Hiya 'Heads, Here's my situation, I'm crunching the numbers to establish my hourly rate, but it just doesn't seem to be adding up. Actually, it's adding up to be too much . Since I'm working from home, I figured that my hourly rate should be reasonably low. I'm figuring that my overall expenses including rent, utilities, etc. would be a little more than half of what I'm paying right now. I've also added in professional fees, advertising, some training, computer upgrades, a reasonable salary, health insurance, etc. which would bring my total expenses up to $6,200 a month. I'm using ProfitWatch and figuring that I'll be working 5 billable hours a day, 48 weeks a year. After running the calculations and it's saying that I should be charging $83+ per hour when I figure in taxes and a 20% gross profit on my overhead. If I eliminate the 28% federal income tax, the rate would still be $77.50 And if I eliminate the 20% profit, I'm down to $62 per hour. So, I guess my questions are... Are you really making money or is your business profitable? or Are my numbers off? As usual, any suggestions or input, no matter how silly you may think it is would be quite helpful to me.
Havin' fun,
Checkers
Posted by Paul Luszcz (Member # 4042) on :
If you're asking if we think those numbers sound right, I'd say yes, they do.
Your hourly shop rate is $83 to produce an after tax net profit of 20% with only 1000 billable hours to cover your overhead.
Mark Roberts gave a seminar at the USSC show indicating you should be achieving a net profit of 30% after tax. My accountant and business advisors say I should be happy with 10%. Your 20% goal is ambitious but apparently doable (according to Mark).
The question is, can you expect to realize $83/hour? If not, you either need to increase your hours or decrease your overhead.
Posted by Dan Streicher (Member # 4515) on :
Hey Checkers this is something I struggled with for a long time and have told many other sign makers if you are self employed in the sign business and working for wages, save yourself the headache and go work for someone else and save yourself the stress. I don't know about your particular market but that would be competitive in Portland Oregon where my shop was, our shop rate was $125 higher than most but we were doing specialized work and that's what we had to charge to cover the basis.
I am glad you are going through the steps to see what it truly costs to be in business it is shocking to most, and if you fail to charge your hourly rate you will loose money, I know two ways to lower the price of your work buy your negotiate a lower price for your materials (and as we all know materials are not a large part of the equation it is labor that kills us all) or learn ways to produce your product quicker while keeping high quality standards.
Too many people do not go through the process that you are going through, and they end up finding out at the end of the year they lost money, and by not knowing what to charge you end up giving your skills away and making it harder for the next sign business when you go out of business and the new guy has to explain why his pricing is what it is...you do NO one any good if your business is not profitable, customers become uneducated, have to pay to have artwork recreated, and you loose money. And it is a difficult process to raise your prices once you realize you are not making any money, you end up with all the cheap customers and they hop ship when you raise your prices and you are back to square one.
good on you for going through the steps, its a hard process, but you will be glad you did it, the next hard part is sticking by your pricing.
good luck
Posted by Sheila Ferrell (Member # 3741) on :
Checkers, you did'nt mention payin' an employee . . . if you were to have an employee that would be where this 'extra' income would be going . . . or you would be charging even more.
One of my problems, and I think a problem in general, inherent with the 'home-based = low-over-head' theory, is automatically pricing ourselves too low. In order to EVER HAVE any overhead . . . an inventory, and employee, newer equipment, a newer office, or building addition, which might require an additional power meter (according to your insurance/bldg.codes) I HAVE got to be pricing just as if I had the same overhead as any other not home-based-business.
[ January 20, 2006, 12:51 PM: Message edited by: Sheila Ferrell ]
Posted by Mike Pipes (Member # 1573) on :
Like Sheila said, if you ever want a shop, which is going to cost more for rent, more for utilities and don't forget that commercial phone lines are expensive, you will never achieve it if you set prices at a "home-based" level.
If those are your numbers, however much you want to earn, however much you want to invest back into business, etc. those are your numbers and that's how it works out.
Maybe you are expecting too much growth right off the bat?
What you're essentially saying is, you need $75,000/yr to achieve your goals, and I don't think that's a lofty expectation considering you need to pay yourself a salary which is a huge chunk of it. You just have to work really hard to achieve it, harder than you would if you worked for someone else.
The real issue at hand is, can you honestly do that in your first year? two years? three? four? Can you pull in enough volume of work with enough profit margin to pull that off?
Posted by Sheila Ferrell (Member # 3741) on :
By the way Checkers . . . babydoll . . . how can it possibley be 'too much'???
ie; When filling out an application for a job, always answer the 'desired wage?' question with the following sentence:
'As much as possible.'
