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Mistakes You Should Never Make

sethbannon.com

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Re: Mistakes You Should Never Make

#141

Post by e15ctr0n »

methodover wrote: post #9

> In the early days I would often let potential customers think we already had a feature they wanted What. How is this even remotely acceptable? If discovered it destroys your credibility. Among your employees it destroys your credibility. If I was an employee and found out that this was happening, I'd be extremely upset. I wouldn't trust a thing you say. If you'll lie to customers, you'll lie to me.

You are referring to a phenomenon known as vaporware [0]. Microsoft was notorious for using this strategy of pre-announcing features in order to kill smaller competitors from developing them, afraid that they won't be able to compete with the 800-pound gorilla [1]. Lots of other companies starting copying this tactic, so much so that tech industry publications like Wired started bringing out annual lists of vaporware [2]. Eventually the Justice Department filed lawsuit against Microsoft [3]. Amicus is just following a long, time-honored tradition.

[0] https://en.wikipedia.org/wiki/Vaporware

[1] http://www.nytimes.com/1995/04/24/business/information-techn...

[2] http://archive.wired.com/culture/lifestyle/news/2005/01/6619...

[3] http://www.justice.gov/atr/public/press_releases/1998/1764.h...

Re: Mistakes You Should Never Make

#142

Post by afarrell »

pjungwir wrote: post #131
slg wrote: post #83

I know this is a minor point of the article, but as someone with a degree from Harvard Extension I need to weigh in on that part of the story. I hate people who make this lie of ommission. Harvard Extension isn't Harvard College or Harvard Business School, but it still provides a very good education with great flexibility at an even better price. However, there is a small minority of people that continuely try to pas…

I also took a few Harvard Extension School classes (mostly Greek and Latin, but also Distributed Computing). I didn't earn a degree, just took a few things that interested me. It's on my resume as Harvard Extension School, and I have to actively correct people who think it's more than it is. My jokey way of putting it is that HES "takes anyone with a credit card." What's really embarrassing is when someone introduces…

As long as you put "Extension School", It seems strange that someone would think you went to undergrad there.

Then again, I ride the Ⓣ every day. Maybe people just have no clue what "Harvard Extension School" is.

Re: Mistakes You Should Never Make

#143

Post by swombat »

tptacek wrote: post #79
will_brown wrote: post #75

Earlier quoted context omitted.

As a former transactional/commercial litigation attorney I too would see this issue regularly. One interesting "hack" I would see clients do regularly as owner/employees, they would minimize their own salary to avoid payroll taxes, maximizing their distributions (distributions are not subject to payroll taxes). Unfortunately for them the IRS accounts for this hack , and if an IRS audit finds the salary isn't reasonab…

It's a hack, and it's also unfair. S-corp company owners get to inhabit a very small part of the economy that, due to a loophole, gets a dial that turns some of their liquid compensation from "salary" to "investment income". That's baloney. I'm glad it's an audit flag.

It's not much of a problem in the UK. A great many of our clients (and ourselves) use the standard dividends + minimum wage method of paying themselves - that is, the ones who own their businesses, i.e. have not taken funding. HMRC accepts this method as a way for business owners to minimise their taxes. As I recall, the argument is something along the lines of "I am paying myself a salary for the basic director duties but effectively working for free on the company day to day, and collecting parts of the earnings as an owner."

It works fine and is very common for small businesses in the UK. I guess this goes to show how contextual accounting advice can be.

On that note, I'll add that I'm ever so glad that in all my interactions with them HMRC have been polite, friendly, supportive, helpful and nothing like the abusive business murderers that the IRS appear to aim to be - even when I fucked something up that was obviously my fault. I don't understand why the IRS feels that they need to be such assholes about everything. They should see their job as what it is: an essential part of the infrastructure that supports the economy and, indirectly, supports businesses. Their role should be to make business easier, not harder.

Re: Mistakes You Should Never Make

#144

Post by jakejake »

tptacek wrote: post #118
jakejake wrote: post #111

Earlier quoted context omitted.

It's totally understandable how these companies get themselves into this situation. Your employee gets a paycheck of $1000 and in addition to that you send off $700 in payroll tax. Well, if your bank account is low you can pay the employee his/her regular amount but delay paying the tax. Your employee doesn't know as long as you manage to pay the withholdings before the end of the quarter (or worse case end of the ta…

You've just described a company willfully failing to remit payroll taxes. That's not just a terrible idea; it's (often) a crime, and it's easy to see why: you aren't really "borrowing", so much as you are "stealing" money that doesn't belong to you and hoping you can pay it back before anyone notices.

As long as you pay the taxes when they are due, it doesn't matter if you collected them with each paycheck or pay a lump sum at the end of your tax period. Smaller businesses are allowed to file (and pay) quarterly.

The smart thing to do is just withhold the tax with each paycheck. But, if you're a small business you do have until the end of the quarter to come up with the money. As I said, it's risky and generally a terrible idea. I was just explaining how companies come to find themselves in this position.

