Tithing--Self Employed

[Anon]

Keep in mind I've been doing this "under the table" for a bit, as all decorators do, to at least get some income and see how much I can handle alongside the kids, etc. Although all of my last year's cake money was spent on necessities so am starting over. I do have an order this weekend and several other orders coming in so I should be caught up soon.

The big unknown here is that now that I"ll soon be legal, I can start attending bridal shows (which there is a HUGE one in Philly March 4 and a cake competition besides, so I am pushing to be legal by that time) and advertising to brides, which may or may not HUGELY grow my little home business. So since I have absolutely no clue how much I will/can make here, until I have a year of being "legal", then I'm not sure where to start as far as finances.

Guess I should go to HR Block but on their website their fees looked kinda high.

[heartstrings]

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.

Qwerty Guy, You missed a couple of things.
Please read the whole context.

Let me try to clarify.
50,000 in gross sales
1. Say qwerty guy sells product X to the customer for $5000
2. Over a year's time he sells 10 units of "product X"
3. That comes to $50,000 in Gross Sales for qwerty guy not so fast.

$36,000 Cost of Goods
1. The wholesale price of product X was $3600
2. Ten (10) units of X sold in the year comes to $36,000 paid for the product.
3. That is $36,000 that qwerty guy NEVER recieved...WHY?
4. Because qwerty guy took $3600 of the customer's money on Monday....then sent that money directly to the manufacturer of product X on Tuesday. Qwerty Guy simply bought the goods on behalf of the customer.


$14,000 in Gross PROFIT Didn't I say that already? Big difference in "gross sales" and gross profit.

How much did do in qwerty gross SALES? $50,000
How much did he have to send to the manufacturer for the product? $36,000
How much money did he make? $50,000 - $36,000 = $14,000 gross PROFIT
How much tithes must qwery guy pay on $50,000? .10 x $50,000 = $5,000
How much left after tithing on 50 grand ? $14,000 - $5000 = $9,000

Did I make it more clear?

[qwerty guy]

Yea, that answered where the 14000 or something or other came from heartstrings.
The only other thing that confused me is terminology. Gross is gross... everything written in black in the books is gross. Once you start subtracting red you use the term net. Just a termonology problem here.

Kitagrl, I would like to express that given your target customers, you are entering into a high yield area. Advertisting cost is rediculously small, overhead low, mark up very high. This of course, creates a cut throat buisness, but at the same time floods the industry with hacks. Don't skimp on flyiers, and don't be scared off about having to pay places to put your card there... wedding planners may want you to give em some cash, but by doing so you get great returns. I can explain all the ins and outs if you really want, but think "glossy graphic artist" on flyers lol. Seriously, a yellow page ad I took out once was 40 grad for a year... 500.00 in flyers isn't anything. Then again, size of buisness, time investment, ect... all factors in.

Sound buisness practices with even a basic plan can make you very profitable.

But I'm off topic.

Sorry for the confusion heartstrings lol, hope you understand how I just looked at the break down and was like HUH?

[Guest Guest]

qwerty,
I may be wrong, but I doubt Kitagrl really wants a big business. After all a big business equals a LOT of time and she does have kids and says "homemaker" in her profile. I suspect she wants something fairly small so it is still "fun" and makes a little money too. Calls for a little different approach in advertising.

[LindaR]

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' date=' I'd sell a cake and every few cakes, I'd chunk some money in the offering[/quote']
Please send me over some of those cakes from "under your table" to "under my table" :lol:

[heartstrings]

Yea, that answered where the 14000 or something or other came from heartstrings.
The only other thing that confused me is terminology. Gross is gross... everything written in black in the books is gross. Once you start subtracting red you use the term net. Just a termonology problem here.

Kitagrl, I would like to express that given your target customers, you are entering into a high yield area. Advertisting cost is rediculously small, overhead low, mark up very high. This of course, creates a cut throat buisness, but at the same time floods the industry with hacks. Don't skimp on flyiers, and don't be scared off about having to pay places to put your card there... wedding planners may want you to give em some cash, but by doing so you get great returns. I can explain all the ins and outs if you really want, but think "glossy graphic artist" on flyers lol. Seriously, a yellow page ad I took out once was 40 grad for a year... 500.00 in flyers isn't anything. Then again, size of buisness, time investment, ect... all factors in.

Sound buisness practices with even a basic plan can make you very profitable.

But I'm off topic.

Sorry for the confusion heartstrings lol, hope you understand how I just looked at the break down and was like HUH?

I might not have made it clear enough, but all the information was there.

And there is a difference in "gross".
I said "gross profit" was $14000


Gross sales are the total amount taken in.
Gross Profit is whats left after paying for cost of the goods and before deducting overhead, payroll, taxation, and interest payments.

[qwerty guy]

I deleted the 2 pages I posted because I don't want heartstrings getting all upset.

Anyone who thinks of taking what heartstrings says as good information must only google search the terminology used.... You'll find it clear fast.

Stumbling block... something about that in the bible..........
Wrong terminology... justifying minimum tithe......

You're a lot braver then I am... messing with someone's walk with God.

