offer health insurance to the employees for example.

My parents are being told by the company accountant that this tax hike would raise their taxes about 30k a year on top of what they already pay. I personally have no faith or trust in giving that money to the state.

I may be speaking out of pure ignorance here so please forgive me if my questions are just out right wrong. You say that much of the on paper profit of the business is actually reinvested in the business. What is preventing them from writing that reinvestment off as a legit business expense?

Are or were there other options in terms of how to structure the business entity so as to not incur personal income taxes by the profits?

I would think that the 200 Grand in spare capital to meet rolling expenses would not be reflected in yearly profit if it's a static thing .

I'm not trying to expose you as having misled anyone but more so trying to learn how things actually work for small businesses.

A lot of the reinvesting is growing out inventory. Inventory value is up several hundred K this year alone. Without growing inventory, we can’t meet order demand and the business would get stagnant.

I’m not 100% an expert on their taxes but I do know they are taxes as personal income on business profit. I’ve seen the bill as well as have had this conversation with the accountant when I had the opportunity to receive shares in the company.

So, just to be clear, there's several hundred thousand dollars worth of unsold inventory that was purchased this year has to be counted as profits? That doesn't sound right at all to me but again I'm not too versed on these things so perhaps I'm wrong.

If that inventory does for some strange reason need to be counted as profits that sounds to me like a problem with the accounting tax code. Not necessarily income taxes.

[League Circles]

Although I do intend to vote no on the referendum I don't really have much sympathy for extremely successful so-called small business owners who would be taxed higher if the referendum passes. 800k of profits per year is what you'd expect a business valued at perhaps 10 million plus dollars to be yielding annually. I don't feel bad for "ma and pa" businesses worth 10 million dollars. Sell the business, buy treasury bonds and life stress free if you don't like the taxes.

[dougthonus]

I think we're getting into semantics because all of this is open to interpretation. That's why I posted the numbers. 200k is the 93rd percentile. It's not middle class. That's clearly upper class in IL. People just have different priorities but someone making 200k for more than a couple of years likely has a net worth north of a million dollars. Which is also well above average.

If you always define middle class as the averages and percentiles, then the middle class can never grow or shrink. That's why I define it by capabilities. I believe the middle class is shrinking rapidly. That can't happen by your definition. If in 10 years there are no jobs above minimum wage that even exist, then it doesn't matter, minimum wage is now the average and median and also middle class by your definition. By my definition, we'd all move to lower class.

Again though, as you noted lots of room for interpretation/semantics depending how you're framing the discussion. Income disparity and transfer of wealth from labor to capital which makes the rich get richer are big issues for me. That's why I define by capabilities, because our capabilities are declining.

[InsideInfo]

Although I do intend to vote no on the referendum I don't really have much sympathy for extremely successful so-called small business owners who would be taxed higher if the referendum passes. 800k of profits per year is what you'd expect a business valued at perhaps 10 million plus dollars to be yielding annually. I don't feel bad for "ma and pa" businesses worth 10 million dollars. Sell the business, buy treasury bonds and life stress free if you don't like the taxes.

No offensive, but this is silly. The business is worth closer to 6m. Sell it and end up with 3... a good retirement, but not like it’s some astronomical number. It’s their lifes work too.

It is a small business. That is measured but number of employees, not dollars.

The point isn’t for sympathy. If the number was 100k they are still left with a massive tax bill. The point is that you end up pulling money from a growing company to give to the state. It hurts small business and the economy just to hand over money to the state. The same state what has managed out money terribly.

[League Circles]

I think we're getting into semantics because all of this is open to interpretation. That's why I posted the numbers. 200k is the 93rd percentile. It's not middle class. That's clearly upper class in IL. People just have different priorities but someone making 200k for more than a couple of years likely has a net worth north of a million dollars. Which is also well above average.

If you always define middle class as the averages and percentiles, then the middle class can never grow or shrink. That's why I define it by capabilities. I believe the middle class is shrinking rapidly. That can't happen by your definition. If in 10 years there are no jobs above minimum wage that even exist, then it doesn't matter, minimum wage is now the average and median and also middle class by your definition. By my definition, we'd all move to lower class.

Again though, as you noted lots of room for interpretation/semantics depending how you're framing the discussion. Income disparity and transfer of wealth from labor to capital which makes the rich get richer are big issues for me. That's why I define by capabilities, because our capabilities are declining.

Obviously it's subjective, but I like this definition of "classes":

Upper Class: can afford to live well without doing anything
Middle Class: need to keep working hard to live pretty well
Lower Class: don't live very well (cutting lots of corners on things that you and most people value and would like to have

As such, to me, it's a wealth thing, not an income thing.

