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originally posted by: LDragonFire
a reply to: TruMcCarthy
Well if my questions offend you all so much. By all means don't answer them.
Do continue your one sided discussion.
At the end of 2015, we placed a major purchase order for inventory of our products. If you sell physical products in your business, the government does not allow you to write it off until it is sold, because it considers that purchase to be an asset, rather than an expense.
As a result, we drained the bank account to pay off the inventory, and then were hit with a larger than expected tax bill. In other words, the business was fully invested in inventory and people, and then we had to pay tax on money that was not yet earned.
This “reverse loophole” hurts a lot of businesses. Some are faced with the decision to either keep their business funded or pay their taxes on time. Doing both is often impossible. In our case, it meant that I owed the government an additional $170,000 on my already large tax bill, and it came funded out of my personal account.
The question that comes most immediately to mind is one of opportunity cost: What could a business person do with an additional $170,000? Ideally, I would like to hire more people and grow my business. That amount of money could allow me to hire three people at $55,000 per year (not including their payroll tax, of course). However, instead of going to the salaries of three qualified people who could help my business advance and start to build a future for themselves, it is going to the government. Where it goes from there is, of course, up for debate. It’s unlikely, though, that three people will get employment because of that contribution to federal coffers. Instead, it will be used to fight needless wars, fund more bureaucracy, and feed bloated entitlement programs.