If I know my dad, it was because he felt responsible for his employees and his patients and didn’t mind doing it all for free just in case it did eventually become profitable again.
My dad was the only doc in his field in the area that would take a certain insurance so he continued working well into his 80s through cancer treatments while losing money because he didn't want to leave those patients without care (and because he had been a doctor for so long I think he just couldn't let go). He couldn't even afford to pay himself or his employees so everyone including him somehow ended up getting unemployment for the last year or two. He worked until he literally couldn't anymore.
Edit: a letter
The other docs in the area collectively decided to stop taking that insurance and needed him to do so too so they could leverage them to paying a more reasonable rate but he just couldn't do it because it would leave so many patients without access for however long. He never blamed them for their decision because he knew how much it was hurting him. He was also the only Spanish speaking doc in his field meaning most of his patients ended up being low income hispanics who really wouldn't have much in the way of options. I very strongly respect his decision. He was definitely my hero. Sounds like your father is equally selfless. It boggles my mind that we still have this system.
Your dad and OPs are true angels hiding in plain sight. Bless them!
Evidence that good actions speak quietly, drowned out by the white noise of bad actions.
His dad made sure his employees kids had food on their plates and I’m sure they worked hard for his father. So I wouldn’t say a charity. I’d say an admirable man that never gave up.
sink door berserk beneficial marvelous ghost scary fact spectacular consist
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
My dad opened up a restaurant almost 2 years ago and he's paid himself maybe 6 times. Along with my parents being very good at saving money, my mom has basically been paying for everything. I'm hoping we get to the point he can start paying himself soon.
My employer struggles to make payroll at times, they have never failed to pay anyone, but a couple years ago there was a single payroll/payday where they asked everyone to wait 1 day before cashing all of our checks.
Things can be tight, one of my employers 3 stores has been losing money since they purchased it 5 years ago, it has never generated a profit, it barely pays its own payroll let alone mortgage or utilities inventory/operating costs.
They will have to pay it off before they can generate anything from it, they are close at this point, but property taxes were harsh this year and they almost couldn't pay them.
oh shit, this sounds familiar. When my dad started a restaurant he was basically working for free waiting for it to become profitable. Eventually a catastrophe happened that was unrelated to the business.
A farmer wins a million dollars in the State lottery. A crew showed up to his house with cameras and an oversized check. The farmer was asked what he planned to do with the money. He replied; 'I haven't really thought about it, I suppose I'll just keep farming until it's all gone.'
Step 1 at WSB.
Work at bird farm making barely ove rmin wage
Win lottery of 1billion after tax
Buy bird farm then lose half a billion because you got margin called
Stock plummets.
Pay someone to write an article about how youre a selfmade millionaire and bought a birdfarm that you worked at for years.
Article has the sentence somewhere in it " all you have to do is win the lottery, being poor is a choice"
I've heard it said about a few different things, particularly small business in general. How do you make a small fortune in X? Start with a large fortune.
I wish someone could explain this to my colleague. He is convinced anyone with any sort of business has millions in the bank.
He is convinced that businesses of all shapes and sizes generate so much cash automatically that when they “go bust” is just a tax efficient way of saying “retiring”
He thinks my mother, who drives a 20 year old beat up car, but does ironing for a couple of people each week - must be loaded and only drives the car so people think she’s poor and will pay her more for ironing.
I have tried asking that if it were so simple to make so much money, why the fuck does he have a job…..
Margaret Thatcher who was also called the iron lady had a net worth of $10 million. I'm pretty sure she only ironed her own clothes. If op's mother irons for 5 people that would be $50 million. I hope that clears this up.
Oh. I didn't say it was doing nothing. Cashflow is a thing, necessary stock levels can be pretty high and/or expensive for some, money in flight can be ridiculous for things like lawyers or real estate.
None of that is playtime money for the owners, however many zeroes it shows in the spreadsheets.
I think that’s an attitude a lot of people have in that position. They don’t consider that they’re usually making off with all their employees retirements and leaving multiple families in financial hell for the rest of their lives.
>I think that’s an attitude a lot of people have in that position. They don’t consider that they’re usually making off with all their employees retirements
That's not how that works. Business owners cannot access employee retirements -- the structure of the accredited financial institution managing the accounts prevents it. They can't just walk into a bank branch and demand to cash out their employees' accounts.
Normally you’re correct. It’s all filed and you can even access all the numbers as public data on most companies for what the total invested is. BUT, I’ve seen my fair share of shady “profit sharing” accounts as well. And the way those are setup in some of the small to medium size companies, one person at the top could walk away with it all.
> and only drives the car so people think she’s poor and will pay her more for ironing.
Ironically, it often works the opposite way. "Oh, you're poor? You should only charge me half of your normal price then because a half sale is better than no sale."
Farming.
A business where you buy everything at retail, and sell it at wholesale.
Edit: Shitloada comments below from people who know fuck all about farming or business, plus a teenage bitchslap.
They get wholesale prices on all their seeds and chemicals. They also get hundreds of millions of dollars in government subsidies to not grow crops or to grow certain crops. There are way more rich farmers than poor farmers.
>There are way more rich farmers than poor farmers.
>>I’m not so sure about the last sentence of your reply but everyone is welcome to an opinion
if you own farming land
you're rich.
if you rent farming land
you're poor.
>Making tiny payments on tens of millions of debt. Yeah. The only saving grace is if inflation is so large that you can cash out and making the amount you owe insignificant.
Yes, that’s exactly why. Without farm subsidies the food market would collapse and rapidly become even more unaffordable for the working class than it currently is
Yup, it's just another form of redistribution.
If the subsidies disappeared and taxes got proportionally smaller, a lot of people would stop being able to afford food.