Your numbers show it's absolutely possible. Go with it and gradually raise it. Posted by Ron Carper (Member # 999) on :
I have been at this for 25 years, and my observation in dealing almost exclusivly with other business owners is that if you want to suceed in any business that you are building from the ground up, be prepared to put in very long hours for a long time. Every business is like this, why would the sign business be any different. Most business owners don't think twice about putting in 12-16 hour days, sometimes 6-7 days a week to build up their business. If you are not prepared to do that, you should be working for someone else who will. Because I have "paid my dues" for the past 2 decades, I have the luxury of taking a day off to go golfing or quiting after an 8-9 hour day.
The reward comes later, and IT IS WORTH IT!!. I can get away with working less than 50 hours now (and still have a high income) because of what I did in the past.
Your example of working 8 to get 5 hours production should be working 12 to get 9 hours. Because you are just starting out, you may have even more hours in "non-productive" sales time until you build up you customer base.
The problem that I see with many talented sign makers is that they are lousy businessmen. That's why the franchises that are run well will make alot of money selling an inferior product. A talented sign person with some business sense can clean up in this business.
Posted by KARYN BUSH (Member # 1948) on :
5 hours a day of billable time sounds doable...BUT alot of times this happens...bookkeeping 1 hr, too much time spent on some estimates 1.5hr, gotta clean the shop and make a dump run 2 hr, shyt my paint job failed i need to research the problem 5hrs(this wound is still fresh), will the fkin phone stop ringing!, crap so&so is here for their sign and i forgot to print the bill, oh swell a paper jam....fling, slam, crash...oops shouldn't have thrown it across the room...now i have to drive to staples and buy another printer(1hr)...maybe i should cut that alumalite for all those ski signs i need to get done...wtf is this shyt?...the aluminum is delaminating from the core...dammit can anything go right? lemme spend a few minutes(2 hrs later)checking out the board.....i think you get my drift.
a one person shop has its draw backs for sure. its all you baby. some days i can puke out $1000 in prints, lettering or signs...then there might be days that i don't bill out anything because its all unbillable time. i know you are thinking 5 hours per day is an average in the course of a week....and if you are very self motivating and not burnt out then its probably close...but think of it this way...if you need to bill out $6200 for your hourly rate just to cover bills which is not including any cost of goods sold...depending on that you need to be at roughly $8500.00 month in gross sales. that would mean you need to gross about $100k a year. can you realistically do that by yourself in your area?
i have yet to break $90k...i don't feel i make enough for as hard as i work. yes i have a nice lifestyle, don't get me wrong...but that is also because i'm married to someone who grosses what i gross. i don't want to show a big profit...i'm the right off. if i added in all my perks and things my business pays for it would be equivilant to taking home $650/wk in pay after taxes. that would mean i would have to find a job in my area that would pay me roughly $55k a year. i can tell ya right now that aint gonna happen in this little new england town...so self employment is the way for me.
your numbers are probably right on at $80/hr...the sign industry as a whole doesn't charge enough $$ to justify the bullshyt that goes along with the risk. i hope more people like you get into it rather than the idiots that work for peanuts and ruin the market.
good luck!
Posted by Donna in BC (Member # 130) on :
LOL Karyn!!!
Posted by Mark Neurohr (Member # 2470) on :
Good job Karyn!! Now I know why I like you soooo much!!
You say it like it needs to girl!
Posted by Doug Allan (Member # 2247) on :
quote:oh swell a paper jam....fling, slam, crash...oops shouldn't have thrown it across the room...now i have to drive to staples and buy another printer
awesome & accurate description from top to bottom Karyn... the ", slam, crash...oops " sequence especially, as I had my wife hang up on me at the wrong time recently. Most of the pieces went back together.. the speaker wasn't found for a week & several little electronic diodes that must not have done anythin important were still on the floor later.. but the pieces I re-assembled did result in a working phone without speaker, or audible button tones... good enough for the break room anyway... but the new 2-phone set-up cost me $100 & now it "speaks" the caller ID info at me & it won't shut up. (at least I know how to remove phone speakers now)
I grossed 100K for about 4 years, then 130 last year with mimimal P.T. help... but by adding a F.T. guy this year for the last 7 months, we hit 200K... but all in all, I work too many hours, have a decent lifestyle, & lots of tangible material investments... but no savings to speak of. So, by other peoples standards I should go work for someone else... but the way I see it, I love working for myself, & no matter how many hours I spend... I usually get stir crazy when I'm not working for too long & I end up wanting to work some more. On the other hand I hate working for other people, so even if I made the same money in less hours, it would suck instead of being enjoyable... PLUS no security, it could end & be difficult to replace.
Posted by Louie Pascuzzi (Member # 1373) on :
Checkers, $83.00 per hour seems like a fair price and 5 billable hours a day seems about right. I have a partner at work and we figure I have about 4 billable hours a day and he has 6 because I do more of the sales, paperwork and answering the phone. We try to figure jobs at $100. per hour for the labor part. Now that it's a new year we will refigure and I'm sure the rate will go up with higher, heat, electric and insurance costs.
Like Karen, some days we're lucky and both get in 7-8 hours of work. Sometimes we have to leave early or take a day off so it all evens out.
