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Kitagrl

Tithing--Self Employed

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Okay for several years now I've been selling cakes "under the table". In a few weeks I should be "legal" and ready to be selling them "for real" now. Which means record keeping (at least better that before) has to start. Before, I'd sell a cake and every few cakes, I'd chunk some money in the offering.

Now though I need to keep more careful records of profit/loss, including any expenses like gas or legal fees or whatever.

So now I can't decide how to tithe...do I tithe off my profit for a single cake, or should I go maybe a month at a time and tithe off my total profit after all expenses have been figured? (BTW for taxes we will just be waiting till the end of the year...after expenses are deducted, my taxes won't be enough to worry about, it will probably just reduce our refund).

Ideas? And please no debate on tithing, replies only from people who believe on tithing income. Thanks.

BTW I'm leaning towards tithing monthly on total profit, just wanted to make sure this is not wrong thinking, because say I buy a mixer or pay insurance for my business and my cakes cover that and other expenses, my net profit would be zero and thus no tithe that month???

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I would go with the monthly tithe.

If you have no gain during a month because of expenses, God knows this too. God is most concerned about our heart in giving. If there is no gain, there is nothing to tithe from.

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Do which ever you like. My opinion is that we should tithe on "increase" which would be net profit not gross. Still, I don't want to feel I am looking for deductions like it was a tax or something, so I only count consumables and think it is best to round it up to some figure higher than I "figured" it to be. That is just me personally though.

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What I have believed and heard explained about tithing, was that the tithing on the increase was off the gross amount - ie. the amount made altogether before deductions. I do not know how to apply this to self employment - but as far as regular employment goes, we should tithe off what we make, not what we take home. Why should the government get their portion first, and then we give God a percentage of the rest? It should be a percentage of the total.

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Speaking from someone who has to tithe on self employment, I really really really wanted it to be net, but ended up going with gross.

God wants the first fruits. That means when I get a check, 10% of it is tithe. Doesn't matter what expences, I figure if God wants me to make money, I'll make it, and if my "tithe" makes me lose money, either I'm not charging enough or God wants it that way.

Also, look at it this way: If you buy a mixer for say, 100dollars, and you take that off your gross, and tithe on your net, and so your tithe is now 10 dollars smaller... What you have is an increase on a mixer, but you didn't tithe on it. Do you figure one day you'll sell the mixer, and tithe on the money at that point? It's increase be it cash or object. Now, you may be seperating the buisness, and yourself, but then you have to realize your "buisness" is not tithing.

I'd put some prayer into it, I had too. God wants you to give happily, so I mainly had to pray to get to the point I could be happy doing it. It's increased my blessings tremendously.

(on a side note, I'd check into the tax laws (a quick free phone call to a tax agent) because if you plan on paying taxes only once a year, but you make enough and they want it quarterly, and you might end up with fines, penalties, and interest. :( happened to me :(

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My husband is fairly up on taxes and told me filing self employment once a year is okay...

Okay I could see that I should tithe on the mixer amount...that one was probably stretching it.

I definitely do not tithe on my "per-cake" expenses...for instance if it costs $50 to make a cake and I get $200 for the cake, then I am only tithing on $150. My main question was whether or not I should take out all business expenses before tithing or not.

BTW Jerry my dad always tithed on gross but then not on tax returns.... we personally tithe on net and then tithe on tax returns. Works out the same I think.

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BTW Jerry my dad always tithed on gross but then not on tax returns.... we personally tithe on net and then tithe on tax returns. Works out the same I think.


No, it wouldn't - because you do not get the same amount back that you had taken off in the first place.