The tricky part is "doctors" for lack of better description. People who have high income but not necessarily any real wealth yet. So I guess the reality is, if you're a high earning physician (or similar profession making something in the vicinity of 250k+ per year, you are upper middle class until you save enough ao that you could stop working if you want. This could be as little as 5-10 years if you're frugal or a long long time if you spend a lot.

[dougthonus]

Obviously it's subjective, but I like this definition of "classes":

Upper Class: can afford to live well without doing anything
Middle Class: need to keep working hard to live pretty well
Lower Class: don't live very well (cutting lots of corners on things that you and most people value and would like to have

As such, to me, it's a wealth thing, not an income thing.

The tricky part is "doctors" for lack of better description. People who have high income but not necessarily any real wealth yet. So I guess the reality is, if you're a high earning physician (or similar profession making something in the vicinity of 250k+ per year, you are upper middle class until you save enough ao that you could stop working if you want. This could be as little as 5-10 years if you're frugal or a long long time if you spend a lot.

Yeah, that's about how I view it too, but I think that's put better.

If you have to work, you are middle class or below. If you have to work but are a doctor and have a very high standard of living, then you're upper middle class, the real upper class does not need to work and can live off what they have and often get even richer while living off what they have.

[League Circles]

Although I do intend to vote no on the referendum I don't really have much sympathy for extremely successful so-called small business owners who would be taxed higher if the referendum passes. 800k of profits per year is what you'd expect a business valued at perhaps 10 million plus dollars to be yielding annually. I don't feel bad for "ma and pa" businesses worth 10 million dollars. Sell the business, buy treasury bonds and life stress free if you don't like the taxes.

No offensive, but this is silly. The business is worth closer to 6m. Sell it and end up with 3... a good retirement, but not like it’s some astronomical number. It’s their lifes work too.

It is a small business. That is measured but number of employees, not dollars.

The point isn’t for sympathy. If the number was 100k they are still left with a massive tax bill. The point is that you end up pulling money from a growing company to give to the state. It hurts small business and the economy just to hand over money to the state. The same state what has managed out money terribly.

I don't conceptualize number of employees being a meaningful way to characterize a business from the perspective of value to owner.

I agree the state has screwed up everything, and I'm voting no, it's just that quite frankly people who have 800k of profits per year can't really be "hurt". They're already in a better position that essentially everyone.

I'm voting no out of spite for people who think that taxing the rich will solve every problem, and because I want to starve the government.

[TheStig]

I may be speaking out of pure ignorance here so please forgive me if my questions are just out right wrong. You say that much of the on paper profit of the business is actually reinvested in the business. What is preventing them from writing that reinvestment off as a legit business expense?

Are or were there other options in terms of how to structure the business entity so as to not incur personal income taxes by the profits?

I would think that the 200 Grand in spare capital to meet rolling expenses would not be reflected in yearly profit if it's a static thing .

I'm not trying to expose you as having misled anyone but more so trying to learn how things actually work for small businesses.

Frankly, I think the kid is speaking out of ignorance from something his father might have been complaining about at the dinner table. He hardly sounds like he has access to the books. Not trying to be rude but we're trying to guess why does the business pay so much tax from scraps of scraps.

Not a kid. I’m 34, and I’ve been doing this since my mid 20s. I do have access to the books as I am on the board of directors and have a profit share in the company. Additionally, I manage the company cashflow, inventory, and production. I’m not sure how I gave you the impression I was a child... maybe Bc I have parents? I don’t know.

Additionally, referring to the other post you made, the building/property tax does not come from the business or it’s profit. The building is rented to the business, just so happens that the building is owned by my parents under a separate entity... it’s ok, I know you were speaking from a place of ignorance.

The profits a business makes is taxed as personal income to the shareholders. When I sat with my accountant we had a long conversation, as I was offered a choice between stock and a profit share.

I’m not sure why you’re struggling to wrap your head around this. My parents own 100% of the company and must pay personal income tax on all of the profit from the company. That’s how it works.

Yes, how can I call you a kid, you've worked for mommy and daddy your whole professional life and speak in vague business terms and don't really understand it. But that's ok. It's a good gig. Good for you. Don't complain about the golden goose. Just be smart with your money.

[dougthonus]

It is an S corp, but you can’t simply switch that. It’s filled when you open the business and you can’t change that.

We do have an accountant.

This isn’t a killer year. Steady growth for 17 years.

