How is this business model possible?

Question by big_j_gizzy: How is this business model possible?
An independent contractor I know takes work for $ 8.75/transaction in this particular line of work. He generates enough leads to then hire other independent contractors under him to do the work through his business for $ 6.75/transaction. Hence, $ 2 profit per/transaction. But independent contractors pay close to 25% of that original $ 8.75 to taxes, so how is this guy making any money?

Great answer:

Answer by Sean Sweeney
He’s not. He’s losing money based on the details you have provided. I would suggest that he has found some tax break that allow him to reclaim a portion of the profit. If he is able to claim back a quarter and processes 1,000 transactions a day he would be walking away with $ 250.00 for doing nothing. I don’t think he is giving you all the details though. Either that or he is running it at a loss to reclaim capital in some other area of his business.

I hope this helps,

Best,

Sean Sweeney
http://bizzbeginnings.com

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