Money Question

I hope this is the right place for this.

What do you guys think a fair wage is for a succsessful CNC Machine shop owner operator?

I know this is a loaded question but I would just like to know what you guys think is average across the country.

Basicly I'm looking for realistic ideas of what the shop owners think they should be making to be happy.

If you dont want to post your ansers in this thread please pm me.

Thanks for the ansers in advance.

I used to have a shop and there are several things IMO you should do
1st have your personal vehicle in the companies name for tax break
2nd use a room in your house for paperwork then wright that off
3rd If you have children of working age have them come in part time (up to $5,000 each) this is good for you and them since that is non taxable, plus its a good experiance for your children.
4th use credit cards for gas, outings, and office supplise,

after all this you should be able to live on about 30-50% of what the census for your area is claiming poverty level. the less you pay yourself the less you give them...

use the tax savings to upgrade your shop with new equipment. and enjoy a night out on occasion (with customers of course).

Let your spouse pic up some slack and have her make a delivery or two then wright her vehicle off as well. this is of course your company is making a profit. but the big picture is not to show a profit.

I think i payed myself around $300.00 week and lived ok. Tennessee has free health insurance as long as you make less than 38k per year so that was a nice perk in itself.

check your local tax laws befor trying any off this since its just borderline from getting you a visit from the IRS monkeys.

It all depends on what you want and what your goals are. Do you want to make a million dollars a year, and accept everything that goes with that? Or do you want to just work out of your garage and make a nice living?

In da HillBilly Hills or is that the Billy and Hilly hills

I agree with g-coder05. I don't have any assets. I drive a 16 year old car. Couldn't find two nickels in my pocket to start a fire with, wear old worn out shoes, cut my hair once every two years or so. The company owns everything except my dawg and guns. I got a Ferrari in the garage that the company owns (VMC), a jug of K1 kerosene for da heater. I gotta few thousand dollars worth of metal locked up. I got signs posted that say 'Unauthorized entry by anyone without express permission may cause you to leak vital body fluids, you have been warned. Please call this number prior to entry____________. Anyone found stealing property that is not theirs will be found lying still in the morning. We will not call the police, fire rescue, or your momma."

We live a simple life in the country and the code and regulations are different. Hell the revenuers don't bother comin around anymore. Tax collector was around last year and asked if I owned anything or made improvements. I spit some tobaccy juice out and said no Ms. and she was happy to git back in her truck and leave. Come to think of it she was in a bit of a hurry.

g-coder05 was right - git yourself a good (real good) tax feller ta get ya setup. Remember it is good for the company to own everything, you only need pocket change. I think it might be nice for the company to buy me a Rolex to celebrate our good fortune, I can keep it in da bank vault except for Sunday go ta meetin at Church so them uppity town folk don't think us stupid country folk are stone poor (it looks good with my Carhart overalls).

Around here ya never know that the guy sittin next ta ya eatin a samwich at the Dog Den fish bait and huntin supply store gots a few million in da bank and rode to the store on a paid fur John Deere that cost 140K or a Ford F450 diesel. Nope never know by the way they is dressed or cun type on a computer.

Pay yourself small, live big and keep a low profile. They can't take whats paid for neider.

Frank S. in West by God Tennessee

Where the men are men and the women can shoot the ticks off a coon dog at 50 paces. We are so blessed to have good lookin women UPS drivers.

I got a Ferrari in the garage that the company owns

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Hey we have an actual Ferrari that the company owns also, just picked it up two weeks ago. Check it out, its pretty cool. $1200 bucks and it even runs.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&rd=1&item=330202631749&ssPageName=STRK:MEWN:IT&ih=014

If you own a company, you can get by on a lot less, and sometimes you have to. The company can pick up a lot and be a write off, its like an instant 30% discount on anything you buy. Go to lunch, talk about the shop, instant business meeting. Burn your brakes up hauling the company Ferrari home over the mountains, 30% discount on the nice warped rotors. Cell phones, you may use them for personal use, but most of my cell phone use is for business, so the company picks up the tab.