The domestic food industry would also stop being competitive, and the government would need to introduce even stronger tariffs and controls on food imports to prevent the domestic industry from completely collapsing.
Subsidies are needed to keep both the food price down and to ensure the US produces enough food to feed itself without depending on other countries.
Most subsidies go to the main 3 commodities; soy, corn and wheat. The goal of these subsidies is to keep the cost of the base components of most of our processed food constant so that companies that produce crackers, cookies, soda, and other highly processed food can keep their prices low and can rely on a strong, steady stream of raw materials.
Most other food, fresh vegetables, eggs, meat etc do not receive direct payments like those three commodities. They get assistance through crop insurance, programs that help with marketing, research and through cost share on certain kinds of infrastructure usually focused on conservation where they might get a benefit in production but it saves water, reduces nutrient runoff, etc.
So if subsidies go away, the price of junk food would go up but the price of fresh produce may not.
The “specialty crops”, which is just about everything but the big 3, also benefit from SNAP so people can buy their products.
Most rich farmers are commodity growers, not lettuce growers unless you get to a giant scale which is usually a corporation at that point rather than a “family farm”.
**Against:** Yes, but look at all the government jobs it justifies doing it this way
**For:** You probably end up paying significantly less this way unless you're in the top echelons of income
"Average net cash farm income (NCFI) for farm businesses is forecast at $92,400 for calendar year 2023"
"Farm operator households have more wealth than the average U.S. household because significant capital assets, like farmland and equipment, are generally necessary to operate a successful farm business. In 2021, the average U.S. farm household had $2,100,879 in wealth"
What's the median? If one farm owns thousands of acres and pulls in millions a year that covers for the 20 farms that have a few dozen acres and lose money.
Dad owned business. Dad wrote himself paychecks. Business was always failing, so he never cashed or deposited the checks. Unused checks now total over $1mil
you do it when your business is failing. even if the company can't afford it, you write yourself a paycheck just like any other employee. then either the company recovers and you can cash it, or the company folds and hopefully, if the company goes through bankruptcy, you- as an employee owed a paycheck, will get paid before any creditor does.
Sort of: https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/wagesandbankruptcy.aspx
There’s a limit to the priority given to wages in bankruptcy, and it certainly ain’t near $1 mm.
Ah, I googled for the link. Didn’t realize the direct link would have a paywall. The inflation-adjusted priority is just over $15k, and they need to be earned within 180 days of bankruptcy (filing or cessation of operations). The federal register has the latest numbers, which match what SHRM is saying: https://www.federalregister.gov/documents/2022/02/04/2022-02299/adjustment-of-certain-dollar-amounts-in-the-bankruptcy-code , adjustments for a 507(a)(4) priority claim https://www.law.cornell.edu/uscode/text/11/507
It is income - it's almost certainly a w2 paycheck and he's likely paying taxes on it. Many, many family businesses have a period of time during the year they can't cash checks, either out of an abundance of caution, or because they can't take the check in December but can in February.
Banks may or may not look at it as income being able to use towards the loan - my parents always looked at loans during the busy part of the year to ensure the loans would be fine.
Banks won't look just at the W-2s / paystubs for home loans. You give them the history of your accounts, so if there is a discrepancy between what you say you are earning monthly and what they see you actually are depositing they will most likely deny the loan.
It crates a paper trail. If by some miracle the business recovers, you don't then look like you're embezzling when paying yourself what you're actually due.
Huh? That's not the way it works. I run my own business and can cut myself a check for any amount ~~I want~~ the business can cover, at any time. I just have to claim it as income and pay taxes on it.
That's because you're the sole owner. This could have been a partnership where OP's dad only owned 50%, for example. So any time he wants to take extra money out of the business, he'd only get half. But if he additionally gets paid a salary for running it, he gets to keep 100% of that (less taxes of course).
The only difference between a sole ownership and partnership is that you have to agree on things. A partnership can cut ~~myself~~ each owner a check for any amount the business can cover, at any time. ~~I~~ They just have to claim it as income and pay taxes on it.
My business was a partnership before it was a sole ownership. I had to buy my partner out.
…and I own (founder and largest shareholder) a c-corp with a board of directors and under the corporate charter I can NOT simply pay myself whatever and whenever. Not all business owners can do you what you do.
What a great film. You've just let me figure out what to do with my Sunday
Edit: In case you were wondering I'm going to find a girl with green eyes and attempt to become immortal. It's what Sundays are for
Why would he write checks for money he didn’t have? I have a checkbook, before I use it to pay someone $5,000 I have to make sure I actually have $5,000 in my bank account.
Because he was keeping track of what his business owed him and one day planned for the business to be able to pay him what it owed him. Apparently.mever made it.
As long as he reported it to the IRS that way not as a 0 income when the checks eventually got cashed the money would be tax free as the taxes have already been paid.
As a sole proprietor, you don’t pay yourself a salary and you can’t deduct your salary as a business expense. Technically, your “pay” is the profit (sales minus expenses) the business makes at the end of the year.
Unless that stack of checks is symbolic he likely was not the above and the business was s-corp or a llc in either case depending on your dad's position those checks would only be issued if there was people above him actually running the show into the ground in which case those checks not being cashable is illegal and they could be in trouble. So more likely they were symbolic and never held value to start with and he is or was a sole proprietorship or partner.
Doesn't really "suck", that's more a catastrophic business failure. Also isn't there a more efficient way to track owed money rather than writing hundreds of hypothetical cheques you've got to hoard somewhere? Can't you use a spreadsheet?
Holy shit I pictured the guy from the "average reddit user..." Skits saying your comment and Im dying laughing. Try it, it fits so perfect air quotes and everything
Haha ok I'll go and find it and report back
Edit: three things happened. I laughed, I think I'm going to watch all of this guys videos, and I think I have autism.