You can switch from an S corp to C corp if you want to, though granted, you would get double taxed if you do that and are taking the money out, but if you're keeping the money with the business for growth, that's okay, because you're getting this all in equity anyway. If you're taking the money out it makes sense to stay an S corp though. The tax rates now are low enough on corporations and capital gains that the tax penalty might be less even with the double tax.

Your parents have done absolutely amazing for themselves. I mean that's an amazing business! It isn't a "small business" in terms of how people think of "small business" which are often barely able to sustain someone that owns them. They're extremely wealthy by any standard, could sell the business tomorrow (or maybe even just shutter the doors), never work again a day in their lives. They're exactly the type of people that the tax is intended to target. Your parents are probably top .1% of earners in the state.

[TheStig]

I think we're getting into semantics because all of this is open to interpretation. That's why I posted the numbers. 200k is the 93rd percentile. It's not middle class. That's clearly upper class in IL. People just have different priorities but someone making 200k for more than a couple of years likely has a net worth north of a million dollars. Which is also well above average.

If you always define middle class as the averages and percentiles, then the middle class can never grow or shrink. That's why I define it by capabilities. I believe the middle class is shrinking rapidly. That can't happen by your definition. If in 10 years there are no jobs above minimum wage that even exist, then it doesn't matter, minimum wage is now the average and median and also middle class by your definition. By my definition, we'd all move to lower class.

Again though, as you noted lots of room for interpretation/semantics depending how you're framing the discussion. Income disparity and transfer of wealth from labor to capital which makes the rich get richer are big issues for me. That's why I define by capabilities, because our capabilities are declining.

I agree with you've that it's shrunk. 110%. However what I described is the current middle class and what you've described is the middle class of 20+ years ago. So an income of 200+k in this state is top 7% and really the upper class. That's all I was trying to say. So to say that families with a top 10% income get hit by this and we disagree what class they're is not the point. They want to take the millionaires on up. As a millionaire is going to have a 200+k income.

[dougthonus]

I agree with you've that it's shrunk. 110%. However what I described is the current middle class and what you've described is the middle class of 20+ years ago. So an income of 200+k in this state is top 7% and really the upper class. That's all I was trying to say. So to say that families with a top 10% income get hit by this and we disagree what class they're is not the point. They want to take the millionaires on up. As a millionaire is going to have a 200+k income.

It it is certainly the upper end of the income earners in the state for sure, that we agree on. I would guess that most people I know in that 200k-300k are not millionaires because they haven't earned at that level for very long (say 5-6 years).

I also think millionaire isn't very meaningful anymore. Someone with a net worth of a million dollars almost certainly can't quit working and maintain their lifestyle for any length of time (especially since typically most of that net worth is tied up in a house which has costs and not things that throw income).

While it doesn't have any nice catchy name to it, I think you probably become wealthy around 4 to 5 million dollars in net worth.

[2018C3]

Its all relative, but I don't consider doctors middle class,

To me Middle class is $63 thousand a year give or take 10 grand. Someone who makes twice that amount is no longer middle class and in the upper percentage of wage earners.

Once you make that much, You then have the opportunity to help your parents pay off there house,

People who make $120,000 plus do not live in the same world as those who make 1/2 that amount. Just like I do not have the same problems of people who make less than $30.000 a year throughout there careers.

I have a friend who makes $60,000 a year and still helped his first generation immigrant parents along with his sibling purchase a home, Way before he he got his own. The guy bought his own first house in his very late 30's. His parents always came first.

But he was not born here, and came from a different family oriented culture,

[TheStig]

I agree with you've that it's shrunk. 110%. However what I described is the current middle class and what you've described is the middle class of 20+ years ago. So an income of 200+k in this state is top 7% and really the upper class. That's all I was trying to say. So to say that families with a top 10% income get hit by this and we disagree what class they're is not the point. They want to take the millionaires on up. As a millionaire is going to have a 200+k income.

It it is certainly the upper end of the income earners in the state for sure, that we agree on. I would guess that most people I know in that 200k-300k are not millionaires because they haven't earned at that level for very long (say 5-6 years).

I also think millionaire isn't very meaningful anymore. Someone with a net worth of a million dollars almost certainly can't quit working and maintain their lifestyle for any length of time (especially since typically most of that net worth is tied up in a house which has costs and not things that throw income).

While it doesn't have any nice catchy name to it, I think you probably become wealthy around 4 to 5 million dollars in net worth.

But those are the wealthy these days. With the real middle class having little savings or assets, a millionaire is someone who has a lot of money these days. Most people have giant mortgages, lease cars and expensive toys and have credit and student loan debt. There was a survey that half of household couldn't manage a $400 unexpected bill. I think you underestimate the precarious situation of the average American. That's why there are modern day bread lines.