Another big thing we do to increase our bottom line is buying supplies right. "You can make just as much money when you buy as when you sell" my father always said. We pretty much shop around to 3-4 suppliers when we make a large purchase. We buy aluminum 50 sheets at a time, vinyl usually 10 rolls at a time and foils for the Edge about 10 rolls at a time. We're going to use them anyway so might as well pay as little as possible for them. The same goes for all of our supplies. It's amazing the different prices that we can be quoted for the same items and how much we can save if we buy in quantity.
Posted by David Wright (Member # 111) on :
Rob, I don't know what drives you, but that is way too many hours. That goes for starting or for an established business.
When I opened my shop, many extra hours were put in for setting up the place, painting, displays, arranging, you name it. What's to be gained staying 4 more hours a night after that? There was no big nut to crack that wasn't being handled by the work done during regular business hours. I could see if part of the day was taken by drumming up work, making more mistakes that experienced people wouldn't make and such, then you would need to work longer to make up for that. After you know what you are doing, have regular business, you should find a groove and regular hours.
Too many justify long hours forever because they don't charge enough, mismanage their time, or just plain want too much and their isn't enough time in the day for them.
Find a balance Brian, you already have the skills to make good money.
Posted by Dan Antonelli (Member # 86) on :
Why would you working at home have anything to do with your hourly rate? Is the quality of your work any less because it's produced in your home? Why penalize yourself for being home based.
Is everything you're selling stricly priced by time and materials? If so then you know what you have there that you're selling right - it's called a commodity.
I know your work Brian - I always thought what you sold is a service. Signs are merely a substrate from which to sell advertising. Sell advertising and marketing instead of signs. Sell advice - sell strategy. Those things have less to do with time and materials than the perception of who you are as a business and what you provide for clients.
Offer tools to expand and generate revenue for your clients through innovative signage solutions and you'll quickly become more than a provider (and cost center) for your clients, but rather a strategic partner who's marketing expertise helps generate revenue and growth opportunities for their business.
Don't get me wrong - it's important to know exactly how much your business costs to run on a daily, and hourly basis. But basing all your pricing around that figure is, in my opinion, more suited by those who are strictly selling vinyl by the pound (ie. commodities).
Don't shortchange your 20 or so years of experience. You're probably 4 or 5 times faster than a newbie - why charge less- because it took you less time? It took 20 years (or whatever) to get to your level - don't minimize your depth of knowledge and experience.
Posted by Mikes Mischeif (Member # 1744) on :
The signcraft 2006 pricing guide could help if you do not have one.
[ January 20, 2006, 10:50 PM: Message edited by: Mikes Mischeif ]
Posted by Mike O'Neill (Member # 470) on :
Numbers are good Brian ....
'tis where you gotta be...
Posted by bruce ward (Member # 1289) on :
not to be an ass...but who cares about numbers if your doing all you can do? after 19 years the the first ten were surviving and they were hard. the last 9 have been great and to "bring up" numbers is somethig i dobt see the point it.
i have savings, retirement, funds, health insurance, workers comp. im doing better than i used to and im very comfortable. finace asks me alot if i know what i make a year or am i interested? No1 i dont care it doesnt matter. eveything is fine.
why is there a concern for finding or searching these numbers? is it part of goal. or maybe im not so much into my own accounting as i should be.
Posted by Checkers (Member # 63) on :
Thanks for the replies everyone. At first I just thought that I was doing the math wrong. But, after hearing your replies, I feel much better. I also figured that adding a productive full-time time employee will lower the hourly rate, but that's much further down the road. After nearly 15 years in this business, I've learned that a new business will take 5 to 7 years to really get established. Around the 10 year mark is when you can start getting comfortable - not that it ever gets easy. Although I'm thinking in several different directions, my primary intent is to operate as a profitable business. A business with tangeable assets that can be sold down the road. I'm figuring that If I start off right, within 10 to 20 years, I'll have that asset. I've seen too many business owners, not just sign makers, that have slaved for 20-30 years or more, building a full time job for themselves. When it came time for them to retire, their busines was not worth more than its assets. And, not that they had to, but almost all of them kept working so they could enjoy themselves. If I decide to retire, I want to have the choice of not having to work again. Unfortunately, working for someone else makes that goal more difficult to achieve. Thanks again for the replies.
Havin' fun,
Checkers
Posted by Sheila Ferrell (Member # 3741) on :
So . . . you obviously don't do your taxes???
You'd know an end-of-year number at least.
Mabey you are living comfortabley and that's all well and good, but it would'nt make leaving money on the table a happy occasion, nor spending more on materials than you need to . . . if I'm doing those things, I like to know about it and work to fix it. I like to know from one year to the next just how much the income is exceeding the out-go . . . I like to know what the dollar amount is I might have to invest is.
You know . . . stuff like that . . .
But to each his own . . . If not knowing suits you, so be it.