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I believe that you are free to give toward Christian work within any way that allows you to feel comfortable in doing it. If a specific percent of your profits allow you a comfortable way to give to Christian work, that can be an option. A tithe may be helpful for you to stay within a consistency, if that is your preference. It can be any percent so you make the call. :2cents

Love,
Madeline

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I believe that you are free to give toward Christian work within any way that allows you to feel comfortable in doing it. If a specific percent of your profits allow you a comfortable way to give to Christian work, that can be an option. A tithe may be helpful for you to stay within a consistency, if that is your preference. It can be any percent so you make the call. :2cents

Love,
Madeline


Well, I don't really agree with that, but thanks. :smile

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Also, look at it this way: If you buy a mixer for say, 100dollars, and you take that off your gross, and tithe on your net, and so your tithe is now 10 dollars smaller... What you have is an increase on a mixer, but you didn't tithe on it.


Right, that is why I said consumables. For tax purposes the mixer you mention doesn't count, but it is still "increase". On the other hand in a business if you tithe the gross in some instances it could exceed profits meaning you would be losing money. If someone chooses to tithe gross in their business good for them, nothing wrong with it, but I don't think it is exactly what the Lord had in mind. Still though, as Jerry mentioned if you are an employee practically speaking this doesn't apply.

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Well, the bible does say increase, so if you as your example spent $50.00 on the cake.. the flour, the eggs.. ect.. and got $200.00, and tithed on $150.00... you could make an argument that the 50 increased to 200, thus the increase was $150.00...

I know people who do this.

Or, you could say that you "planted" your $50.00 and God blessed you with $200.00, your increase is $200.00 because the 50 has to be gone before the 200 arrives. More of a faith living God owns everything type.

I don't dare get critical on either. All I can say is pray about it. If you in prayer feel you're right with God on the former, so be it. If you feel God is leading you to the latter, so be it. The only trouble you'll get into is if you do either the former or the latter, when God wants you to do the other.

As to taxes, some lower income families do recieve back more then they even paid in. I myself, when I do recieve a tax return, do not tithe on it because I tithe on gross paycheck, and tax returns do not come with interest so there is no increase. I do know people though that get back more then they paid in, and there is no way to justify not tithing on the increase. If you pay in 4000, and get 6000 back, you need to tithe on the 2000 difference.

I had to keep better books then I've ever done cuz of tithe... I get lots of free stuff from so many people, I find myself tithing a ton some weeks, and in some cases I have to turn down a gift just because the tithe. I stopped that though, learned never to say no to a gift, some people get really insulted.

Go with God, you should know this. net, gross, reason with God about it, He does say you can do that in the bible. Being right with him is much more importaint then some change here and there.

You'll make the right call I"m sure, and if you mess up, God will make it clear pretty fast so you can go the other way.

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Work Order
I've been in business for 14 years it is my sole income.
I manufacture custom goods for my clients. Because the work is custom and the end products can only be used by the specific client, I am paid 50% up front before work starts. After the deposit changes hands, the prospect not only becomes my client, they are now my employer....my boss. One of my first tasks as their newly hired employee, is to act on their behalf as a "purchasing agent".

Purchasing Agent
Say the client gives me $2000 to begin a project. I haven't yet worked for it, so it is not mine. But after swiping their credit card, or when their check clears, the money is now in my account. I now proceed to use THEIR money to purchase the materials and consumables for the project. A typical job requires approximately 30% materials out of the total selling price. After purchasing the materials, I now have about $800 left from the $2000. The materials now belong to the client. I never owned them.

Manufacture
I now take THEIR materials and proceed to manufacture the end product. In the process of creating their project, I must also use unreal amounts of consumables. I have to use MY property.,,,overhead

Overhead
To run my business, I must have insurance, electricity, office supplies, telephone, fax, internet, and many other things to produce the product. I must also purchase and maintain equipment.

Profit
Profit is the money which is left after all the bills are paid. The business cannot grow without it. If you are only making enough money to pay your normal household bills and are living from hand to mouth and keeping the business afoat, your are NOT making "profit". "profit" pays for upgrading equipment, expanding floor space etc. IMPROVEMENTS to the business....If your business is able to grow and you are able to put some money into a nest egg, THAT, is increase.

