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I only know a few small business owners and they only paid taxes on income after deductions and business expenses. One Contract Engineer I worked with would write off all living expense while he was away from home (rent, car, meals, etc..) and he was away from home most of the time. As I recall he had to jump through some hoops to maintain a home address for tax purposes such as voting record etc.. The bottom line is he was only liable for income after deductions.
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What you can "expense," how much of it, and what it's deductible is worth, however, are questions the IRS decides based upon, among other things, what type of Corporation (or LLC, or Partnership, etc) a business is. The rules which apply to one business may not apply to an identical business up the road if the two are Incorporated (or otherwise organized) in different ways.
Additionally, even if you are correct across-the-board, and all expenses for payroll, inventory, etc can be deducted, there's still the double-whammy of Obamacare and the increased tax rate to deal with. All the deductions in the world won't help when Income remains the same, Payout remains the same (in terms of rent, payroll, inventory, etc), while the amount of taxes you -do- pay more than doubles as well as having new expenses added on top of it. It's simply unsustainable.
If a business makes $100,000.00 per year, and spends $50,000.00 of that on deductable expenses, it's taxed on $50,000.00. But if the tax -paid on- that $50,000.00 suddenly doubles while income remains $50,000.00 per year and expenses hold steady, you can see how this could get to be a problem. Now, throw in on top of that a very expensive, highly intrusive, time-consuming mandate like Obamacare, and you have a very serious problem. Literally every small business owner I know is worried sick about these laws, and for good reason.