[ January 21, 2006, 04:19 PM: Message edited by: Sheila Ferrell ]
Posted by Checkers (Member # 63) on :
Hey Sheila, I do my own taxes just to see what to expect from my accountant. Normally he comes up with the same numbers, but sometimes he does a little better. The main point of my original post is to compare numbers. I was assuming that my hourly rate for being home based would be around $40 to $50 because that's what everyone else charges. I am now happy to say that I know that I need at least $80 per hour to maintain and grow a successful sign busines from my home. And knowing this bit of information alone puts me in a much better situation than my competition because, no matter what I do, I'm going to do it right
Cheers,
Checkers
Posted by George Perkins (Member # 156) on :
quote:Originally posted by Dan Antonelli: Why would you working at home have anything to do with your hourly rate? Is the quality of your work any less because it's produced in your home? Why penalize yourself for being home based.
Don't shortchange your 20 or so years of experience. You're probably 4 or 5 times faster than a newbie - why charge less- because it took you less time? It took 20 years (or whatever) to get to your level - don't minimize your depth of knowledge and experience.
AMEN
Posted by Mike Pipes (Member # 1573) on :
Brian I think Sheila was referring to Bruce's last post.
Regardless, you are going about it the right way. Too many business owners in all forms of business establish an hourly rate that apparently, is either a random number that just sounds good, is based upon what others in their area charge, or they figure "so and so charges $60/hr, I can charge $45 and gain marketshare" with no consideration of their actual operating costs.
So what you have is when more people enter the same field, they're choosing their rates at random based upon the rates of other businesses that were basically chosen at random too.
It would be a mistake to compare your own rates with other businesses in this situation because they're all setting themselves up for failure.
Posted by Sheila Ferrell (Member # 3741) on :
Thank you Mr.Pimp. I was indeed refering to Bruce's reply.
Posted by Si Allen (Member # 420) on :
It doesn't matter what you are charging per hour, it usually isn't enough!
Simple test: get out yor bank book and look at the balance at the end of the last 6 or 8 months, after everything has been paid.
IF it is not getting larger every month, then YOU MUST RAISE YOUR PRICES, unless you plan to live fast, die young, and make a handsome corpse!
Just staying even won't get you anywheren nor will you be able to expand and grow!
Posted by Checkers (Member # 63) on :
Ooops, my mistake. I missed Bruce's comments.
Bruce, I feel these numbers are important because of several reasons. As I mentioned earlier, I would like to have the option of selling the business and not have to work again. If I am not using the proper accounting practices and only working for whatever the business gives me, my business really doesn't have any resale value in the business world. Also, I don't want to start with a handicap, having to dig myself out of a hole before I get out of the starting gates. Crunching these numbers will help me avoid that. And not that it has much to do with this discussion, but I've also learned, through this website I might add, that it's critical that your pay yourself a steady paycheck too. If you need to get a loan to finance your dreams, whether it's buying a car or your dream home, you'll probably pay a higher interest rate, if you're lucky enough to get a loan. I hae a meeting scheduled next week with a career councelor to discuss this and the other options I am exploring. Once I meet with her, I'll be able to see a little more clearly on which way I plan on going. If all goes well, it will be a combination of subcontracting my labor while starting my own business.
Cheers,
Checkers
Posted by Denis de Leon (Member # 5844) on :
some very valid points were made about numbers and working out of your garage or wherever.
First, there are other ways to achieve your hourly goals other than lowering costs.
How about raising prices?
Second, whether you are working out of your garage or a lofty retail space YOU ARE SELLING ADVERTISING. The value of which can't be controlled simply by bean counting. What are your signs REALLY worth to your customers (this I believe is Dan's point)?
Posted by Ray Rheaume (Member # 3794) on :
Percieved value.
Dan's right on the money. If you are experienced and capable of producing work at or above the level of the competition, why sell yourself short. Being someone who long worked out of his home, I never felt that having the lower overhead of a home based business automatically meant that I should work for a lowered rate.
This is a service business, and as long as the service is percived as professional and valuable, it should be priced that way.
It's a business, not a hobby. Rapid
Posted by Doug Bernhardt (Member # 1568) on :
Hi Check, sorry cuz it has been way too long. Love the question as this question of hourly rate is on my mind right now. As you probably know we (in Canada) do our GST (value added tax) every 4 months for the most part and is always reveilling at this time of year. My gut reaction....if you feel (and see) it in your pocket and there seems to be a fair rate for your clients...what are you worried about? Alot of the price point is what the market will bear. Keep it up and get what you deserve/want! One of the things I've learned that took way too long was, that life doesn't wait, it just goes on. Sure we can all take holidays later but now might just be all there is left. Don't wait and that bit of profit will help get you there.
