Business End of a Production Company
- Thread starter Jim Brennan
- Start date
Barry_Green
Moderator
Re: Business End of a Production Company
You are exactly right, of course. I'm just spelling it out a little more clearly for those who may think that a "writeoff" somehow means something more than it does. A writeoff is a discount off your taxes, but to get it, you must spend more than you'll get back. Even when a millionaire in the 39.6% bracket makes a donation or something to "get a writeoff", he/she still only gets "back" 39.6% of what they gave away. They're still "out" 60.4% of what they spent.
So writing something off your taxes is basically a way to get a discount on your purchase, but you'll still be pulling money out of your pocket to do it.
Which is what you said, except instead of being nice and brief, I spent a whole lot of paragraphs to say the same thing.
You are exactly right, of course. I'm just spelling it out a little more clearly for those who may think that a "writeoff" somehow means something more than it does. A writeoff is a discount off your taxes, but to get it, you must spend more than you'll get back. Even when a millionaire in the 39.6% bracket makes a donation or something to "get a writeoff", he/she still only gets "back" 39.6% of what they gave away. They're still "out" 60.4% of what they spent.
So writing something off your taxes is basically a way to get a discount on your purchase, but you'll still be pulling money out of your pocket to do it.
Which is what you said, except instead of being nice and brief, I spent a whole lot of paragraphs to say the same thing.
XCheck
Veteran
Re: Business End of a Production Company
Speaking of which... beware of accountants that, in order to show how good they are, will encourage you to spend, with references to 'write offs'. I've learned my lesson way back, when my accountant was showing me smart tricks about how little tax I paid on my earnings (if 15% sounds impresssive to you, it did to me).
Once I found what it really meant (almost going broke), I fired him. No tax break is worth of having no savings.
Oh - and another thing. If an accountant charges anything more than $1000 for a corporate tax return, fire them too. $1000 at 22% tax rate (approximate rate for small business in Ontario, Canada), is worh almost $5000 in spending. That is the amount of "questionable" items you may end up paying tax on in case you get audited.
Spend wisely.
Jerry
Speaking of which... beware of accountants that, in order to show how good they are, will encourage you to spend, with references to 'write offs'. I've learned my lesson way back, when my accountant was showing me smart tricks about how little tax I paid on my earnings (if 15% sounds impresssive to you, it did to me).
Once I found what it really meant (almost going broke), I fired him. No tax break is worth of having no savings.
Oh - and another thing. If an accountant charges anything more than $1000 for a corporate tax return, fire them too. $1000 at 22% tax rate (approximate rate for small business in Ontario, Canada), is worh almost $5000 in spending. That is the amount of "questionable" items you may end up paying tax on in case you get audited.
Spend wisely.
Jerry
dakotapod
Veteran
Re: Business End of a Production Company
[quote author=Jerry XCheck link=board=Offtopic;num=1101752136;start=15#22 date=12/01/04 at 07:36:07]
Spend wisely.
[/quote]
Exactly - Learn to categorize equipment as "need" and "want"... Big difference. "Want" can be powerful - And expensive.
[quote author=Jerry XCheck link=board=Offtopic;num=1101752136;start=15#22 date=12/01/04 at 07:36:07]
Spend wisely.
[/quote]
Exactly - Learn to categorize equipment as "need" and "want"... Big difference. "Want" can be powerful - And expensive.
Jim Brennan
VHS Member Old Skool
Re: Business End of a Production Company
Yes, but the advantage here is simply that, most of us would have spent the money anyway. If we can legitimize it as a business expense, it works to our advantage. It is very true that it is NOT free money. You should certainly stay within your means. But if it is money spent anyway...
Yes, but the advantage here is simply that, most of us would have spent the money anyway. If we can legitimize it as a business expense, it works to our advantage. It is very true that it is NOT free money. You should certainly stay within your means. But if it is money spent anyway...
bodaphoto
Well-known member
Re: Business End of a Production Company
Using programs like Quickbooks and Quicken's Tax software sure makes things easier, and you can monitor your PnL all year long. Items you buy and breaking down your services can help you keep an eye on whether you are making money or not. If you shoot a commercial and you use two tapes and hire someone to act or work with you, those are all business expenses. Paying yourself mileage from your business or just simply adding it up over the year can help also. The little things add up. If you give someone a discount on service or do Pro-Bono stuff such Public service ads, make up an invoice and keeping the records will help. Now don't get crazy with that stuff, but programs like Quickbooks as those who use it know, will work out discounts and all that stuff. That program is well worth it.
Using programs like Quickbooks and Quicken's Tax software sure makes things easier, and you can monitor your PnL all year long. Items you buy and breaking down your services can help you keep an eye on whether you are making money or not. If you shoot a commercial and you use two tapes and hire someone to act or work with you, those are all business expenses. Paying yourself mileage from your business or just simply adding it up over the year can help also. The little things add up. If you give someone a discount on service or do Pro-Bono stuff such Public service ads, make up an invoice and keeping the records will help. Now don't get crazy with that stuff, but programs like Quickbooks as those who use it know, will work out discounts and all that stuff. That program is well worth it.
