Some of the largest corporations and businesses in the USA don't pay any federal income or corporate taxes, so there must be ways to limit the tax cost. I did small business taxes for 35 years and it is amazing how much one can use for deductions to lower taxable income. We found ways to employ family members etc. that lowered total costs and increased spouse income and family revenues. No need to hide or cheat when the codes are on your side. I had several business owners that rarely bought items for their children. By employing the kids and paying wages and the SSI tax the kids could buy their own bikes, clothes etc. and monies could be put in 401 Ks at an early age let alone college funds etc. Just because one totally dislikes the system does not mean one should just say screw it and pay or cheat. We have to remember that tax codes were created and modified by persons who want to not pay anymore than they have too. Those who earn wages, pay SSI, and work for wages are subjected to the least mechanisms to avoid taxes. It is interesting to read the comments about how much businesses pay in labor, benefits, UE etc. and then complain because no one is willing to show up and work. With an attitude toward labor like that maybe they don't want to work for a firm that feels they are a drain.

Bryce

best day of owning your own business is when you sell it.
be ready for the taxes you pay tho.
I had to write a check for the high 6 figures.
After all those years of working well over 60 hrs/wk, providing employment for several people and paying taxes for every conceivable reason when you final cash in big daddy Gov't puts a gun to your head and robs you one last time.

bblwi your post makes a lot of sense. You lost me on the labor part.

I just got off the phone from a contractor from Florida building a Holiday express. I had to turn down the work he needed done due to a small crew and one sick employee. He said he hears about people not wanting to work all the time. Something has happened to the work force in the last couple of years.

Restaurants have closed here, reduced hours, auto repair shops are a month out due to lack of help, EVERY business that I see and communicate with has the same problem.

I gladly pay over 4 times minimum wage, cause our work is 90% Davis Bacon scale. I pay weekly and pay overtime over 8/40.

If you can come up with the answer to put people back productive you would be the MAN!

I never considered my employees a drain. Their labor along with my management and continual investment into machines and equipment is what allowed me to sell the place and retire early.


Trouble with the vast majority of employees is the lack of an idea what it costs to have them work for you.
I spent the time to track all the costs and benefits I paid to each employee besides their wages.
Needless to say they were surprised about how much a month it was.
Approx 1/4 to 1/3 of their wages was paid by the business for benefits.
I covered Health Ins 100%, when the Ins. went up 20-30% I adsorbed the cost. The employees never paid a dime in health Ins yet wondered why they didn't get as big a raise as their buddies down the road who paid a couple of thousand a year for ins.
I also paid out a bonus to all employees at the end of the year which my competitors never did. They gave out turkeys, I gave out on average $2000 to each employee. I gave out bonus strictly one how good of an employee I considered them.

Biggest divide between owners and employees is the work ethic and drive. Yes, there is maybe 20% of the employees that care and put in the effort but the other 80% don't.
Another is an employer that asks something of them which he is not willing to do himself. I made sure I always did more than my employees did. I was the first in and the last out. I took considerable less time off then they got. I would jump in and help do any job to get things done. especially the crappy jobs that they didn't like. I used my time as constructively as possible. I didn't waste my time.

I had an employee back the truck into the shop while forgetting to close the drivers door. The steel bollard bent the door back so it couldn't be closed. Cost me over $2000 to fix it. It was the source of alot of laughs and jokes around the shop.
That is till I told the employees that the money it took to fix it is coming out of the bonus money pool. That amount of money divided by the number of employees was about $250 ea. They did think the guy screwing up and costing them $250 was funny anymore.

Most employees don't have a clue what it takes. Most don't care and most just care about themselves. Its no wonder most employers have a bad attitude towards labor.

If anyone is to blame for the labor/employer divide its the gov't who forces the employer to carry a much larger financial burden when employing labor. Employers have lots to loose if things don't work out, employees have very little to loose.

I am so much happier working by myself without any employees . The admiral does the paperwork for the most part and I just fix and drive boats around for one week per month. Wont get rich like this but not going to get any ulcers either.

A lot of truth Dirty D! I have a life time of employee horror stories and could write a book. Still fun though seeing the 20% benefit!

X2 dirty D

bblwi, as far as paying family members to reduce your tax burden, that isn’t going to help anybody with their income taxes. Im not sure this thread is about bashing employees vs whining about taxes. Business owners spend much more time on work than w-2 employees and should be paid more

All of that's true, even the last sentence.