Posted by bruce ward (Member # 1289) on :
sheila of course i do taxes. i do all the bookeeping for the year and turn into the accountant at the end of the year. there are things i count and dont count like alot of other people.
i read your post and do not understand it maybe im misreading. i report what needs to be reported. i would have to spend alot of time on the books to come up with the exact number (do you understand what i mean?) and that is something i have no interest in. my one goal at the end of every year is try and spend as much as possible and try to make the profit not much more than it was the year before.
i have met a few people in this world that were on the up and up. 100% across the board. im not here to judge, but i think that in doing so your only hurting yourself.
the fedsral govenment, IMHO is a poorly run business with no ethics. i will not feed into this institution one more dime than i have to. I will decide how to save for my retirment, NOT THEM. their method is not working for me. they take more than they give back.
at the end of the year the IRS gets a payment full that i owe them. thats the way it should be!
Posted by Tim Whitcher (Member # 685) on :
Not to speak for Bruce, (he can defend himself), but I think he means that a lot of people worry about the minutia (seeing the trees, not the forest) and can easily lose track of the fact that they are leaving money on the table by running everything by the numbers. I knew a guy that used to quote each job down to the cost of each individual foam brush and sheet of paper towel required to complete a job. Although I feel this is a necessary practice every once in a while, it's going overboard to be this anal on each individual project. Time is money, and practices like this can paralyze you. We actually have a percentage that we call the "Q" (quotient) factor that covers miscellaneous expenses like that. In regards to an hourly shop rate, I use one to calculate labor, but once the job is quoted this way, I try to mark it up from there to include the actual value the job has to the customer. All businesses do this, otherwise you wouldn't be willing to buy a $3.00 bottle of water at the ball game.
Posted by Mike Pipes (Member # 1573) on :
quote:Originally posted by Tim Whitcher: All businesses do this, otherwise you wouldn't be willing to buy a $3.00 bottle of water at the ball game.
And I saw an ad for a car dealer on TV last night offering $13,000 discounts on new vehicles. Wait a sec, if they can discount the damn thing by $13,000, that should give a clue to what kind of margins they have!
Posted by Curtis hammond (Member # 2170) on :
IF you ain't building NET WORTH then you are lying to yourself and to every one else around you.
You claim to be a business person but are just getting paid a salary. There must be some NET WORTH building going on to be a true business.
What does big bizz do when they do not make any net worth. Simple,, They close.
Net Worth = 10% - 20% return on your money at the end of the day after you pay every thing. wages, retirement included.
Retained earnings is a good measure. At the end of the year,, you have 10 grand left in the corp account. thats a good pile of NET WORTH..
Posted by bruce ward (Member # 1289) on :
what tim said!!! im not saying we do not need to grow. im not saying every year it does not matter if you make more money....im saying who cares! if you love your business and the product you sell the money will come.
it seems that people that over analyze whats coming in, whats going out, how much percentage of the overall fiscal average have we done this week, compared to 3 years ago!!!???
basically put im not a numbers person. and if the customers are not ordering and im not making then numbers have absolutely no part for me. numbers aint going to get customers a new tactic will Posted by Doug Allan (Member # 2247) on :
I can relate a lot to what Bruce (& Tim) are saying. I am a numbers guy... but I'm a damn busy numbers guy... so while I may not look at the minutia (wow, I don't think I ever used that word in print before ) in advance, on every job... I do look at the books after the fact, and if they say I paid all my business expenses & had enough fun with the rest to justify working for myself, instead of some other slave driver... then thats good enough for me.
I am always inspired by good business sense & don't question Dan's, & many letterheads "perceived value" concepts, or "vinyl-by-the-pound" warnings, & I appreciate the healthy reminders that a businesses net worth growth is the name of the game for good business ownership, but I also think Paul made an important point in the first reply here.
if you determine your hourly shop rate needs to be X to produce an after tax net profit of Y in a given amount of billable hours...
"The question is, can you expect to realize $83/hour? If not, you either need to increase your hours or decrease your overhead"
Notice he didn't say "raise your prices"... that's because in this reply, "can you expect to realize $83/hour?" means WILL PEOPLE PAY THAT for what you can produce in an hour. IF the answer is no... then sure, some would say give up.. go work for someone else.
Of course everyone should charge whatever the market will bear. We should all lose some bids based on price, or we'll never know if we are close to that local current market value... or lose a lot of bids if we want to be the expensive guy in the area, & have the quality (& demand) to sustain that desire.
At some point, regardless of how you crunch the numbers, there are prices that will be too high to make the sale, & in Checkers case, based on his own productivity, & his market conditions... if $83 is too high, Paul points out some viable options. Cut costs, or work harder (faster or longer hours)
I guess I'm really agreeing with Ron Carpers post too. Where others may seem to be saying if you can't be realizing all this tremendous financial growth without working long hours... GIVE UP... you're not a business man... go work for someone who is.
I disagree... I think if you love your work, & can work a little harder for the first 10 years... & keep being inspired by the good business information available here & elsewhere... it's OK to stay in the game (or to start) even if you are more sign guy, then business man.
