I am a manufacturing consultant. I run my own firm along with a colleague. It took me four years after I started my business to clear a profit. Until then, I had zero savings, I was living off my savings, but I still had to pay a minimum tax of about $600. That went up the following year. And I also had to pay for workers compensation, even though the concept of workers compensation for a sole proprietor is irrational to me.
This is highly unfair, especially when your business is not making money, and in fact, may be losing money.
The tax system is not set up to help entrepreneurs, especially if you become an incorporated business. The point is, in order to conform to the tax structure of an incorporated entity, there's a penalty for income not earned.
If you don't have the money to pay the taxes, you end up borrowing money, and there's costs associated with doing that. There are no programs to help the sole proprietor starting a business like there are for tech or biotech businesses.
All taxes result in money not available for [building a business]. Marketing, selling, conferences, managing employees are non-billable expenses to client. There are times when I choose not to fund something because I lack revenue.
Taxes, interest and regulatory fees are a real drain on a business when they are unfair, unnecessary or have no value to the business.
In case you haven't heard, President Obama wants the wealthiest to pay more in taxes.