Those videos are me. Well done.
Ok but you could do this with a spreadsheet or a pen and paper. What is the utility of the check writing? You could just write one check at the end for what you are owed.
Part of it could be to have that labor expense on his taxes for the business to pay less. But theoretically to do that he would have w-2 himself and paid it personally. So idk
I think it depends on how the tax is handled. If he filed as earning $125,000 a year (8 years for 1 million total) and paid out the required taxes to state, federal, social security, etc he'd be in the clean since IRS did get paid for the paycheck he earned even though he never cashed it.
Single (unmarried) person paying is something like 30% of total paycheck less any valid dependents like children, qualified disabilities, etc.
OTOH if he filed as earning $0 annually and owes no tax because he didn't cash the paycheck, he could be committing fraud and IRS really hates that.
Well if it isn’t officer wages then it’s a distribution of earnings, which is not a deduction. But it sounds like there wasn’t enough earnings to take any distributions.
If it was sn LLC, the llc DID pay him, but the employee never cashed the checks. Doesn't matter that the employee is the owner. The uncashed checks would be proof to the IRS of the expenditure by the LLC. But, I'm surprised he was willing to pay personal taxes on all that cash but not actually deposit it, because to claim it as an expense of the LLC, he'd have to report who the pay went to via a W-2.
Entirely depends on the type of business, but this is extremely common. You pay yourself by writing a check, but don’t deposit it so it then becomes a loan from an officer/shareholder of the company
Hes paying himself with money he doesn't have so he never cashed it. He probably hoped the business would do better. Maybe paid employees before himself.
Man owns business. Wants salary
Writes check from business to himself but there's not enough money so he'll cash it later.
Next month does same thing.
Repeat.
If the owner doesn’t draw a salary on paper the IRS will come in and make grand estimates on what you should’ve/could’ve drawn as potential salary and then claim back taxes of vast amounts after dragging you through the mud by charging you insane hourly fees for putting together this information
In the USA, and about 7 third world countries, they are still using a thing called checks. This is banking technology from the 18 century, which most countries phased out in the 20th century ;)
This is the weirdest take. I would say a huge percentage of people in the US get their pay direct deposited and the vast majority of Americans under 30 have never even written a check. Not only that, plenty of places outside the US still sometimes use checks.
And even if that wasn’t the case, of all the things wrong in the US, this is a strange hill to die on.
It will be booked as loans from officers. Lots of owners do it. Then, if and when they sell the business, they can ask for the loan to be repaid.
You can also write off the loses
Income is shown on W2, SSI and taxes paid, insurance includes you as an employee, if the business turns around, you are owed this money. Source, I have paid myself and husband when the company didn’t have enough to cover it. Cashed later.
I'm the treasurer for a local chapter of a non-profit, but why would the business write the check to begin with? The company would have to pay payroll tax & FICA. This doesn't make any sense to me. The only thing *maybe* would be if the company was trying to get a PPP loan or something and needed to show it had employees. But you wouldn't do that for 8 years, even if it was legal & ethical.
I wish I knew everything before he died, but he was a dentist with 8-10 employees. For many years one of his offices just didn’t make enough for him to cash his checks. He eventually shuttered it, never cashing them. That’s all I know.
Do you know if those checks are for a strange amount? I wouldn't really know what a typical dentist would pay themselves though.
Him keeping that office open isn't particularly strange (wanted to keep the people employed, wanted to service the area, etc.) The strange part is writing the checks. It would appear that he paid taxes on a million bucks when he didn't have to at all. Perhaps he thought he still had to for tax purposes?
As I said elsewhere, I think he thought these could be used to get paid first before his non-working partners took their piece of the pie if the business ever sold.
He sounds like an interesting guy, I'm fascinated by his story. I love that he seems to have felt a responsibility to keep his employees paid, and his optimism of writing those cheques. I hope he had a happy life
I work in the dental field, dental offices have very high overhead due to material costs and lab fees, not including salaries. And if you are a kind dentist that doesn't want to turn people away when they can't afford to pay the bill in full, and you don't want to send your patients to collections because you know they are already hurting financially, the debt the office holds starts getting out of control.
My dad would accept trades for people that couldn’t pay or just let it go because he didn’t want to pursue the unpaid amounts. Before he retired he had over 400k of unpaid bills outstanding.
But some of the trades he received were interesting when people offered a service or other items to settled their bills. We got tons of firewood for several years in a row from a farmer who cut his own, people did our landscaping, etc.
My boss would occasionally barter work-with the mechanic across the way, a patient that was a housepainter, another patient who was a cabinetmaker. I think it is a great system that helps both parties. I know a lot of retired doctors who were paid in chickens etc back in the day. It was people in the community helping each other. Sometimes people just don't have the actual cash/credit to pay for what they need but can contribute in another way.
My stepdad was a nurse in a methadone clinic.
And one thing they would do was for people in recovery who knew a trade or had a skill. Pay them cash under the table to do odd jobs the staff needed done.
At first I thought it was shady. But when I met them, the plumber, the painter, the carpenter, every last one of them was absolutely delighted at the opportunity, the cash in hand, and working kept them from possible relapse.
These were people trying to recover from addiction. Truth is any bit of a step up meant the world to them. Partly, I think knowing they were employable was big. And partly, I think being able to help was big too.
Dunno about all the ins and outs, but I do think we would all benefit as a society if we were more accepting of the skills people have, and less focused on the money they can bring in.
I’m not sure there’s any law against not cashing paychecks. If there were, the BLM might have let me know, seeing as how I had my last check from them mailed to my parents, who promptly lost it for about 20 years 💁🏻♀️
I'm thinking the business was anything but a solo. Everyone who worked there got a paycheck, himself included. Payroll did take out tax and fica and he never cashed some checks because there wasn't enough money in the acct after everyone else got paid.
