I'm going to create a "Living Business" IRS category

[The Wise Turtle]

Anyone know enough about the IRS and taxes and such to explain to me what it would take for an independent business to have no "profit" (that is taxable) while still being able to grow healthfully and pay the employees a good, healthy, living wage? In other words, how would a business be successful and honestly pay no taxes?

My goal is to have what I call a Living Business, which is effectively a cross between a socially responsible business (with an independent owner in charge of running the show) and a non-profit organization (does good for the world and doesn't make a "profit" as a company, but still pays it's employees and the rent and such). It would be great if the IRS began to recognize this kind of business, but I'm planning on making it happen regardless.

I'd want to be one of the first to participate in the newest "new economy" where the new sign of wealth and the new measure of profit is health and wellbeing and fun, and where the "new money" is:

Energy Balance (food, water, air, warmth, etc.)
Freedom
Inspiring Communities and Organizations
Effective Skills and Tools
Practical Contributions to Society
Unique Talents
Diversity
Innovation
Appreciation of Oneself
Peace Within Oneself
Universal Wisdom
Universal Peace

What do you folks think? Want to be another visionary bringing healthy values into the economy?

-Turil

[Red Willow]

Why can't you just apply to be a 501c3?

[The Wise Turtle]

I don't want to run a non-profit for the same reasons that most business owners don't want to run a non-profit...

For example, a non-profit organization has many limitations on what it can do. And it has to serve a "public service" purpose, which, while my company intends to do that, is not the primary function of the business, so the government isn't likely to approve of it as a non-profit. The purpose of my business is to give it's employees (including me) a healthy salary.

Also, non-profit status requires a board of directors, and I don't want to hand over my business to some random bunch of folks. :-) As I said, I intend for this to be an independent company.

Does that answer your question?

Any ideas on what my company would have to do to legally owe no taxes to the IRS?

-Turil

[Brutha]

Why do you think that your business shouldn't pay taxes? You can reduce the taxes you pay by making tax deductable donations to charities.

A lot of business want to do good for the world but the state needs money from somewhere to run.

Maybe you should focus more on creating value then on paying no taxes?

[1000feet]

What kind of balance can you have when you want to take services provided by the government but not give anything in return?

That said, it's pretty easy not to make a profit - just increase your legitimate expenses or decrease your revenue. Keep moving to nicer and bigger offices. Buy lots of equipment. Hire contractors for long, complicated projects to re-create email systems in a much more limited way. Sell products at 1 cent above their cost, or services for $1, when you've made enough money to pay salaries for the year. There's really no limit to how you can lose money

I was also thinking of possibly giving away all your extra money, but even if you choose a real charity that might still sound suspiciously like a profit.

Oh, and one other thing - I don't know about how the IRS views businesses, but over here the CRA does require a "reasonable expectation of profit" for some deductions...

[The Wise Turtle]

Hmmm, I think I'm not making myself clear here, since I'm surprised at the responses. This is a good thing here.

The goal is to create a company that doesn't make a profit, because profit is essentially taking more than you give (i.e. greed). The goal is absolute balance, with a healthy, sustainable business that gives as much as it takes (or gives more than it takes). Profit is where the imbalance is found, thus I want to get rid of the profit.

For those concerned about taxes, it would work just like any other non-profit, taxes would be paid by the employees on their earned income and on the sales tax that is collected on stuff bought by the employees and the business.

The business itself would never earn more than it spent, so there would be no fat cats leeching off of the employees or the customers (I'd like to stay thin now that I've lost nearly 100 unwanted pounds!). I just need to know what "zero profit" might entail, as far as the government is concerned. :-)

As for the suggestion to waste money, that's not balance and it's not sustainable. I want to know how to spend the small amount that the company will earn, above and beyond employees' salary and web hosting and such, as wisely as possible, so that the business can create the most value for the community with the least amount of resources.

As for donation, that is likely to be a major part of the business, since it is really a community service, but I'm wondering if the donations are deductable on a 1:1 ratio...

-Turil

[1000feet]

A profit doesn't mean taking more than you give; you can still have it even when there's a consumer surplus...

If you absolutely don't want the company to make any profit there's two ways to do it.

You can keep things as small as possible by only charging enough to pay for expenses and salaries. This can be hard if you're selling a product (physical or not) because you can't predict exactly how much you'll sell to set the price accordingly. It's a lot easier with a service. There's a lot of variety in contracts, so it wouldn't be hard to set a maximum price (helping the customer plan for it) and only billing for the actual amount that it cost you.

Another way is to come up with big long-term plans that require a lot of capital, and work on those bit by bit. For example, you could "invest" in research in any area of science that you think needs to move faster (even better if it relates to something the company does). It might be something that will take 50 years to show any results. In that case you can be assured that you won't make a profit for a very long time; should it result in a useful discovery you can sell that at a minimal cost.