[Anon]

Pretty much my "business plan" is going to include a bridal show or two (as I see how much business it brings in) which costs about $100 each time... and then maybe a few business cards at bridal places. I can only accept maybe two large cakes max per weekend, or four small ones, so yes this is very much part time for now..

[HappyChristian]

Depends on your situation, income etc. If you owed the previous year, they will require quarterly.
I've been in business 14 years and I file my income tax and self employment tax once a year. I file sales tax monthly.

Not that I want to argue, but we never owe - we always get a refund. And we are required to file quarterly. We are not incorporated, we simply file as self-employed. Maybe the difference is who prepares our taxes, but we are required to file quarterly. My parents also were when my dad was self-employed, and he wasn't incorporated. When I taught school, I didn't have to file quartlery, but that was in the '80's, and laws have changed multiple times since then!

The business we will be starting will be eithe sole proprietership or LLC, my hubby hasn't decided yet. Then we will see how things will change, as I'm sure they will! Such a complicated tax system!

[HappyChristian]

Thanks Qwert.... and I know I'm definitely not retail, I would definitely qualify as catering.

I think the $1000 tax was per year...my math could be wrong, but if income tax is 15.3% that would mean I'd have to make roughly $15,000 per year in order to have to pay out $1000 in tax...right? Which I'm not going to make.

How expensive is a tax guy? I can barely afford insurance much less a personal accountant. I"m already starting the year in the hole due to business expenses, slight as they are for doing this from home.

Suzy, you can call the IRS and get info free, for federal taxes. We use Jackson Hewitt...like them a lot better than H&R Block. They really work to see that you get the most money back that you can. They do charge when they prepare your taxes, but you can claim it the next year. Sometimes one of them will moonlight, and do your taxes for less. Maybe give them a call, too.

Oh - one of the things that the fellow told us was that you can declare a loss in your business for 3 years. On the fourth year you have to show a profit, though. Maybe you could look into that for this year - usually the year a business is getting going, there is more loss than profit because of set-up, etc. (of course, depending on what the business is).

[heartstrings]

HappyChristian,
Your situation must be different from ours in some way for them to require quarterly. As I said, It depends on your situtation. For instance; I don't know if yours does but, some states collect state income tax. Also, is your refund total the same as the total tax you pay in for the year?
My wife has done our taxes for over 23 years and has been to school for it: she worked in a Jackson Hewett accountant's firm doing other people's taxes. So she knows her stuff...well at least as much as the IRS workers do :lol:

[HappyChristian]

Your situation must be different from ours in some way for them to require that. As I said, It depends on your situtation. For instance; I don't know if yours does but, some states collect state income tax. Also, is your refund total the same as the total tax you pay in for the year?
My wife has done our taxes for over 23 years and has been to school for it: she worked in a Jackson Hewett accountant's firm doing other people's taxes. So she knows her stuff...well at least as much as the IRS workers do

Our state does collect state income tax. And our county has for a few years now. And now they are talking about adding another one. *sigh*

No - the refund total is not the same as the taxes we pay. The fellow who told us that we had to pay quarterly also works at Jackson Hewett. I think they are some of the best at taxes!!

[heartstrings]

Our state does collect state income tax. And our county has for a few years now. And now they are talking about adding another one. *sigh*

No - the refund total is not the same as the taxes we pay. The fellow who told us that we had to pay quarterly also works at Jackson Hewett. I think they are some of the best at taxes!!

Your situation is definitely different from ours.
I would advise Suzi to consult with Jackson Hewett and the IRS for her particluar situation. My opinion, is that she won't have to file quarterly, until she starts raking in the big bucks anyway.

[qwerty guy]

On the "taking a loss" for 3 years thing... It's why lots of start ups buy a ton of equipment in december lol. But, watch out... that third year you may wanna show profit simply because if you take a loss for 3 years, then something goes wrong in the 4th year, the IRS classifies what you do as a hobby, and you pay taxes on everything, no more deductions, and reversing that is from what I hear a nightmare.

If you want to save money on cards, office supply stores sell templates to print your own. IF you have a good printer, this is a great option. Keep in mind your pr card cost is high, and you'll only be saving money by low volume. I wouldn't go cheap on the quality of your cards though. With the minimal advertising you require, quality is your focus.

Even if you're working "part time" and have a limit on volume, you still want to attack it head on and full boar.. You see... if you get say, 20 people wanting you to make a cake in a week, and you can only do 4, you get to choose the most profitable, or most fun ones. If things take off, why in the world do you feel you must bake cakes? You work "part time" managing and paying stay at home wives in your church to take care of the grunt work. Your income increases, you get to be a vessel to bless others...

You hire people, when by doing so your income will increase. You don't do favors by breaking even or loosing money by having an employee. If you go this way one day, come back and start a thread because there are many things you need to know as "legit" if you have an employee... it's not overwelming though, just another thing in life that you don't wanna go into without some reading and a plan.

I'm so excited for you.

[Guest Guest]

Qwerty, I think you are looking at the business aspects and overlooking the personal aspects. Do you have any idea of the potential for problems if the pastors wife hires ladies in the church to do "the grunt work". :loll: That is trouble waiting to happen even in a good church. Pastors and their wives have to be even more careful than the rest of us because WAY to many people are easily offended at even little things they do... It is sad but it is a fact...