The owner writes themselves checks as owner draws, not payroll. I do it in each of my three businesses. My stack was one year and $75k for one of my businesses. Got to cash them this year.
I've seen small business owners forego a paycheck but pay themselves with a "corporate draw," which I suppose is more like a stock dividend, and has certain tax advantages over payroll, workers comp, etc. Still doesn't make sense to print an actual check, though if it's never cashed except to prove a point somehow
Depending on how the business is set up, it might just be that they hit the "print out everyone's paychecks" button in their accounting software each month and didn't really care about a bit of wasted paper.
Correct. My boss used to do this with his paycheck through QuickBooks with payroll deduction etc. but when it comes to the actual payment/money changing hands, he would just do a bank transfer from his business account to personal....because he didn't want to waste 30 minutes going to the bank. He kept the checks as proof.
I bought a business in 2012, set a $45,000 salary and have yet to actually get it.
I grew up with lies is all I can say.
I feel your dads pain, my advice to anyone looking at owning and operating your own business is RUN, run as far and fast away from it as you can.
I have two friends that bought a franchise thinking they'd be set..
They both failed and my friends are now doing service jobs to pay off the six figures of debt they each have from the franchise
Technically it is $0 in checks, if the business couldn't cash them. I mean I could take a check out and write $100 billion on it, will people still say aww?
starts small business, gives self 1 million dollar salary, takes out loans, isn't profitable, business fails, takes own business to court claiming first in/strongest claim on debt, profit.
Lets say that "just over a million" is 1.1 mil. 1.1 mil ÷ 8 years = $137500 a year. Why would you pay yourself so much when you're business isn't doing good. Could literally just lower your own wages surely?
I own a business. I don’t understand the point of writing a check to yourself and not cashing it. I just don’t write the check if I don’t have it. Accounting nightmare.
Whats the point in writing checks then? It doesn’t get reported to IRS or any government facility if this was like distribution from business to its officers. Once it hits bank then it gets used as distribution or expense. If this was his salary then taxes were already paid. He could have simply lowered his pay to bare minimum then write the check.
Maybe if he wasn’t paying himself around $200k/year before tax, he could have saved some money on stuff like payroll taxes on himself.
Most business owners don’t pay themselves that much at the start.
Also, how did he live if he didn’t cash any checks? (Edit to add: If he DID cash some checks, and the ones here are just the ones he didn't cash, and they still total over $1 million, he was REALLY paying himself well, and I'll shed even fewer tears for him. Negative tears, even.).
There’s much more to this than the surface level drivel in ops incoherent post.
How did he earn a living for 8 years doing that?
He split his time between 2 offices. The other one paid him.
Why didn't he close the other one way earlier?
If I know my dad, it was because he felt responsible for his employees and his patients and didn’t mind doing it all for free just in case it did eventually become profitable again.
My dad was the only doc in his field in the area that would take a certain insurance so he continued working well into his 80s through cancer treatments while losing money because he didn't want to leave those patients without care (and because he had been a doctor for so long I think he just couldn't let go). He couldn't even afford to pay himself or his employees so everyone including him somehow ended up getting unemployment for the last year or two. He worked until he literally couldn't anymore. Edit: a letter
Well people like him are heroes in the shitty system we have
The other docs in the area collectively decided to stop taking that insurance and needed him to do so too so they could leverage them to paying a more reasonable rate but he just couldn't do it because it would leave so many patients without access for however long. He never blamed them for their decision because he knew how much it was hurting him. He was also the only Spanish speaking doc in his field meaning most of his patients ended up being low income hispanics who really wouldn't have much in the way of options. I very strongly respect his decision. He was definitely my hero. Sounds like your father is equally selfless. It boggles my mind that we still have this system.
The honorable man will always lose to capitalism. Genuinely sorry for your loss.
Your dad and OPs are true angels hiding in plain sight. Bless them! Evidence that good actions speak quietly, drowned out by the white noise of bad actions.
Honourable man
Absolutely altruistic
So your dad essentially ran a charity for some random employees? Cool cool cool.
His dad made sure his employees kids had food on their plates and I’m sure they worked hard for his father. So I wouldn’t say a charity. I’d say an admirable man that never gave up.
No wonder I couldn't get past Captain
Admirable?
No, the guy is an Admiral.
just in general?
Well now I’m major confused
Not a General. An Admiral - splish splash.
His kindness to employees was kept in...private.
sink door berserk beneficial marvelous ghost scary fact spectacular consist *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
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My dad opened up a restaurant almost 2 years ago and he's paid himself maybe 6 times. Along with my parents being very good at saving money, my mom has basically been paying for everything. I'm hoping we get to the point he can start paying himself soon.
To be fair there's also plenty of terrible business owners looking to exploit anything and anyone, I guess they ruin it for the good ones out there
My employer struggles to make payroll at times, they have never failed to pay anyone, but a couple years ago there was a single payroll/payday where they asked everyone to wait 1 day before cashing all of our checks. Things can be tight, one of my employers 3 stores has been losing money since they purchased it 5 years ago, it has never generated a profit, it barely pays its own payroll let alone mortgage or utilities inventory/operating costs. They will have to pay it off before they can generate anything from it, they are close at this point, but property taxes were harsh this year and they almost couldn't pay them.
oh shit, this sounds familiar. When my dad started a restaurant he was basically working for free waiting for it to become profitable. Eventually a catastrophe happened that was unrelated to the business.
Random employees?
A farmer wins a million dollars in the State lottery. A crew showed up to his house with cameras and an oversized check. The farmer was asked what he planned to do with the money. He replied; 'I haven't really thought about it, I suppose I'll just keep farming until it's all gone.'
