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Realistic Revenue/Profit Goals

Sure, but it sounds like the OP is starting a job shop. Life is a lot easier when you're being fed gravy work from former colleagues than trying to win low bid jobs from new customers.
Yes maybe but he's making it work.
 
24 is too young to go out on your own in this industry.
I did exactly that but can't say I recommend it :)

Really depends on the person and circumstances a lot but agree with you that job shopping is a hard row to hoe. Some products of your own gives you a lot more room for profit. Also if I wuz to make a recommendation it would be to choose a niche. Don't try to compete with established companies on plain ol' mill work or lathe work, it'll kill you. Pick an area where the hourly is higher and the competition is lower and specialized knowledge has some value.

But that's just common sense. Too bad I didn't have any.

I know what I would do at this moment but everyone will just yell at me so I'll shut up :)
 
I did exactly that but can't say I recommend it :)

Really depends on the person and circumstances a lot but agree with you that job shopping is a hard row to hoe. Some products of your own gives you a lot more room for profit. Also if I wuz to make a recommendation it would be to choose a niche. Don't try to compete with established companies on plain ol' mill work or lathe work, it'll kill you. Pick an area where the hourly is higher and the competition is lower and specialized knowledge has some value.

But that's just common sense. Too bad I didn't have any.

I know what I would do at this moment but everyone will just yell at me so I'll shut up :)
If I had my time over I would have learnt Mandarin and gone to China to work in manufacturing where it is still done on a large scale. It's probably too late now because they have gone from being the student to the master with regards to high tech manufacturing.
 
If someone is making good money,its time to look at tax minimization..every kind of tax .
100% - If you plan on selling the business, I can see value in showing higher profits.

I don't focus on profit for my business, come end of November I take a look at my books and see where I am at and start investing by maxing out any employer contributed investments, one in particular my SEP IRA, I like the SEP IRA option because as a business you can contribute up to 25% of your compensation, buy needed equipment utilizing Section 179, last two years in a row I bought two machines.

You can also pay your children up to $12k/year tax free. If you have kids, this is something you should really look into.

Minimize tax liability by re investing in your business and/or your personal wealth.
 
100% - If you plan on selling the business, I can see value in showing higher profits.

I don't focus on profit for my business, come end of November I take a look at my books and see where I am at and start investing by maxing out any employer contributed investments, one in particular my SEP IRA, I like the SEP IRA option because as a business you can contribute up to 25% of your compensation, buy needed equipment utilizing Section 179, last two years in a row I bought two machines.

You can also pay your children up to $12k/year tax free. If you have kids, this is something you should really look into.

Minimize tax liability by re investing in your business and/or your personal wealth.
Very good post...and if I may add...assuming you already have a competent accountant, copy the "Marvel" post, show it to your numbers guy, and ask him if it is a fit for your situation.
 
Very good post...and if I may add...assuming you already have a competent accountant, copy the "Marvel" post, show it to your numbers guy, and ask him if it is a fit for your situation.
Yes, great advice, always ask your accountant.

Everyone's business and personal financial situation is different and what may work for some may not work for all. This is why come November I take a look at my numbers and have a conversation with my accountant with where things are at and entertain any and all end of year options from a financial standpoint.
 
How does that work?
I would say check with your states labor laws first, but here in MN as a sole owner of a company their is no age restriction to hiring your own child/children.

But the IRS allows you to pay them, reasonable wage, up to $12k per year tax free.

Quick Google search: How much can I pay my child to work for my business 2022 IRS? As long as they're doing legitimate work for your business, you can hire your child tax free and pay each of them up to $12,000 per year tax-free. It's true. And all of this while they earn a little money AND start saving for college or that first business.
 
Can't you give your children ten grand a year tax free also ? Seems to me I remember something like that from estate planning columns.

I suppose you could do both ?
Yea but I think the difference is on that, you or your business wouldn't minimize your tax liability, whereas paying your child through payroll, your business gets the wage deduction and your child doesn't pay taxes.
 
Thanks for all the replies! Going back and reading through in depth. These perspectives are super helpful.
Just to throw out some numbers for context...