Want to do something really cool with a vehicle, and since you are in business , see if it can be marketable. R&D, and even if its not marketable, you just got a 30% discount on souping the businesses car up(that you get to drive since you own the company).

Right now we(me & my partner) are salaried at 30k, and its covering everything that 50k used to cover. Once I get the credit cards down I'll be able to live on a lot less. BTW, I bought machines on personal credit cards and got repaid from the company as a loan, plus interest, so mostly tax free(lived off of that for a while). Granted I have a big chunk of debt, but I have machines making money.

tzoll said:

Basicly I'm looking for realistic ideas of what the shop owners think they should be making to be happy.

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Well over 10 years ago I read an article in a magazine (I think it was Money, but I can't remember exactly) which asked people if they thought they were compensated enough for the job that they perform. From toilet cleaners to CEO's of Fortune 500 companies, every last one of them said they did not make enough money! This just points out that no matter what you make, you'll never be satisfied.

You need to make enough to cover the bills, pay into retirement, pay into the "rainy day" fund, college tuition for the kids, vacation funds, blah blah blah blah blah....................

Vehicles for the masses!

Bobw - that is so cool. Then again I knew that Ferrari and Lamborghini have sold into the agriculture world years ago. In Italy someone had to make the tractors.

I'm still waiting for my John Deere truck, in a strange twist I understand that Sterling and Dodge have a unique alliance. However with the price of diesel the truck may get parked for a while. Need one of those Chev's that burn E85 so I can brew some corn liquor for it. I see the country folk goin back to the roots of early existence to get by as things get tough.

Money is not always happiness. I keep in mind what my Banker said the other day. Keep your money close as those that has can buy anything they need at a good price in the future - or somethin like that. In other words stay liquid and keep a reserve. I believe in having cash on hand. Stashed away where it no ones business. I also never cash a check for more than 10K, as the bank is required to file with IRS who took that much money.

Hum, depends. One way to look at it is. Say you have 1million in equipment. How much is that million bringing back in % compared to if you just invested it and sat on your butt?

i would agree that 100K+ would be a good salary for the owner of a successful shop. my personal goal is 150+ and still have the shop own my cars, vacation homes, etc. i would like to get past the point of paying social security for the given year. seeing as how i just started my shop i would just like positive return on investment this year from my machinery.

It all depends on how big your successful cnc machine shop is.

I consider myself a successful (most of the time, anyway) 1.5 man cnc machine shop. I will make anywhere from $40k per year, up to maybe $100k in a good year. Everthing's paid for: land, buildings, machines, etc. And I live and operate tight. A friend once said I invented copper wire by stretching a penny...

Now, if you want to grow big and hire a bunch of machinists, obviously you can make more. I would think each additional man should put another $20-$25k on your salary. If not, then why bother with a bunch of aggravating employees???

Thank you all for your input. I agree and we practice most of what you guys have said.

My shop grossed 1.4 mil with a very good net year of 07 plus we paid off 2 more machines.
we have 6 employees including myself and my partner. The 4 employees are very well paid and do a fantastic job I feel very lucky for that.

this works out to $233,333 gross per employee. I have been told 100k to 200k is good.

We had been in business since 1946, we averaged around 15m per year the last 7 years befor the monkeys decided on this little thing called NAFTA and sent our customers over seas. if you look at the big picture with all the write offs i made well over 150k per year just not on paper. i enjoyed the companies 74' bluewater yacht where i spent my weekends along with the free beer and food "Mainly lobster flown in from Maine on thursay for Fridays outings" . also buying new cincinnatis every year and not costing nothing but the taxes i would have had to give uncle sugar anyway. I have offten wondered who was fitting the tax bill for my endevours. All those years of writing off items let us sell the company without paying capital gains. and now my family enjoys a peacefull retirement on the beach. The moral of my thoughts is "dont give the politicians money that there gonna give the drug dealers and theves to have a free place to live" I will admit this left me without a job but enough sevrance package ive enjoyed a few years off at 36 years old. ill go back to work soon though, it does get boring on the water after a while.....

"i enjoyed the companies 74' bluewater yacht where i spent my weekends along with the free beer and food"

Geez, and I feel bad when I use my company credit card to buy an egg mcmuffin for breakfast every once in a while.