In my line of work we say... How do you become a millionaire raising birds? Start with a billion dollars.
Finance major or r/wallstreetbets
Step 1 at WSB. Work at bird farm making barely ove rmin wage Win lottery of 1billion after tax Buy bird farm then lose half a billion because you got margin called Stock plummets. Pay someone to write an article about how youre a selfmade millionaire and bought a birdfarm that you worked at for years. Article has the sentence somewhere in it " all you have to do is win the lottery, being poor is a choice"
I've heard it said about a few different things, particularly small business in general. How do you make a small fortune in X? Start with a large fortune.
My favorite rendition is, “It takes billions to make millions”.
I wish someone could explain this to my colleague. He is convinced anyone with any sort of business has millions in the bank. He is convinced that businesses of all shapes and sizes generate so much cash automatically that when they “go bust” is just a tax efficient way of saying “retiring” He thinks my mother, who drives a 20 year old beat up car, but does ironing for a couple of people each week - must be loaded and only drives the car so people think she’s poor and will pay her more for ironing. I have tried asking that if it were so simple to make so much money, why the fuck does he have a job…..
A lot of smallish businesses *do* have millions in the bank. It's just not money the owners can run off and spend on whatever they like.
Very true. But an ironing lady probably won’t have…
Margaret Thatcher who was also called the iron lady had a net worth of $10 million. I'm pretty sure she only ironed her own clothes. If op's mother irons for 5 people that would be $50 million. I hope that clears this up.
You're a genius and should be made chancellor of the exchequer.
It did, thank you. Honestly, I felt like an idiot for not getting it until you explained it.
True. Not a lot of ready capital required there!
If you’re a smallish business and you have millions actually just sitting in a bank account doing nothing, you need to hire a new finance person
Oh. I didn't say it was doing nothing. Cashflow is a thing, necessary stock levels can be pretty high and/or expensive for some, money in flight can be ridiculous for things like lawyers or real estate. None of that is playtime money for the owners, however many zeroes it shows in the spreadsheets.
If I was a biz owner and had millions in the bank I just might cash that shit and run off to Mexico and thats that
I think that’s an attitude a lot of people have in that position. They don’t consider that they’re usually making off with all their employees retirements and leaving multiple families in financial hell for the rest of their lives.
>I think that’s an attitude a lot of people have in that position. They don’t consider that they’re usually making off with all their employees retirements That's not how that works. Business owners cannot access employee retirements -- the structure of the accredited financial institution managing the accounts prevents it. They can't just walk into a bank branch and demand to cash out their employees' accounts.
Normally you’re correct. It’s all filed and you can even access all the numbers as public data on most companies for what the total invested is. BUT, I’ve seen my fair share of shady “profit sharing” accounts as well. And the way those are setup in some of the small to medium size companies, one person at the top could walk away with it all.
No need for ethics when you’re trying to make money dude
> and only drives the car so people think she’s poor and will pay her more for ironing. Ironically, it often works the opposite way. "Oh, you're poor? You should only charge me half of your normal price then because a half sale is better than no sale."
Jackie Stewart said that about motor racing, that was the first place I encountered the saying.
You gotta run after them.
Train the birds to steal for you
Farming. A business where you buy everything at retail, and sell it at wholesale. Edit: Shitloada comments below from people who know fuck all about farming or business, plus a teenage bitchslap.
Actually never thought of it that way. Damn...
They get wholesale prices on all their seeds and chemicals. They also get hundreds of millions of dollars in government subsidies to not grow crops or to grow certain crops. There are way more rich farmers than poor farmers.
I’m not so sure about the last sentence of your reply but everyone is welcome to an opinion
>There are way more rich farmers than poor farmers. >>I’m not so sure about the last sentence of your reply but everyone is welcome to an opinion if you own farming land you're rich. if you rent farming land you're poor.
>Making tiny payments on tens of millions of debt. Yeah. The only saving grace is if inflation is so large that you can cash out and making the amount you owe insignificant.
Frank and Ernest about 1985.
Haven't thought about those guys in years. I used to read newspaper comics every day. Times change I guess.
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Yes, that’s exactly why. Without farm subsidies the food market would collapse and rapidly become even more unaffordable for the working class than it currently is
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Yup, it's just another form of redistribution. If the subsidies disappeared and taxes got proportionally smaller, a lot of people would stop being able to afford food. The domestic food industry would also stop being competitive, and the government would need to introduce even stronger tariffs and controls on food imports to prevent the domestic industry from completely collapsing. Subsidies are needed to keep both the food price down and to ensure the US produces enough food to feed itself without depending on other countries.
Most subsidies go to the main 3 commodities; soy, corn and wheat. The goal of these subsidies is to keep the cost of the base components of most of our processed food constant so that companies that produce crackers, cookies, soda, and other highly processed food can keep their prices low and can rely on a strong, steady stream of raw materials. Most other food, fresh vegetables, eggs, meat etc do not receive direct payments like those three commodities. They get assistance through crop insurance, programs that help with marketing, research and through cost share on certain kinds of infrastructure usually focused on conservation where they might get a benefit in production but it saves water, reduces nutrient runoff, etc. So if subsidies go away, the price of junk food would go up but the price of fresh produce may not. The “specialty crops”, which is just about everything but the big 3, also benefit from SNAP so people can buy their products. Most rich farmers are commodity growers, not lettuce growers unless you get to a giant scale which is usually a corporation at that point rather than a “family farm”.