Posted by Monte Jumper (Member # 1106) on :
Checkers...Realistically no one makes all hours of the day account for (any) shop rate...( especially in a one or two person operation)More realistically if you figure your rate the same ...lower or even higher (doessn't much matter) What you really need to do is... gear up making EVERY hour profitable ...you will soon sceam over the top.
To set a goal of 5 hours a day seems a self fullfillig prophecy...and you'll never meet or exceed your needs.
We strive to make every hour profitable...things get in the way but at least our goal is an attainable one...(barring the days that fall on their face.)
In the old production shop days if you couldn't make the company 3 times what your wages were (every hour of the day)..you'd look up one day and not have a job. Ask the old timers here!
An advantage of living thru those days is your head still makes you think that way and fullfilling that obligation is formost on your mind!
Well it is for me anyway...Relax you couldn't have been in biz this long if you weren't at least "making wages"...but then again maybe it is time to bump yer prices! You know best.
Posted by Sheila Ferrell (Member # 3741) on :
To quote Bruce: _______________________________________________ "...my one goal at the end of every year is try and spend as much as possible and try to make the profit not much more than it was the year before . . ." _______________________________________________
*Smack-ownself-in-forhead*
Ya mean ta say, I DON'T wanna increase my profit from year to year, while at the same time finding ways to reduce my expenditures??!!
And all in the name of not givin' Unka'Sam a penny more than he can get????!!!!
IRS be-damned, but I will honor the 'laws of the land' and pay whatever, and you can bet your sweet bippy I am NOT gonna show any losses . . .
Meanwhile, I'm gonna make as MUCH as I can for as little as I can spend.
This is not easy.
But . . . also not too hard . . . . because I make an effort to use the best materials possible . . . I can charge MORE MORE MORE for the work.
Quality STILL earns more almighty dollars, and even more benefits than greenery.
And by the way sugar, just speaking personally . . . I do everything pretty much on the up-&-up. Posted by Doug Allan (Member # 2247) on :
Having the moral character to live within the law is commendable. And what is legally right, is therefore morally right too (serve 2 masters with one stone) ...but what one may determine to be ethical is not always legally required, & what IS legally required, is not always ethical.
Corporate loopholes, & other cost saving, or tax saving business strategies may not feel "on the up-&-up" ... but where Bruce says "I have met a few people in this world that were on the up and up. 100% across the board. I'm not here to judge, but I think that in doing so, your only hurting yourself.
The Federal government, IMHO is a poorly run business with no ethics. I will not feed into this institution one more dime than I have to."
I have to agree that playing by the rules is a 2 way street. You can play nice in the sandlot & go by a basic understanding of knowing right-from-wrong... but like in business... if you start playing in the boxing ring, & different set of rules apply.. take it into the kick boxing ring... different again & then there's "ultimate fighter" rules.. not what I'd call "moral" behavior... but I would call it "wrong" to go in that ring & NOT play by those rules.
Uncle Sam wants to get EVERY penny possible out of us.. why should we not look for any legal way possible to KEEP every peny possible. As for their ethics.. if you own money from 10 years ago... you will now owe triple, if not tenfold... if they owe you money... after something like 3 years... your SOL!
Posted by Sheila Ferrell (Member # 3741) on :
Sir, we can not debate over what we agree upon.
And please excuse me for ever questioning Bruce's integrity regarding his tax paying.
I ONLY brought that up as a resource point because HE said he did'nt have clue how much he makes a year.
However, if your in the mood for 'love' . . . we can now debate whether this thread is about ethics and taxes, or if it's still about 'HOW MUCH MONEY we can make-HOW MUCH ARE we makin'-Do we KNOW?/HOW do we know'?
Posted by Doug Allan (Member # 2247) on :
quote:Originally posted by Sheila Ferrell: However, if your in the mood for 'love' . . . we can now debate whether this thread is about ethics and taxes, or...
hell... when you put it that way, I'll even quit agreeing with what we agree upon. Ilove a good debate
I think, this thread is about if we know (& how we know) how much we are (& could be) making... AND about the fine line between the legality, morality & ethics that may or may not stand between how much we are (& could be) making...
Posted by Sheila Ferrell (Member # 3741) on :
Debate reply:
Well we half agree . . . I already said the thread was about "if we know (& how we know) how much we are (& could be) making..."
As for this . . . quote; _________________________________________________ "...the fine line between the legality, morality & ethics that may or may not stand between how much we are (& could be) making..." _________________________________________________
Well, there is little limit to what anyone can make when they are willing to simply do an honest day's work, showing no fear of sweat. In such cases there is no need to worry so much about morality and ethics.
You almost make it sound as if it's difficult to be honest in business, and moral & ethical decisions must be faced daily and heavily weighed. Most people know exactly what is good, proper and right to do . . . they just don't care to use their knowledge.
Believe it or not: for the some of the others, whether or not they will do the ethical thing is not even up for questioning. They are settled. They KNOW they will automatically do it just the way they know when their eyes open in the morning they will draw air and go brush their teeth.
