Re: OT:Obama's tax plan will cost me money

On Sat, 4 Oct 2008 06:33:49 -0400, "Eisboch" <rce@xxxxxxxxxxx> wrote:


<gfretwell@xxxxxxx> wrote in message
news:vi0ee4hu271ltikkn171tk29jt1ofvl195@xxxxxxxxxx
On Fri, 3 Oct 2008 14:12:03 -0700 (PDT), ohara5.0@xxxxxxxxxxxxxx
wrote:

This means that any
amount of money in our business account greater than what was in it at
the end of the fiscal year last year is considered income (roughly).


I take it you don't do your own books.
That is not how you determine profit.


No, it isn't, but many technically trained small business owners look at it
that way.

I got a chuckle when I read this. The first year I was in business, many
years ago, we did just under 1mm in terms of "bookings".
Our products typically took 6 months or more to design, build, test and
ship, so the "Percentage of Completion" method of accounting was used. We
typically were paid in several "Progress Payments" over the course of the
contract by our customers.

At the end of the first calendar year in business (also our fiscal year),
our accountant did our tax returns as a Sub-S Corp.
He reported to me that I had lost just over $100K for the year.

I was mortified. (I also almost flunked Accounting 101 because I couldn't
correctly identify an asset from a liability. In my mind it was all
backwards)

Thank you, thank you.

I took one accounting course. If I owed someone money, it was a credit. If
they owed me money, it was a debit (or something like that). It's for sure
the amounts were always entered backwards.

And all this time, about 40 years now, I thought it was just me.

Again, thank you.
--
John H.
.

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