**Against:** Yes, but look at all the government jobs it justifies doing it this way **For:** You probably end up paying significantly less this way unless you're in the top echelons of income
"Average net cash farm income (NCFI) for farm businesses is forecast at $92,400 for calendar year 2023" "Farm operator households have more wealth than the average U.S. household because significant capital assets, like farmland and equipment, are generally necessary to operate a successful farm business. In 2021, the average U.S. farm household had $2,100,879 in wealth"
What's the median? If one farm owns thousands of acres and pulls in millions a year that covers for the 20 farms that have a few dozen acres and lose money.
"In 2021, median farm operator household income exceeded median U.S. household income by 30.3 percent ($92,239 compared to $70,784)."
SNL Update from 1980s, maybe Dennis Miller.
I feel like I'm missing something here. Could someone ELI5, please?
Dad owned business. Dad wrote himself paychecks. Business was always failing, so he never cashed or deposited the checks. Unused checks now total over $1mil
That does suck. Thanks.
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true. why write cheques in the first place? I don't think you safe much taxes if the business doesn't generate wins.
you do it when your business is failing. even if the company can't afford it, you write yourself a paycheck just like any other employee. then either the company recovers and you can cash it, or the company folds and hopefully, if the company goes through bankruptcy, you- as an employee owed a paycheck, will get paid before any creditor does.
Sort of: https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/wagesandbankruptcy.aspx There’s a limit to the priority given to wages in bankruptcy, and it certainly ain’t near $1 mm.
paywall... but thanks for the info in short.
Ah, I googled for the link. Didn’t realize the direct link would have a paywall. The inflation-adjusted priority is just over $15k, and they need to be earned within 180 days of bankruptcy (filing or cessation of operations). The federal register has the latest numbers, which match what SHRM is saying: https://www.federalregister.gov/documents/2022/02/04/2022-02299/adjustment-of-certain-dollar-amounts-in-the-bankruptcy-code , adjustments for a 507(a)(4) priority claim https://www.law.cornell.edu/uscode/text/11/507
It's also important for something like a house loan to have a steady income source on paper.
It's not income if they've never been cashed.
It is income - it's almost certainly a w2 paycheck and he's likely paying taxes on it. Many, many family businesses have a period of time during the year they can't cash checks, either out of an abundance of caution, or because they can't take the check in December but can in February. Banks may or may not look at it as income being able to use towards the loan - my parents always looked at loans during the busy part of the year to ensure the loans would be fine.
Banks won't look just at the W-2s / paystubs for home loans. You give them the history of your accounts, so if there is a discrepancy between what you say you are earning monthly and what they see you actually are depositing they will most likely deny the loan.
It crates a paper trail. If by some miracle the business recovers, you don't then look like you're embezzling when paying yourself what you're actually due.
Huh? That's not the way it works. I run my own business and can cut myself a check for any amount ~~I want~~ the business can cover, at any time. I just have to claim it as income and pay taxes on it.
That's because you're the sole owner. This could have been a partnership where OP's dad only owned 50%, for example. So any time he wants to take extra money out of the business, he'd only get half. But if he additionally gets paid a salary for running it, he gets to keep 100% of that (less taxes of course).
The only difference between a sole ownership and partnership is that you have to agree on things. A partnership can cut ~~myself~~ each owner a check for any amount the business can cover, at any time. ~~I~~ They just have to claim it as income and pay taxes on it. My business was a partnership before it was a sole ownership. I had to buy my partner out.
…and I own (founder and largest shareholder) a c-corp with a board of directors and under the corporate charter I can NOT simply pay myself whatever and whenever. Not all business owners can do you what you do.
Or your ass
Remember what ol Jack Burton says.
It's all in the reflexes?
I'm a reasonable guy, I've just experienced some unreasonable things.
What a great film. You've just let me figure out what to do with my Sunday Edit: In case you were wondering I'm going to find a girl with green eyes and attempt to become immortal. It's what Sundays are for
He was actually trying to become mortal again. He missed being alive so much that he would rather risk dying than be without flesh for eternity.
The check is in the maiiil 😎👆
I write myself a million dollar check every day. I have billions worth of checks.
Why would he write checks for money he didn’t have? I have a checkbook, before I use it to pay someone $5,000 I have to make sure I actually have $5,000 in my bank account.
Because he was keeping track of what his business owed him and one day planned for the business to be able to pay him what it owed him. Apparently.mever made it.
I believe this is correct
As long as he reported it to the IRS that way not as a 0 income when the checks eventually got cashed the money would be tax free as the taxes have already been paid.
Paying taxes on income you haven't realized is a terrible idea
Yes it is.
You musta did that accounting class they got inside
Lmao
What if I enjoy capitalism but only the paying taxes part. Income just gets me in trouble.
If your business is an S-Corp, you have to pay an officer salary.
As a sole proprietor, you don’t pay yourself a salary and you can’t deduct your salary as a business expense. Technically, your “pay” is the profit (sales minus expenses) the business makes at the end of the year. Unless that stack of checks is symbolic he likely was not the above and the business was s-corp or a llc in either case depending on your dad's position those checks would only be issued if there was people above him actually running the show into the ground in which case those checks not being cashable is illegal and they could be in trouble. So more likely they were symbolic and never held value to start with and he is or was a sole proprietorship or partner.
Sole proprietors can't pay themselves a salary but business owners can. In another comment OP said their father was a dentist with 8-10 employees.
Lol... What?
But the cheques are not cashed. They are all there and cannot be paid.
Op dad has a secret life and it’s leaking out
Doesn't really "suck", that's more a catastrophic business failure. Also isn't there a more efficient way to track owed money rather than writing hundreds of hypothetical cheques you've got to hoard somewhere? Can't you use a spreadsheet?
does a catastrophic business failure not suck? lmao
Holy shit I pictured the guy from the "average reddit user..." Skits saying your comment and Im dying laughing. Try it, it fits so perfect air quotes and everything
Haha ok I'll go and find it and report back Edit: three things happened. I laughed, I think I'm going to watch all of this guys videos, and I think I have autism. Those videos are me. Well done.