By the way, on what basis did you decide morality and ethics played a part in this thread??
[ January 22, 2006, 11:21 PM: Message edited by: Sheila Ferrell ]
Posted by Doug Allan (Member # 2247) on :
quote:Originally posted by Sheila Ferrell: By the way, on what basis did you decide morality and ethics played a part in this thread??
I don't think I decided anything... but I can identify the basis for my perceiving that morality and ethics played a part in this thread.
Bruce first used the word "ethics" in this remark:
"I have met a few people in this world that were on the up and up. 100% across the board. I'm not here to judge, but I think that in doing so your only hurting yourself. The Federal government, IMHO is a poorly run business with no ethics. I will not feed into this institution one more dime than I have to."
after which (& possibly in response to it) you stated:
"...I will honor the 'laws of the land' and pay whatever..."
"...I do everything pretty much on the up-&-up."
So, I felt that the "honor" you spoke of, & one probable meaning for "up & up" had to do with morality... which, as I stated, is unquestionably commendable.
That said... now that I perceive that "morality and ethics played a part in this thread" ...my desire to contribute to that element of this thread was by making reference to where I thought Bruce was ONLY suggesting compromises that may appear to be of questionable ethics... but NOT of questionable morality.
Now IMO, the somewhat common practice of squirrling away a few cash jobs off the books would rightly have to fall in the category of questionable morality... so for this discussion, due to the belief that this is somewhat common... AND the fact that people generally don't mention that in writing anyway...
I am referring to "compromises" that IMO are only at risk of being seen as questionable ethically. Now I suppose I should cite some examples & this forces me to admit that by falling into the "devils advocate" role of debating from any side just for the mental challenge... I didn't have any specific examples in mind at the outset. I will also qualify my comments as not intending to speak for Bruce, who makes his own points quite clear... but taking cues from him & the direction his comments seemed to add to this thread.
I will, however, attempt to find some examples in my own business dealings to clarify my point.
When I have to state the percentage of my auto usage that is personal, vs. the percentage that is business... I have elected to NOT keep track during the year... therefore I DON'T KNOW... therefore I guess, which means a better then 99% chance I AM WRONG... so if I'm probably wrong, which side of the truth will I probably fall on? The less expensive one!! Is my computer & the DSL fees for my home office a business expense? YES... to me they are. I do a lot of business on it, but am I doing business on it now? Well... that's a good question... what wouldthe IRS think? Should I ask them? ...nah.. I'll just make the decision that is less expensive!
quote:Originally posted by Sheila Ferrell: You almost make it sound as if it's difficult to be honest in business, and moral & ethical decisions must be faced daily and heavily weighed.
..well, if I did make it sound that way, I didn't mean to. I consider myself an honest man who runs an honest business. Have I ever done anything in business that is dishonest? Yes I have. (let he who has not cast the first stone) As for heavilly weighing ethical decisions... nope, that ain't me.
I may look back in introspection & refer to actions that "may be" of "questionable ethics"... but they were usually determined as easily by me as others may "know when their eyes open in the morning they will draw air"
Posted by Sheila Ferrell (Member # 3741) on :
Well said Doug.
You're no fun to argue with.
Posted by bruce ward (Member # 1289) on :
ehtics and taxes? nope they dont go tegether. politicians and honesty? nope nothtat either. am i honest? yes for the most part, aside from the little white business lies that WE ALL TELL!
i doubt that anyone would disagree with me that the goverment and IRS are corrupt. this past year I purchased some commerical property in a neighboring town. that property will be leased back to my company for a damn good write off while in the process of securing me something tangible for my future, that may be resold in the future for profit. but however for the moment I "may" place my future commmercial business there....as told to me by my cpa.
im not out to screw the goverment but i am out to look out for me and me only. im not into feeding the liitle gangster wannabees and their kinfolk. im not into always paying money to fat politicians that always want raises. i am her for me and mine. i am a giving person and i dont mind giving when the cause is just.
Posted by bruce ward (Member # 1289) on :
"...I will honor the 'laws of the land' and pay whatever..."
doug i didnt say this. must have been taken off someone elses post, and on the up and up means what i do is legit and reasonable.
Posted by Mike Pipes (Member # 1573) on :
quote:Originally posted by Doug Allan: why should we not look for any legal way possible to KEEP every peny possible.
Actually, that's in the tax law. You're legally responsible for making sure you don't pay any more than you are obligated, of course they're not going to penalize you if you do, you've already penalized yourself. Posted by Doug Allan (Member # 2247) on :
excellent Bruce! I overheard a discussion of a strategy just like that at a fundraiser last week, & I didn't grasp the whole of it, but it caught my attention. I'm maybe a few years out from being in a position where I could attempt something similar, but I plan to start educating myself about the possibilities.
