On-line "Shop" closing

OK, I had to play "lets ask the IRS!" with my friend Zach, who works for the IRS.

He says that it's actually very common for companies to never show a profit because the current trend is to reinvest all profits into growing the business. Depending on how you do it (and here's where non-business-major me gets lost in details) wages paid to employees, including yourself, isn't profit, it's an expense, so everyone can make a living even if the business isn't showing a profit. The employees pay income tax, and the employer pays employment tax (which is a hidden income tax, and that's why self-employment tax is so high).

Not making a profit for several years is a red flag, BUT all it flags them to do is look at you to determine whether or not you're actually

Having a website, listing on eBay, and posting ads here would pretty well cover your heinie as an authentic marketing tactic.

Oh, I understand this concept, but I also have to make my living out of my business... I have mouths to feed..

the money back

I understand that the same thing happens with corporates in NZ. But my DH & I are a small partnership NOT a large Corporation.. and we have 2 kids. Maybe I should register us as a company and pay ourselves a salary, eh?

Mavis

I don't know how the tax laws work there at all, Mavis. But here in the USA, I would look long and hard before registering as a corporation. I prefer being an Owner Operated business, even with two teenagers to feed. Sarajane

Sarajane's Polymer Clay Gallery

Thanks Sarajane. I'm sure they all work the same! They suck you dry any way you look at it!! I was speaking above with tongue-in-cheek.. 8-)

Mavis

My sister and I are a corporation so that our personal assets cannot be seized in the case of lawsuit, etc. Being married/attached, there are houses, spousal salaries, other assets that can be attached. Now, you think, what the heck could happen to jewelry makers? A colleague of ours was sued when a woman "stuck" herself with the pin of a brooch and the cut got infected. Ridiculous lawsuit, but the woman was awarded damages...our friend had to pay her medical bill because she did not meet her deductible. Of course that fact that she did nothing to clean her scratch and allowed it to become infected didn't matter. As the judge said, "but for the fact that she bought this pin, she wouldn't have scratched herself". Not fair, but legal.

So, corporati>

All of her problems could have been avoided with a simple business insurance policy. To not carry insurance when you are in business is asking for problems in today's society. I carry 1 mil. in liability insurance, just because people are so sue-happy. It isn't that expensive when you think of the possible consequences. Barbara Dream Master

Autumn is a second spring when every leaf is a flower. ~~ Albert Camus

Is it 5 years? I thought it was 3. Please respond to my email, I don't check here as often as I should. Greta