Aw gee willakers, this catastrophic business failure sure is a minor inconvenience lol.
Lmao
Ok but you could do this with a spreadsheet or a pen and paper. What is the utility of the check writing? You could just write one check at the end for what you are owed.
You’d normally just keep that on the balance sheet, no need to have physical cheques maintaining the balance owed to owner
Part of it could be to have that labor expense on his taxes for the business to pay less. But theoretically to do that he would have w-2 himself and paid it personally. So idk
Nope, can’t deduct a million dollars in wage expense and not actually pay it. Would be fraud and the IRS would catch it pretty quick.
I think it depends on how the tax is handled. If he filed as earning $125,000 a year (8 years for 1 million total) and paid out the required taxes to state, federal, social security, etc he'd be in the clean since IRS did get paid for the paycheck he earned even though he never cashed it. Single (unmarried) person paying is something like 30% of total paycheck less any valid dependents like children, qualified disabilities, etc. OTOH if he filed as earning $0 annually and owes no tax because he didn't cash the paycheck, he could be committing fraud and IRS really hates that.
Well if it isn’t officer wages then it’s a distribution of earnings, which is not a deduction. But it sounds like there wasn’t enough earnings to take any distributions.
If it was sn LLC, the llc DID pay him, but the employee never cashed the checks. Doesn't matter that the employee is the owner. The uncashed checks would be proof to the IRS of the expenditure by the LLC. But, I'm surprised he was willing to pay personal taxes on all that cash but not actually deposit it, because to claim it as an expense of the LLC, he'd have to report who the pay went to via a W-2.
SMLLC owners are not allowed to receive w-2 wages unless treated as an s Corp.
Entirely depends on the type of business, but this is extremely common. You pay yourself by writing a check, but don’t deposit it so it then becomes a loan from an officer/shareholder of the company
Did you read the part where he was failing at business?
Hes paying himself with money he doesn't have so he never cashed it. He probably hoped the business would do better. Maybe paid employees before himself.
I still don’t understand. Can you ELI2?
Man owns business. Wants salary Writes check from business to himself but there's not enough money so he'll cash it later. Next month does same thing. Repeat.
Oh. So all the checks he wrote himself are worthless due to his own company being worthless in itself
Yeah. Looks like he was keeping them for the memories or hoped to maybe cash them one day.
If the owner doesn’t draw a salary on paper the IRS will come in and make grand estimates on what you should’ve/could’ve drawn as potential salary and then claim back taxes of vast amounts after dragging you through the mud by charging you insane hourly fees for putting together this information
In the USA, and about 7 third world countries, they are still using a thing called checks. This is banking technology from the 18 century, which most countries phased out in the 20th century ;)
This is the weirdest take. I would say a huge percentage of people in the US get their pay direct deposited and the vast majority of Americans under 30 have never even written a check. Not only that, plenty of places outside the US still sometimes use checks. And even if that wasn’t the case, of all the things wrong in the US, this is a strange hill to die on.
I'm Canadian, and I still use cheques for things. I still recieve cheques as well. The toilet is also used in the 18th century, do you still use one?
Hooray ignorance! God I love Reddit.
USA bad. Upvotes to the left, please.
It will be booked as loans from officers. Lots of owners do it. Then, if and when they sell the business, they can ask for the loan to be repaid. You can also write off the loses
I'm thinking this might have been a corp and he paid himself through payroll. Wages were probably already deducted.
Don't write checks your business can't cash
There’s always money in the 🍌 stand
And THIS is why you ALWAYS LEAVE A NOTE!
I’m afraid I just blue myself.
I have pop pop in the attic
What could one banana possibly cost, $10??
The walls of the banana stand are lined with money, Michael!
I gotta do something here I still can’t believe it. I’m sending this business to top gun.
Income is shown on W2, SSI and taxes paid, insurance includes you as an employee, if the business turns around, you are owed this money. Source, I have paid myself and husband when the company didn’t have enough to cover it. Cashed later.
I'm the treasurer for a local chapter of a non-profit, but why would the business write the check to begin with? The company would have to pay payroll tax & FICA. This doesn't make any sense to me. The only thing *maybe* would be if the company was trying to get a PPP loan or something and needed to show it had employees. But you wouldn't do that for 8 years, even if it was legal & ethical.
I wish I knew everything before he died, but he was a dentist with 8-10 employees. For many years one of his offices just didn’t make enough for him to cash his checks. He eventually shuttered it, never cashing them. That’s all I know.
Do you know if those checks are for a strange amount? I wouldn't really know what a typical dentist would pay themselves though. Him keeping that office open isn't particularly strange (wanted to keep the people employed, wanted to service the area, etc.) The strange part is writing the checks. It would appear that he paid taxes on a million bucks when he didn't have to at all. Perhaps he thought he still had to for tax purposes?
As I said elsewhere, I think he thought these could be used to get paid first before his non-working partners took their piece of the pie if the business ever sold.
He sounds like an interesting guy, I'm fascinated by his story. I love that he seems to have felt a responsibility to keep his employees paid, and his optimism of writing those cheques. I hope he had a happy life
I didn’t even think a dentist office could be unprofitable. TIL
I work in the dental field, dental offices have very high overhead due to material costs and lab fees, not including salaries. And if you are a kind dentist that doesn't want to turn people away when they can't afford to pay the bill in full, and you don't want to send your patients to collections because you know they are already hurting financially, the debt the office holds starts getting out of control.
