Comment Comment by harry8 It's an accounting trick.1) Make tons of cash.2) Invest the cash back in the business.3) Record this investment on the financials as an expense.4) The expenses inflated by investment spending means you declare no profit and probably pay no tax on that profit you just hid.The alternative is:1) declare profit2) Pay tax on it3) Reinvest what's left after the taxman took a cut.Which would you choose if you were raking in loads more money than it was costing you to run the business and you had growth opportunities?Should this be a choice?If not, how would you "fix" it? parent harry8 2 years ago
1) Make tons of cash.
2) Invest the cash back in the business.
3) Record this investment on the financials as an expense.
4) The expenses inflated by investment spending means you declare no profit and probably pay no tax on that profit you just hid.
The alternative is:
1) declare profit
2) Pay tax on it
3) Reinvest what's left after the taxman took a cut.
Which would you choose if you were raking in loads more money than it was costing you to run the business and you had growth opportunities?
Should this be a choice?
If not, how would you "fix" it?