One of the reasons the employers pay most of the benefits and not the government is that almost all businesses that pay into the lobby funds don't want the government to take over HC and other aspects of employee costs because as much as many dislike having to offer or pay those costs they don't want to give up the control that having a lot of bargaining power gone when hiring and promoting employees. The recent passage of the ACA further shows that today. I realize that most lower level employees or entry level and part time rarely have those benefits provided even partially. People would rather complain about the high cost of labor and perks then pay the taxes that would probably be needed to have many of those benefits provided through some form of state and or federal government. Our SIL owns a mechanical contracting business with 60-85 employees depending upon the projects at the time. He does not want to give up the option of being able to negotiate wages, perks, etc. as he uses those to find and keep skilled workers, engineers, CAD staff etc. Yes I followed the total cost of employees and in most cases the percent of non wage costs were much larger for the lower end workers and thus finding ways to not pay those costs and deal with more turnover was more economical and this gives more resources to work with the higher skilled employees.
One of the real surprises many business owners get when they sell their business is all the depreciation claimed on equipment and depreciable property is due in recapture of depreciation in the year of sale even if the business and facilities are sold over time. I helped a lot of business owners do an equipment plan if they developed a plan which saved them a lot of taxes if they were willing to develop a plan and follow it.

Bryce

Federal income tax probably will not be lowered but there are a lot of long term benefits for paying wages to family members, like starting the quarterly SSI earnings, having them manage income, plus any 401 k monies paid in are deductible to the business. Also HC can be put into a spouses name and can be deducted directly by the business.

Bryce

The benefits that I've seen so far have outweighed the negatives. My CPA is ambitious she's talking of trying to get my taxes down to 12-13%. I've historically paid around 18% and I've been holding back at least 25%. I find some of the write offs quite interesting. I need a computer to work every day, and a brand new lap top is 100% able to be written off. I've considered renting a room to myself in my house as my office as I do have to do some book keeping regarding the business. I'm just touching the surface of everything and I am sure as I go on I will find other options. All up front and not illegal, just using the tax laws to my benefit. I haven't even dove into the family members as employees etc. although she had mentioned it. The time I've been at home with my kids has definitely been the ultimate reward of not letting an organization dictate my life.

Paul, I'm wondering if the local city employees are correctly informed or if your state is different than Indiana. My company carries workman's comp..... If I had no employees, I would send down state and apply for a waiver. I am 100 % sure of this .

The city is aware of the state regs saying it's not required of businesses with 3 employees or less, but they want the extra insurance. They're paying for it, but its this danged audit that's eating up so much of my time, and it's really irritating me. They keep moving the goal posts.

No, the reason businesses end up paying all the benefits that benefit the employee and not the employer is cause it was easier for daddy sugar bucks (Gov't) to pass all the laws/benefits when someone else has to pay for them.
There is another person who could pay and logical should pay for workman's comp, the employers 1/2 of SS and other costs. That is the employee. I'll bet if you asked a majority of employers would gladly have someone else deal with all the benefits.
Why should the employer pay for the employees benefits? if the employee wants workman's comp, health Ins and what ever else why doesn't he pay for them? They are no benefit to the employer, the guy who pays for them.

I'll remind you that health Ins was started as a benefit during WWII as a way to offer more to employees when wages were frozen by the Gov't. Again the gov't is at the root of our problems.

In a perfect world a employer should only pay a wage to his employee for his labor, nothing more, nothing less. An employee should be able to get and pay for workman's comp, unemployment ins, health ins and ss if he wants. If he wants to roll the dice he should be free to. When one is young it would beneficial to pass on all the benefits and get a big nest egg faster to allow one to get a home, family and other things that benefit society as a whole. then when older buy the ins and benefits.

Lets also admit how lousy our Gov't does at everything it does. An individual would be well ahead just investing money in the market vs paying into SS.

If you think the UE is high now just quit providing HC insurance and see what happens. If the private sector would really get behind moving HC to the government level it would have happened decades ago. To me it would make more sense for an employer to say instead of paying say $25 per hour and providing %10 plus worth of benefits he could pay $33 per hour and the employee could buy their own benefits, but that is not happening in many places where the employees make enough in wages to even consider buying their own benefits. I know one person who is a professional engineer that is doing that and both he and the firm like the way things are working. Not all the other staff persons are paid in the same way.

Bryce

My son is a commercial building contractor in a fairly large family business. Whenever he bids on a job at a Native American reservation, when the bids are opened, any native American whose bid is within a certain percentage of the low bid, gets to see the low bid and change their bid. If my son wins the bid, he must employ some Native American sub contractors (and do their paperwork for them).

It's really fun to claim zero and single all year and still have to pay in and if it's a really good year make quarterly payments or get fined.

I should have had more kids lol.

If you’re not making quarterly payments, that’s not good.

Our local hospitals fired all the nurses and dr.s who didn’t get the covid vaccine. Now they’re all “full” a self inflicted problem.