Having said all that....when you take the customer's $200 for the cake, and purchase THEIR materials , you are their employee and purchasing agent.....you only made $150 above materials. The whole $200 was never yours. BUT...if that was your very first cake, and the same day you went and bought a nice mixer for $150, you still have not made a penny yet. When your mixer burns up and you have to buy another one....

Pay tithes on the gross profit...what is left over after materials. You are only buying the materials FOR the client.

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That's kind of how I'm looking at it, I think...

For instance I'm getting "legal"...just paid $50 for zoning and will be paying another $35 for an inspection, and then will have to fork out $500 for a year of insurance. So until I make at least that much "profit" in cakes, I'm not even coming out even for the year yet...right? Meaning no tithe yet...right?

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Speaking as if I was a pro10%er,

I think the mixer is a bit of a stretch. What value does the mixer have besides making cakes? Will not the mixer depreciate over the lifespan of the mixer. The mixer is an asset of 'the company'. The mixer is a tool used to make money. That money is the money you are tithing off of. If you sold the company after 5 years, and the mixer went with it, then you would tithe off of the increase to you personally. (not to mention the depreciation factors of the mixer)

Its ultimately up to you and God. When its the "increase" I think that means to you personally. If you took out a 100,000 loan to open a cake storefront and buy all your ovens, would you then tithe on the new ovens? No. Because they are tools to make money... the money you are getting, and tithing off of.

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Maybe no t until you've gotten off the ground, paid for the equipment expenses. That's your call.
I tithe weekly, but do my books at the end of the year. After I see what the profit/loss is for that year, I adjust it accordingly.

But I don't tithe on utilities or the customer's materials/consumables.

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My hubby has been self-employed for many years, and I was also for a while. I babysat, and he delivers. We had and have a lot of expenses (gas, vehicle repairs ($$$!); housing costs, since I babysat). I have to say that we tithe on our gross, not our net. We believe that we should tithe on all of what we receive, even if there will be money going out for whatever expenses we have. We will be starting a business soon, and will most likely continue that process. As qwerty said, the real thing is to pray about it, and in your case talk to your hubby. I'm sure God will show you what you should do.

As far as taxes are concerned, federally a self-employed person is supposed to file quarterly. If you don't, you can (and most likely will) be fined. We pay once a year, but we pay in advance, with our refund. We find it's easier to get it out of the way - and in some cases, the next year's refund has been larger because we didn't owe when we paid (does that make sense?). State taxes in IN are to be filed quarterly also - don't know if your state is different. But I would suggest you look into it. It would most likely be a bit different for a business than for a minister.

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I'll have my husband look into the taxes.

I do already have most of my equipment, I was just using those as illustrations. The only main expenses right now are "legal", "insurance", and then just regular gas, supplies, etc for each cake.

I do not know if I agree with "gross" or not. For instance last year I had a huge cake order from a corporation. They paid me $1000. (BTW I did tithe off of it, just using this as an example). However I think the cakes, gas, and misc expenses were right around $200 out of pocket, possibly a bit more. And, if I paid taxes out of that, it would be even slightly more. So lets just say my net profit was $750. So that would be $100 tithe off gross, or $75 tithe off net. The thing about tithing off the gross is that I would be tithing off supplies I had to actually buy for the order that I would not have bought for any other reason. As heartstrings said...it was "their property", not mine."

As an extreme for instance, say I undercharged a $50 order (or did as a favor). And say it costed me $40 to make, so my net was only $10. Other than the obvious need of raising my prices, LOL, to tithe off the gross would mean to tithe 50% of my net profit.

And thanks Dwayner for keeping it to the 10%ile, that helps alot for this discussion. :wink

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BTW I do realize its something each person has to decide for themselves, and my husband and I pretty much already know how we are doing it in light of our other giving and finances...however I thought you all might have other insight I had not thought of, plus its an interesting discussion I don't think we've had before.

