Taxing Circumstances

Seven orders awaited my ministrations on Tuesday morning. Seven would be fine and dandy if they were $100 orders, or even $50 orders. It's considerably less dandy when they're all $10-15 orders, and that pattern held up all week. When last I checked*, this week stood at 32 orders (fair) worth just $375 (awful). Small orders usually indicate that people are done with their Christmas shopping and down to filling in gaps. It seems early for that, but I don't celebrate holidays myself and I don't know much about how ordinary people do. Television leads me to believe that they're furiously buying up smartphones, cars, and prescription drugs.

As I merrily marked down most of my old stock, I forgot a lesson that I'd learned years ago: bargain hunters are also bottom feeders. They won't load up big boxes of low-priced goods; they're just going to buy one thing, and they're probably going to complain about it. Now that almost everything I sell has been reduced to $15 or less, the tiny average order should not surprise me.

*I said "when last I checked" because I couldn't update that this morning. My website is down. Remember how I downgraded my IP address from dedicated to shared? Turns out that my Sunshop license is keyed to my IP -- Turnkey has to update that to get me back online. Ticket opened; waiting for response....

My IP address changed on 12/2 and my license renewed on 11/29, so I have no idea why it waited until 12/8 to fail. It's always something.

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The constant stream of bad news out of Washington probably isn't affecting sales; the tax debacle won't take effect until next year, it's mostly benign in the beginning, and nobody really understands it yet anyway. From what I can tell, the initial damage will hit home businesses, 1099 income, and the working poor.

We're going to lose our home office deduction and a lot of related Schedule C expenses related to my wife's teaching jobs. Curio City and Blue Hills should be okay because they're under Kraken Enterprises. As I understand it, corporations can still deduct most of the costs of doing business -- only individual small businesses are getting reamed. I don't understand the "pass-through entities" provisions yet. As an S corporation, Kraken's profit goes onto our personal 1040 and gets taxed as ordinary income (albeit without payroll taxes), so I guess that makes me a pass-through. That might turn out to be a reason to keep Kraken going even if I kill Curio. But my understanding is that the new tax system was written primarily to benefit C corps, so I honestly have no idea. 

I do know that losing the deductions for state income tax, charitable contributions, medical expenses, tax preparation, and especially Anne's home business expenses is going to hurt us, and probably everybody else who runs a home business. I'm tentatively expecting a modest tax increase next year. Buying TurboTax instead of hiring a CPA to do our personal returns will save a few hundred bucks, so maybe that will neutralize the tax hike for the first year or two.   

The damage to the economy stemming from middle-class tax increases should be two to three years out -- I think I read that the tax hikes snowball in 2021, conveniently after the next presidential election -- so it shouldn't be depressing sales this Christmas except insofar as uncertainty is always bad for business. In fact, holiday sales will probably be robust as people mistake the stock market's performance for the economy.

The middle class has been stagnant or shrinking since the Reagan administration; the Republicans are merely accelerating a decline that they set in motion in the 1980s.

It's definitely a good time to get out of retail, though. Retail depends on middle-class spending. Billionaires aren't going to use their newfound millions to buy more of my stuff. 

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Minor milestone: I passed order number 115000. That means that 15,000 transactions have gone through Sunshop over the past 12 years. Some of those were tests and some were canceled orders, so the number of actual sales is something lower (QuickBooks is on order 14,685, and even that number isn't entirely accurate).