So your company pays a steep lease payment to Bruce... resulting in less taxable income for the company (while sporting a new building to increase efficiency... enhance appearances, & improve working conditions)
Then Bruce, with only the lowest possible salary, is paying a mortgage on a new building from lease payment funds.
I guess the alternative would be the business buying the building right? So, is one advantage that you pay less tax on the difference between steep lease payments & actual mortgage expenses... then if that same living expense money came from straight salary?
If that is even part of the tax sheltering concept, I'm sure there is more to it. Would you care to elaborate?
Posted by Doug Allan (Member # 2247) on :
Bruce, I just saw your latest post. I guesss starting page 2 added to the confusion, but my whole post was a reply to a question from Sheila, so after I quoted you (Bruce) to begin my reply, I then quoted Sheila, simply saying "you wrote..." (meaning Sheila wrote)
Posted by Doug Allan (Member # 2247) on :
come on Sheila.... You're better then that!!!
OK, I think some of those tax dodges ARE ethically questionable... AND I think showing an ever increasing profit IS part of my growth strategy... AND paying more taxes WILL be part of my future...because taxes support MY government & pave my roads, subsidize my less fortunant neighbors... If I make more, and pay more taxes... as long as I still end up with "more"... that's a good thing, & I've contributed "more" to society... that's also a good thing... especially if I didn't work harder to make more... I only worked smarter (exploiting good business sense... but only in ethical ways)
If I thought my country was too corrupt to support, I should leave this playground & find another, but if this playground & the established rules of capitalism that allow me to do what I love... answer to almost no one on a daily basis... & earn the lifestyle I currently enjoy... or MORE... then I should be happy to lend MORE support (taxes) to that government, & LESS criticism.In fact, maybe I should lend more support in the way of helping campaign for better government officials, or even once my business is self sustainable, I should run for office myself! Posted by Sheila Ferrell (Member # 3741) on :
OK . . . how 'bout this Doug . . . my new debate is with you trying to catch anyone one up by having to explain the conversation due to their own lack of reading . . . most especially when the ensuing comments were almost entirely generated from that same individual.
I would also like to say to Bruce; you should never say: never all always everyone, etc.
I'm sorry to burst your bubble babydoll, but 'WE', by we I assume you mean any/every human being, DO NOT 'ALL TELL' white lies.
You can no more make that assumption, than you can say EVERYONE does any particular act.You can only assert what you know and/or do your own self. In a true debate form, you will be confronted if you make illogical, unfounded assertions.
At least it is my heartfelt opinion that there exists in this world, even in Letterville, people who never lie about anything.
Back to the ethics in taxes/business . . . Doug, are we splitting hairs???
But . . . if one is going to be completely honest in business, then there are no hairs to split. If we cross the line into 'degrees' of dishonesty, at which point does 'real' dishonesty begin??
I'm only saying I do not think there are degrees. I don't think a little white lie is ok and a bold-faced lie is really, super wrong.
A lie is a lie.
[ January 23, 2006, 02:48 PM: Message edited by: Sheila Ferrell ]
Posted by KARYN BUSH (Member # 1948) on :
oh shyt...when i say we...i mean me myself and i.
Posted by Ron Carper (Member # 999) on :
I am an S Corp. The corp. pays me (the owner of the building) rent. High rent... Rental income is not subject to self employment tax (SS, Medicare) That will save you over 15% a year in taxes compared to taking your income in a paycheck. Your rent must be resonable for the area. Other than that, it's a great way to decrease your taxes. You can also take income as profit sharing, that is not subject to self employment taxes. I take 1/3 in wages (must be reasonable) 1/3 in rent 1/3 in profit sharing so 2/3 of my income is not subject to self employment tax. I do have to pay PA Corp tax, but there is still a substancial savings over not being incorporated.
Posted by Doug Allan (Member # 2247) on :
Thanks ron... that is where I thought the bulk of the tax advantages would exist. I suspected that there may be others I was unaware of though. 15% of 2/3 of anything is still a nice 10% savings on taxable income... I look forward to creating a similar situation myself someday.
hmmm... would it be unethical if I rented out half my house to my company for all that extensive Letterville research I do from the home office every night???
[ January 23, 2006, 05:02 PM: Message edited by: Doug Allan ]
Posted by Checkers (Member # 63) on :
Great Advice Ron, thank you for the input! One of these days I have to get down to visit you. It's not like you're that far away. What days are you not playing golf?
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awesome & accurate description from top to bottom Karyn... the ", slam, crash...oops " sequence especially, as I had my wife hang up on me at the wrong time recently. Most of the pieces went back together.. the speaker wasn't found for a week & several little electronic diodes that must not have done anythin important were still on the floor later.. but the pieces I re-assembled did result in a working phone without speaker, or audible button tones... good enough for the break room anyway... but the new 2-phone set-up cost me $100 & now it "speaks" the caller ID info at me & it won't shut up. (at least I know how to remove phone speakers now)![[Roll Eyes]](rolleyes.gif)
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