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no problem...

In your example, I would pay $80 tithe... In other words, tithe off of the amount after the $200 expenses but before taxes (because in theory, taxes provide services... )


True.

I asked my husband about the yearly tax thing and he is almost sure that since I will only be filing self employment (not registering as an official business right now, although will be licensed and insured) that I can do that yearly. We had a lady cleaning the church that at one time was filing self employed and did so yearly. We will probably look it up to be sure but...anyway if that is the case, the monthly tithing will work fine because it will disregard any taxes.

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My hubby has been self-employed for many years, and I was also for a while. I babysat, and he delivers. We had and have a lot of expenses (gas, vehicle repairs ($$$!); housing costs, since I babysat). I have to say that we tithe on our gross, not our net. We believe that we should tithe on all of what we receive, even if there will be money going out for whatever expenses we have. We will be starting a business soon, and will most likely continue that process. As qwerty said, the real thing is to pray about it, and in your case talk to your hubby. I'm sure God will show you what you should do.

As far as taxes are concerned, federally a self-employed person is supposed to file quarterly. If you don't, you can (and most likely will) be fined. We pay once a year, but we pay in advance, with our refund. We find it's easier to get it out of the way - and in some cases, the next year's refund has been larger because we didn't owe when we paid (does that make sense?). State taxes in IN are to be filed quarterly also - don't know if your state is different. But I would suggest you look into it. It would most likely be a bit different for a business than for a minister.


You only have to file income tax quarterly if you are a incorporated. If you are a sole proprietor, in my case, only yearly.
In Florida, we have to file sales tax depending gross sales. Smaller business can get by quarterly. We have to do our sales tax monthly.

Let me give you an example of tithing on the gross....
Most of the stuff we sell, is manufactured by us, but sometimes we outsource. We sold one unit to a client for $5000. This item cost us $3600. ....We took the client's money and purchased his product for him. So instead of tithes being $140 on the gross profit, by what you are saying they should be $500. That's tithing 35.7%. We made $1400 bucks and paid our gas, insurance, electrity and phone bill, out of that. We did not have a $5000 increase; we simply bought the client's goods for him using his money. the $3600 was never ours.....

To put that in another perspective...
Suppose you had ten(10) such $5000 sales a year with a gross profit of $1400 each and that was all the sales you made for the year. With me?
If you tithe $500 off each sale, you had $50,000 in annual sales, so your tithes for the year come to $5000.
Was your total income for the year $50,000? Nope
You actually grossed $14000 for the year, tithed $5000, and have $9000 to live on for the year...out of which you take business expenses.....what happened to the 50,000?
You tithed on $36,000 of it which was never yours to begin with.

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My husband is fairly up on taxes and told me filing self employment once a year is okay...

Okay I could see that I should tithe on the mixer amount...that one was probably stretching it.

I definitely do not tithe on my "per-cake" expenses...for instance if it costs $50 to make a cake and I get $200 for the cake, then I am only tithing on $150. My main question was whether or not I should take out all business expenses before tithing or not.

BTW Jerry my dad always tithed on gross but then not on tax returns.... we personally tithe on net and then tithe on tax returns. Works out the same I think.


I would double check to be sure about that, because we filed as self-employed when I was teaching and it was required quarterly.

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I would double check to be sure about that, because we filed as self-employed when I was teaching and it was required quarterly.

Depends on the state, but in NJ, I had to do monthly sales tax returns even if it was small.

wrt the bolded part: That would not be the same. Lets assume you make $50,000/year and pay throughout the year $10,000 to the government. You would have tithed on 40,000. Then you get a $3,000 rebate, and tithe on that. You have tithed on $43,000, but you earned $50,000. The other 7k you paid in taxes to the government to provide you certain services (just like you pay the car mechanic... but it happens automatically). From a tithing POV, you should really tithe on the $50,000 up front and not tithe on the tax return.

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