A reader writes:
Not sure if you have something planned for tax day, but thought you’d like a little perspective from the private sector. If you do use it, please hold back our names – a few of my clients are liberals!
The joys of being a small business owner in Obama’s America.
We are sole proprietors, therefore our business taxes are part of our personal return.
We have a great business doing what we love and clients that we feel good working for – not everyone gets to say that. Like most businesses over the last 4 years, we’ve held a very tight line
on expenses and then cut some more.
The toughest thing we did was layoff our 5 full time employees, working more hours ourselves and bridging the gap with occasional freelancers. The decision was painful, but necessary once we evaluated the impact of Obamacare and rising costs of doing business.
Since our services fall under discretionary expenses for other companies, we’ve seen about a 20% decline. They’re making due on a tighter budget as well as recycling as much as possible. On the other hand, we’ve seen certain expenses including utilities, fuel for company vehicles, supplies (computer hard drives, mother boards and such) and our local taxes skyrocket even when we’re using less of them. A good example is our fuel expenses – we’ve cut our mileage to 1/20th of 6 years ago, but our cost has doubled. We used to eat lunch “out” 2 or 3 days a week – now it’s 100% brown bagging.
We count ourselves fortunate. We pay our mortgage and give to charity. We are able to make time to spend with our kids and our parents. Three of our four children are full-time college students at a modestly priced state University (number four will join them next fall). We pay 100% of their tuition, books and housing, they cover their food and utilities.
Because of our business income they don’t qualify for financial aid, therefore they all hold part time jobs on top of all the babysitting and yard work they can pick up. Ironically, the University routinely offers them thousands of dollars in “loans” every semester that they turn down. They understand that it’s better to potentially miss a semester than go into debt.
Likewise, I roll my eyes every time Obama gives a speech about making loans available to businesses – that’s a very bad business plan in a weak economy.
I spend a full day every month and 2 weeks every year balancing and verifying that our books are complete and accurate, then deliver them to the very expensive accountant to prepare our tax return.
Even with less income this year we still hit the Alternative Minimum Tax…. therefore, all the careful tracking and scanning of expense receipts for our business and the much touted Tuition Credits get tossed in the garbage. We get hit with a 33% effective tax rate on an income of $350K.
But we were excited that we owed $16,000 less than our in-house estimate. It puts things in perspective to realize that our tax bill will only pay for operating Air Force One for less than half an hour. Or another way to look at it, is that just cutting our tax bill in half would allow us to hire back 2 entry level employees or 1 very experienced salesman.
And – I might mention – that other than feeling like we have too much government in our lives and that our taxes are being wasted by profligate government welfare – like most conservatives, we’re pretty darned happy.