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It noted she was already a full time employee of the business and received consulting fees on top of that salary that she would have received as a employee. Typically a consulting fee is paid to outside sources, not an employee. It would have made more sense if they were bonuses paid for the work on the three hotel deals. Not consulting fees.What am I missing here?
I have a couple sub contractors/employees and related or not, their pay is a business expense write off (and they pay taxes on that money because of something called a personal income tax). In a typical year I write off $40k-60k in contractor pay.
Literally, I offered my college aged daughter a job working for me (she declined when she got a job more in her field of study), and I would have written off her pay as a business expense, because it would be, and she'd pay taxes on that money, which would be her income not mine, herself.
A friend of mine is a General Contractor and flips houses. In a typical year he'll sell 2 houses for about $2.2M, but he doesn't pay taxes on the "gross", he expenses out his costs for materials and labor, insurance, overhead, marketing, etc. etc. So on a gross revenue of $2.2M he's only paying taxes on the roughly $350k he personally makes after all the expenses.
Are people just too stupid to realize that that's the way business works? Or am I misunderstanding something?
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