Re: Mistakes You Should Never Make

#145

Post by bravo22 »

tptacek wrote: post #79
will_brown wrote: post #75

Earlier quoted context omitted.

As a former transactional/commercial litigation attorney I too would see this issue regularly. One interesting "hack" I would see clients do regularly as owner/employees, they would minimize their own salary to avoid payroll taxes, maximizing their distributions (distributions are not subject to payroll taxes). Unfortunately for them the IRS accounts for this hack , and if an IRS audit finds the salary isn't reasonab…

It's a hack, and it's also unfair. S-corp company owners get to inhabit a very small part of the economy that, due to a loophole, gets a dial that turns some of their liquid compensation from "salary" to "investment income". That's baloney. I'm glad it's an audit flag.

Actually as an S-Corp owner all the corporate income is taxed as REGULAR INCOME. It doesn't become a capital gains tax -- which is what I assume you mean by investment income.

However the US government wants you to also pay Social Security and Medicare tax, which you only pay on employment income. Therefore they force you to take a "reasonable"[1] salary from the company. Everything else left in the company's account at the end of the year is your non-employment income.

It avoids double taxation. It doesn't put you in a lower tax bracket.

1. Reasonable is determined by them.

Re: Mistakes You Should Never Make

#146

Post by tptacek »

swombat wrote: post #143
tptacek wrote: post #79

Earlier quoted context omitted.

It's a hack, and it's also unfair. S-corp company owners get to inhabit a very small part of the economy that, due to a loophole, gets a dial that turns some of their liquid compensation from "salary" to "investment income". That's baloney. I'm glad it's an audit flag.

It's not much of a problem in the UK. A great many of our clients (and ourselves) use the standard dividends + minimum wage method of paying themselves - that is, the ones who own their businesses, i.e. have not taken funding. HMRC accepts this method as a way for business owners to minimise their taxes. As I recall, the argument is something along the lines of "I am paying myself a salary for the basic director duti…

I've never had an unpleasant interaction with the IRS. Unlike virtually any other creditor I've ever dealt with, the people I've talked to who actually work for the IRS have been courteous and helpful. I'm not the only person who's said this. The IRS has acquired a personalized reputation for being jerks, not unlike that of Customs, but which totally doesn't square with how the agency actually acts.

I say this as someone who once had a pretty decent unexpected 5-figure liability that I had to work out with them.

I also don't feel like zealous enforcement of unremitted payroll tax is particularly abusive, since that's essentially describing companies stealing from their employees.

Re: Mistakes You Should Never Make

#147

Post by [deleted] »

slg wrote: post #83

I know this is a minor point of the article, but as someone with a degree from Harvard Extension I need to weigh in on that part of the story. I hate people who make this lie of ommission. Harvard Extension isn't Harvard College or Harvard Business School, but it still provides a very good education with great flexibility at an even better price. However, there is a small minority of people that continuely try to pas…

[deleted]

Re: Mistakes You Should Never Make

#148

Post by endersshadow »

slantyyz wrote: post #116
seancoleman wrote: post #70

Earlier quoted context omitted.

Founders get bombarded with many corporate taxes they are often unfamiliar with. As a founder, it's not inconceivable to think all the proper taxes are being paid when one slips through the cracks.

>> As a founder, it's not inconceivable to think all the proper taxes are being paid when one slips through the cracks. In any company, someone's responsible for the books (whether it's the CEO, some other employee, or an outsourced accountant), and you would think that the bank statements would be reconciled with the general ledger more than once a year. At the very least, it would have been done with each fiscal ye…

This just means that they were running their business off of their account balance on B of A's site. It's also known as "flying by the seat of your pants."

Re: Mistakes You Should Never Make

#149

Post by personZ »

matthewmacleod wrote: post #10

Wow - "Oops, we forgot to pay payroll taxes for three years" isn't good. How does nobody notice that? But lessons learned and all that. I can't stress enough (at least from having run a small business) that accounting is the number one thing to get correct from the get-go. It saves such an immense amount of time, money and stress later on.

It's rather surprising that the IRS wasn't dramatically more aggressive about this. Every year they had people submitting tax returns claiming taxes paid that weren't paid, for years. I would have expected the IRS to have searched the Earth for this company.

Re: Mistakes You Should Never Make

#150

Post by UVB-76 »

otterley wrote: post #37
MadManE wrote: post #28

Earlier quoted context omitted.

This cannot be overstated. If you give the sales team any room or freedom, they will make your life hell trying to keep up with "features" that outdo everyone else just so they can get their commission check. They don't have to deal with anything beyond signing of the purchase, so they don't care that it sinks everyone else to get that purchase.

Salespeople who sell products by providing false information are committing fraud on behalf of the company and should be fired.

This is just how things work in a lot of industries.

You promise the world to make a sale, then once you've signed, work frantically to make the vision you sold a reality. If you were open and honest, you wouldn't sell a thing.

The only people who lose out are those who take salespeople on their word and don't get everything agreed in writing. Never take a salesperson on their word.

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