[dougthonus]

But those are the wealthy these days. With the real middle class having little savings or assets, a millionaire is someone who has a lot of money these days. Most people have giant mortgages, lease cars and expensive toys and have credit and student loan debt. There was a survey that half of household couldn't manage a $400 unexpected bill. I think you underestimate the precarious situation of the average American. That's why there are modern day bread lines.

Semantically it just is a matter of whether you're saying:
the capabilities of the each class are lessening
or
generally, people are moving into lower classes than they were in / their parent were in

You seem to be saying more the first while I'm saying the second, but they really mean the same thing.

I think those are two separate problems too, people who do stupid things with money and are overwhelmed with debt and barely getting by and people that don't do stupid things with money but are still barely getting by. I think the second of those groups is the one I'm concerned about.

[TheStig]

But those are the wealthy these days. With the real middle class having little savings or assets, a millionaire is someone who has a lot of money these days. Most people have giant mortgages, lease cars and expensive toys and have credit and student loan debt. There was a survey that half of household couldn't manage a $400 unexpected bill. I think you underestimate the precarious situation of the average American. That's why there are modern day bread lines.

Semantically it just is a matter of whether you're saying:
the capabilities of the each class are lessening
or
generally, people are moving into lower classes than they were in / their parent were in

You seem to be saying more the first while I'm saying the second, but they really mean the same thing.

I think those are two separate problems too, people who do stupid things with money and are overwhelmed with debt and barely getting by and people that don't do stupid things with money but are still barely getting by. I think the second of those groups is the one I'm concerned about.

That's fair and I agree.

I think it's really easy to fit things into a budget. Leasing a car is cheaper than buying one. You can pay $20 a month for a new Iphone. You can click a button and get a car anywhere so you don't have to worry about the car or train. You can put things on a CC and pay the min. Out of money, pull it out of the house.....

It all adds up and the average person has so much more stuff than when wealthy was having a car you bought cash, taking a normal vacation, buying a house when you had a large downpayment, etc. Money has almost become funny money now.

[InsideInfo]

Frankly, I think the kid is speaking out of ignorance from something his father might have been complaining about at the dinner table. He hardly sounds like he has access to the books. Not trying to be rude but we're trying to guess why does the business pay so much tax from scraps of scraps.

Not a kid. I’m 34, and I’ve been doing this since my mid 20s. I do have access to the books as I am on the board of directors and have a profit share in the company. Additionally, I manage the company cashflow, inventory, and production. I’m not sure how I gave you the impression I was a child... maybe Bc I have parents? I don’t know.

Additionally, referring to the other post you made, the building/property tax does not come from the business or it’s profit. The building is rented to the business, just so happens that the building is owned by my parents under a separate entity... it’s ok, I know you were speaking from a place of ignorance.

The profits a business makes is taxed as personal income to the shareholders. When I sat with my accountant we had a long conversation, as I was offered a choice between stock and a profit share.

I’m not sure why you’re struggling to wrap your head around this. My parents own 100% of the company and must pay personal income tax on all of the profit from the company. That’s how it works.

Yes, how can I call you a kid, you've worked for mommy and daddy your whole professional life and speak in vague business terms and don't really understand it. But that's ok. It's a good gig. Good for you. Don't complain about the golden goose. Just be smart with your money.

I didn’t know my whole professional life started at 26.

What vague business terms have I used?

I’m a kid because I work for stayed with the family business? You’re a clown. You don’t know a thing about what our business is, what my education is, what my previous background is prior to working for the company, or what the business looked like when I started and how it’s changed and what role I’ve had in it.

No, but you seem to know how the inner workings of our business works... like your brilliant point about how the business loses profit paying the taxes on a building it doesn’t own.

I play a large role in a multimillion dollar company, and have had in depth conversations with the accountant for that company. You’re sitting behind a keyboard pretending to know things you don’t.

Nothing changes the fact that private business owners have to pay income tax on their company profits. Maybe read up on it before you spout nonsense.

https://smallbusiness.chron.com/pay-personal-income-taxes-own-own-small-business-57158.html?back=https%3A%2F%2Fwww.google.com%2Fsearch%3Fclient%3Dsafari%26as_qdr%3Dall%26as_occt%3Dany%26safe%3Dactive%26as_q%3DDo+private+business+owners+have+to+pay+a+personal+income+tax+on+their+companies+profit%26channel%3Daplab%26source%3Da-app1%26hl%3Den