$233k gross per employee is better than most companies out there. That's an awesome amount of sales per employee!

Most companies have at least $100k in sales per employee. The average among ALL companies is probably around $150k per employee.

Keep up the good work!

Paul, All i was getting at is take it from the government before they waist it on there 200' Bluewater or a night in paris in the name of " Public relations" I grant you theres not a politition that deserves more than minimum wage.

To clarify, I still am still going to have to work "eventualy" my family however put the money from the sale of business into several schwab acounts and some IRA's "when re-investing you dont pay capitol gains" there 401k tends to let them pay there bills. there where several items that where depreciated out that we (they) kept witch on occasion i do get to enjoy, yes. this all boils down to get a good tax lawyer and let him figure the best rout. the guys that pay themselves 100k + are gonna get to give alot back to the system for the politicians to spend how they please. personaly i dont care how much or who's getting what. i just made a suggetion based on what ive seen my family do with there business over the years. all in all i got screwd when they shut the door. but ive learned all good things come to an end and i can deal with that. the only thing i can say good that came from the deal is the house that was left to me from writing off the office space for years.

just to add take a look at mitty's post on this. he does the same thing. maybe the government doesnt figure us hillbillys can find the loop holes so they just leave us alone.

I believe I gotta agree with Doug. All this "advice" sounds like its coming from someone who hasn't ever had anything to do with the business end of a business, and fer damn sure hasn't ever had any dealings with the IRS.

For starters, deducting part of your household expenses and claiming office use is tantamount to asking the IRS to audit you and pick your ass apart with a fine tooth comb. Most knowledgable tax CPA's will tell you not to claim it even if it is legitimate unless you're using a great enough percentage of the square footage to make for a substantial deduction. Typical one room used as office isn't worth the aggravation of an audit that's almost guaranteed to happen.

Free machine tools every year bought with what would've otherwise been paid to Uncle Sam? How does that work? Until very recently, the limit on Sec 179 deductions was $17K. One expensive machine could put you up past the point where the 179 deduction begins to be reduced as total capital expenditures get larger, so, in what would be considered a large machine shop, there was typically no 179 deduction to speak of anyway. Machines just get depreciated like they always have, and the tax saving is never equal to the money spent, regardless of whether you're talking 179 expensing or ACRS depreciation.

Another minor point..... You cannot depreciate an asset and then claim the favorable tax treatment of long term gains when its later sold. You either hold it without expensing or depreciating, and claim long term gain on the profit when sold, if its held for more than a year. Or, you depreciate it and declare the sales amount above your basis in the asset as regular income. Can't have it both ways.

I know a feller who's making payments right now on $2.3 million that he owes the IRS, and he didn't try even half the tricks advocated here. On top of that, he's an attorney so the likelihood of him getting caught was far less than it would be for most of us, but they got him just the same.

Low pay for owners or officers of businesses doing a large dollar volume is another IRS audit flag. This makes them look at both the business return and the personal returns of the officers or owners, because the assumption is that non-business expenses are being paid and deducted by the business on behalf of the officers or owners, and that the individuals are intentionally understating their incomes as a result.

Honestly, I generally could care less what sort of hogwash anyone wants to spout here or elsewhere, but when someone starts giving tax avoidance advice that'll get someone audited and fined at best, and time in Federal prison if their luck ain't so great, its time to call the horseshit just what it is.

What part of "get a tax attourney before doing this" did you not understand? and you are correct this kind of string is about useless. none of us here are tax attourneys so what the hell are we talking about. i would rather spend my time discussing machine problems than who's making what.

Doug said:

I'm s little surprised by the comments of a couple of the posters about concentrating so much on write-offs. My philosophy has always been to concentrate on making money, the write-offs follow as lower priority. Besides, you can't really take advantage of the really great write-offs and tax avoidance schemes unless you have the income and assets to exercise them.

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Exactly, concentrate on making money. If the company pays the tab on the cell phone, which is used primarily for business, the savings are about half a good endmill a month or more, free money.

I do believe the expression is work smarter, not harder.