Again, Xard, you arguing about tax but do not acknowledge the fundamentals of a business, which is the balance sheet i.e. income and expenses. Thus arguing about Amazon would be paying tax on their massive cache of goods is wrong. It only represents a value (in monetary terms) as part of the whole business. They may or may not make a profit on the sale. Tax will have to be paid when the balance sheet of their total business shows such and not a sale in particular.RplusT wrote: Fri Aug 26, 2022 11:19 am If the owner of the small business has let's say for talking sake $100'000 in profits then they now owe say 30% ($30'000) to the taxman.
Now, the owner can legally reinvest ALL of the working capital $100'000 back into the company by way of purchasing stock in bulk say from a manufacturer instead of their usual wholesaler, and obtain better discounts along the way. In doing so they now show zero profits and are liable for 30% of those zero profits (which is now $0 dollars).
Oh, no,no,no.....It does not work that way.
1) If you talk about profits, it's the year end (tax period) balance sheet that may show some. If that for example shows 100,000 profit, you got to pay tax on that. During the course of the year (tax period) there is no such thing as profits to talk about, just cash flow. You may do with that what you want.
2) Purchasing products to keep on stock does not reduce your profits. How come! That's not how accounting works.
It's expenses that reduce profits. Something that you mention later.....
".....brand new works van, obtain a storage facility for excess stock, lease another retail outlet or open more cloud outlets, a condo for your mistress who happens to be the company's tax consultant, open more stores.....
Ask Trump, he knows about creating a network of expenses to reduce his tax liability.....
XARD: If that was the case then Amazon would be paying 30 Billion dollars every year from the massive cache of goods held for same-day delivery service and Warren Buffet would be paying the same for the massive cache of shares held over the past 50 years. Instead, they only pay tax (albeit a reduced amount) when they sell said goods and shares without purchasing any more goods and shares. If they seel their wares and leave it as cash on hand then they will have tp pay tax on said cash
The same applies to Buffet. If the balance sheet of his total business shows a profit, he will pay tax, not on the sale of some shares.