I'm towards the end of the 2nd year in business, did this on the side for about a year (first at a job shop, then later as a drafter at the firm from which I now rent shop space). The drafting job is super flexible on hours so I never had to make a "leap", and I still do 10 hrs/week unless the shop gets slammed, which is kind of the MO now. So if/when sales dip I have up to 40 hours of "steady" income that I can return to but I haven't done more than 20 hrs for them in a week since December.
I figured I'm too young (but I'm also impatient lolol) so that's why I went the no-debt route, and have a parachute to do drafting if I need to. And plenty of local contacts so if I need to need to I can go get a job working for someone else. I expect to make (and have made) expensive mistakes but no debt rule keeps the pain high enough to learn those lessons without ruining our lives financially.

For numbers: gross revenue this year to date has been a little over $80k, with a net profit margin of 59%. Last year was only moonlighting, essentially went full time starting in late December '22.
 
Sure, but it sounds like the OP is starting a job shop. Life is a lot easier when you're being fed gravy work from former colleagues than trying to win low bid jobs from new customers.
Haha yeah that was ...fun, to start. Better relationships now but I definitely started by underbidding everyone at like $50/hr. It worked ok since I had such tiny costs to start with, my first few months were about $35/hr profit. Lots of overnighters and sleeping in the shop cause the better profit for me was the 2-3 day turnaround stuff. Sure beat the $21/hr I was making at the time at the established shop though.
 
Haha yeah that was ...fun, to start. Better relationships now but I definitely started by underbidding everyone at like $50/hr. It worked ok since I had such tiny costs to start with, my first few months were about $35/hr profit. Lots of overnighters and sleeping in the shop cause the better profit for me was the 2-3 day turnaround stuff. Sure beat the $21/hr I was making at the time at the established shop though.


Accountant, and deductions. keep as much of that money as you can instead of paying taxes on it, whether it be in tools and equipment, you can use to grow your business, or in investments for retirement.
 
Accountant, and deductions. keep as much of that money as you can instead of paying taxes on it, whether it be in tools and equipment, you can use to grow your business, or in investments for retirement.
What he said. You're allowed to show a legit loss during two out of five years. If you're a sole proprietorship, your taxable income from your "day job" counts as part of that. Take five year depreciation on your machines. Depending on what you spent on your machines, you'll likely end up paying zero income tax for two years. Tooling is often depreciated the year you bought it. Same, same.
 
100% - If you plan on selling the business, I can see value in showing higher profits.

I don't focus on profit for my business, come end of November I take a look at my books and see where I am at and start investing by maxing out any employer contributed investments, one in particular my SEP IRA, I like the SEP IRA option because as a business you can contribute up to 25% of your compensation, buy needed equipment utilizing Section 179, last two years in a row I bought two machines.

You can also pay your children up to $12k/year tax free. If you have kids, this is something you should really look into.

Minimize tax liability by re investing in your business and/or your personal wealth.

This should be read carefully by everyone interested in this thread. If you’re Canadian, forget it. Canada is a shit hole that hates small business and has none of the opportunity of the US of A.

There are specific types of scams you can run here though. Have a half-baked idea that you can bullshit your way through? Apply for scientific grants, Innovation Canada funding and government innovation grants. Cook the books, make it look like a legitimate business then sell the assets (all tax payer funded) for a tidy profit. Rinse, repeat. The entire region of Waterloo, Ontario is based on this.
 
This should be read carefully by everyone interested in this thread. If you’re Canadian, forget it. Canada is a shit hole that hates small business and has none of the opportunity of the US of A.

Trudeau definitely hates us, what did they call us small business owners? tax cheats? All while hiding his money in trust funds, foundations and offshore accounts.

But we still need to do our best to keep every single penny we can by keeping it out of the profit column.
 
Trudeau definitely hates us, what did they call us small business owners? tax cheats? All while hiding his money in trust funds, foundations and offshore accounts.

But we still need to do our best to keep every single penny we can by keeping it out of the profit column.

Another Canadian guy on this forum, SND, said “You need to find an accountant that understands taxation is theft.” Paraphrased, but close. When I read that years ago I thought “Ha, yeah okay.”

Now I’m certain he’s correct.
 








 
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