[Market-farming] big difference between gross profit and grossprofit MARGIN

Margaret L Wilson booldawgs at cavenet.com
Fri Feb 4 20:39:53 EST 2005


Steven,

I have noticed several times that you are incorporated.  My farming situation and my husband's consulting business need to be incorporated.  I am (at this point) paying income tax to the State of California because we have kept our primary residence there.  It is complicated but I do have my reasons.  I am selling my home there soon.  My husband is currently working there (for a company out of Alaska) and they are withholding CA taxes. 

Is there anyone that you could recommend or refer me to that could advise me on where to incorporate and all of the details??  He will want to stay with this company at least two years, for health insurance and until I can prove this farm can support us.  At this point I am filing income and expenses under him.  I have not wanted to pay FICA and the other details for me.  I do file jointly.

If this is something that you are not comfortable with, no problem.  I understand completely.
Thanks
Margaret
  ----- Original Message ----- 
  From: Steven Rogers 
  To: Market-farming 
  Sent: February 04, 2005 5:03 PM
  Subject: [Market-farming] big difference between gross profit and grossprofit MARGIN



  Adriana:
  If you read my email closely you will see that I said GROSS PROFIT MARGIN not gross profit. 2 totally different things.
  Gross profit margin=((gross sales-cost of sales)/gross sales)X100
  Read closer still and you will see that I said my gross profit margin averages about 65%. The 50% figure you are quoting is my threshold figure used when evaluating a business opportunity. Over 50%gpm=yes, under50%gpm=no.
  As I further stated, Singing Pig Farm, Inc is a corporation. As president of the corporation is receive a salary every 2 weeks. I have a payroll service that cuts the checks for myself and my one employee. As a shareholder of the corporation, I also receive dividends on the company stock that I own. I personally own the farm and lease it back to the corporation which is a third income stream for me. I also have a 401K plan which I contribute to with pretax money and the corporation matches it. I pay only self employment tax on my conntribution and on the company match no taxes are paid .  I am straight salary,overtime exempt status which means that I get paid the same salary every 2 weeks no matter how many hours I work.
  My cost of sales for the gross profit margin includes the following: seeds, irrigation, fertilizer, cultivation, harvest, packing, distribution/ Included in these items are fuel, hourly rate for equipment, hourly rate for labor. From the gross sales comes taxes, my salary, depreciation and land costs to arrive at the net.
  Please do dust off your fianacial books.
  Steven Rogers
  singingpigfarm at earthlink.net
  EarthLink Revolves Around You.




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