If you look around there's a lot of companies that don't get the absolute maximum short-term profits and invest a lot of resources in things that can help others, in various ways. There's no law saying you have to set prices to maximize profits, and there's countless ways you can invest in the future or donate extra money.

I'm not sure how far you can go to reduce taxes after paying your immediate expenses. Investing in long-term projects and donations might help, but if you're investing in things that will obviously lose money that might not be enough to avoid taxes.

[Still Growing]

Originally Posted by The Wise Turtle

Hmmm, I think I'm not making myself clear here, since I'm surprised at the responses. This is a good thing here.

The goal is to create a company that doesn't make a profit, because profit is essentially taking more than you give (i.e. greed). The goal is absolute balance, with a healthy, sustainable business that gives as much as it takes (or gives more than it takes). Profit is where the imbalance is found, thus I want to get rid of the profit.

For those concerned about taxes, it would work just like any other non-profit, taxes would be paid by the employees on their earned income and on the sales tax that is collected on stuff bought by the employees and the business.

The business itself would never earn more than it spent, so there would be no fat cats leeching off of the employees or the customers (I'd like to stay thin now that I've lost nearly 100 unwanted pounds!). I just need to know what "zero profit" might entail, as far as the government is concerned. :-)

As for the suggestion to waste money, that's not balance and it's not sustainable. I want to know how to spend the small amount that the company will earn, above and beyond employees' salary and web hosting and such, as wisely as possible, so that the business can create the most value for the community with the least amount of resources.

As for donation, that is likely to be a major part of the business, since it is really a community service, but I'm wondering if the donations are deductable on a 1:1 ratio...

-Turil

No profit?!

Please be a Wise Turtle and rethink your view of greed and profits.

If you make a profit it will enable you to reinvest into your business to do more of it. Profit is the lifeblood of your business and it needed to flourish and to continue with the good work I'm sure you are intended to do. You need to see profit as a donation from your clients to support your cause....

You mistakenly view profit as "taking more than you are giving" and that it is somehow unbalanced. Let me splain'

If you want the most efficient way to give then donate your time for no money. This would decrease paperwork, time, taxes,etc. But no.... You said you want to build a company. I presume that its so you can do more with many than alone. Thus, doing the most good right???

Well if this is the case then you need to sell your goods or services for more than it costs you. There are many unseen expenses, increasing overhead, cashflow issues and money needed for growth. The entire scenario suggests that your "real cost" is a moving target if you will be growing.

I can tell by the way that you post that you have a kind heart but are somewhat of an unwise turtle when it comes to building a business. Don't post back that you don't want to build a business because its clear that you do.

And please don't speak about the "p" word as if its dirty. This hurts my sensabilities.

[The Wise Turtle]

I'll let everyone know what I find out, and let you all know when I open up my service to the general public (it's in beta testing mode right now).

Thanks for all your offerings! And I apologize for confusing several of you, too. It's not easy to explain my business theory since it's so different from the mainsteam understanding of economic development.

I hope to find some business types who can phrase my ideas better in the future!

-Turil

[Still Growing]

Originally Posted by The Wise Turtle

It's not easy to explain my business theory since it's so different from the mainsteam understanding of economic development.

I hope to find some business types who can phrase my ideas better in the future! -Turil

I wish you had responded to my post above directly... You should really talk through your idea agressively and no matter what people say still go for it...

With that said, I think you are in for a world of learning....

Think about what you are saying, "I'll get some business types who can phrase my ideas better in the future!" So you are going to get into business but will have to have "business types" help you out....? Imagine Tiger Woods taking this approach to golf or Bill Gates taking this approach to operating systems.

I don't know why non-business people think that its not important to be good at business in order to succeed in business. Everyone thinks that they can be good at business for some reason or another.

The truth is that its like anything else in life; you will get better with it the more that you do, secondly you should love it, and finally you should play with people better than you.

I am a seasoned veteran in business and I just offered advice above and you didn't question, challenge or attempt to explain and dig for more info... Being insular is most typically the kiss of death in business.

I can kind of see what you are saying... You want to start a business but not make a profit and to sell your good or service for at your cost so that you are not taking more than you are giving and therefore would be more efficient and less greedy.... This is what you said and I understood you fully but the problem is that its very naive and it doesn't make any since.

Ignorance is bliss when it comes to ideas. The less you know about something the easier it is to believe it will work. Great things come as a result of adaptation. You start with your intent such as "I want to help orphans in third world countries" Next you concoct a business idea and then you adapt your path in order to have success in your ultimate goal...

Its clear to me that you are not interested in reality though.

I incourage you to get counceling from free organizations such as SCORE... You are going to need it.