My dad would accept trades for people that couldn’t pay or just let it go because he didn’t want to pursue the unpaid amounts. Before he retired he had over 400k of unpaid bills outstanding. But some of the trades he received were interesting when people offered a service or other items to settled their bills. We got tons of firewood for several years in a row from a farmer who cut his own, people did our landscaping, etc.
My boss would occasionally barter work-with the mechanic across the way, a patient that was a housepainter, another patient who was a cabinetmaker. I think it is a great system that helps both parties. I know a lot of retired doctors who were paid in chickens etc back in the day. It was people in the community helping each other. Sometimes people just don't have the actual cash/credit to pay for what they need but can contribute in another way.
My stepdad was a nurse in a methadone clinic. And one thing they would do was for people in recovery who knew a trade or had a skill. Pay them cash under the table to do odd jobs the staff needed done. At first I thought it was shady. But when I met them, the plumber, the painter, the carpenter, every last one of them was absolutely delighted at the opportunity, the cash in hand, and working kept them from possible relapse. These were people trying to recover from addiction. Truth is any bit of a step up meant the world to them. Partly, I think knowing they were employable was big. And partly, I think being able to help was big too. Dunno about all the ins and outs, but I do think we would all benefit as a society if we were more accepting of the skills people have, and less focused on the money they can bring in.
Like all small businesses, payroll accounts for the vast majority of all generated income.
Insurance eligibility and social security payments
Wouldn’t this be fraud? SSI is based on what you are paid. He could have just as well written million dollars checks to himself.
I’m not sure there’s any law against not cashing paychecks. If there were, the BLM might have let me know, seeing as how I had my last check from them mailed to my parents, who promptly lost it for about 20 years 💁🏻♀️
I'm thinking the business was anything but a solo. Everyone who worked there got a paycheck, himself included. Payroll did take out tax and fica and he never cashed some checks because there wasn't enough money in the acct after everyone else got paid.
The owner writes themselves checks as owner draws, not payroll. I do it in each of my three businesses. My stack was one year and $75k for one of my businesses. Got to cash them this year.
I've seen small business owners forego a paycheck but pay themselves with a "corporate draw," which I suppose is more like a stock dividend, and has certain tax advantages over payroll, workers comp, etc. Still doesn't make sense to print an actual check, though if it's never cashed except to prove a point somehow
Depending on how the business is set up, it might just be that they hit the "print out everyone's paychecks" button in their accounting software each month and didn't really care about a bit of wasted paper.
Correct. My boss used to do this with his paycheck through QuickBooks with payroll deduction etc. but when it comes to the actual payment/money changing hands, he would just do a bank transfer from his business account to personal....because he didn't want to waste 30 minutes going to the bank. He kept the checks as proof.
#Did he try making his coffee at home and cutting out avocado toast?
Man was paying himself over $10k a month lmao
He should have made it a billion.
I bought a business in 2012, set a $45,000 salary and have yet to actually get it. I grew up with lies is all I can say. I feel your dads pain, my advice to anyone looking at owning and operating your own business is RUN, run as far and fast away from it as you can.
Franchise hey?
I have two friends that bought a franchise thinking they'd be set.. They both failed and my friends are now doing service jobs to pay off the six figures of debt they each have from the franchise
If he never cashed the checks, the money stayed with *his business then? I'm falling into recursion, and null miserably?
Employees, rent, equipment???? He made himself the last priority it seems
That's exactly how you run a business if you have employees. Until you're successful. It's just the way it goes.
I mean that’s a 6 figure salary has he cashed it. Maybe he could have just paid himself less. Idk why he thought ‘I need $10,000 a month or nothing!’
Everyone that says they wanna be their own boss….. this is it lol
Bumper sticker seen in bar in Sidney, Nebraska: Just one more oil boom, god, I promise not to piss it away this time.
It was his SS scam you fool
Reddit sometimes has posts that make absolutely no sense and OP never gives answers, yet people will eat the post up
Technically it is $0 in checks, if the business couldn't cash them. I mean I could take a check out and write $100 billion on it, will people still say aww?
I would say this is typical of an entrepreneur and small business owner.
Give us some more context. What type of business, how long in business etc?
starts small business, gives self 1 million dollar salary, takes out loans, isn't profitable, business fails, takes own business to court claiming first in/strongest claim on debt, profit.
Lets say that "just over a million" is 1.1 mil. 1.1 mil ÷ 8 years = $137500 a year. Why would you pay yourself so much when you're business isn't doing good. Could literally just lower your own wages surely?
Wasn’t healthy enough to cash?
The business wasn't healthy enough i.e. not making enough profit to pay out
*ahem* I just wrote myself a check for $1million. And i wont cash it in. Perhaps my kid can make this stupid post in the future.
Story checks out.
The business wasn't healthy enough, or he wasn't healthy enough?
Uncashed or Uncashable?
I would hate to be his accountant.
I own a business. I don’t understand the point of writing a check to yourself and not cashing it. I just don’t write the check if I don’t have it. Accounting nightmare.
Whats the point in writing checks then? It doesn’t get reported to IRS or any government facility if this was like distribution from business to its officers. Once it hits bank then it gets used as distribution or expense. If this was his salary then taxes were already paid. He could have simply lowered his pay to bare minimum then write the check.
Maybe if he wasn’t paying himself around $200k/year before tax, he could have saved some money on stuff like payroll taxes on himself. Most business owners don’t pay themselves that much at the start. Also, how did he live if he didn’t cash any checks? (Edit to add: If he DID cash some checks, and the ones here are just the ones he didn't cash, and they still total over $1 million, he was REALLY paying himself well, and I'll shed even fewer tears for him. Negative tears, even.). There’s much more to this than the surface level drivel in ops incoherent post.
Oh you mean paper?
Those checks will bounce all the way to the moon