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      07-26-2011, 04:43 PM   #265
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Originally Posted by 11Series View Post
Thanks for proving my point. Even highly profitable companies issue debt. Debt is an integral part of the business sector.
OMG you are funny...Microsoft went 30 yrs without issuing debt...they did this a few yrs ago...you are contradicting yourself yet again......they issued debt cause it was free money at such low interest rates...they didnt need this to grow or to be successful...do you know how much cash they have?...3B is nothing to them...its like you and me borrowing 10.00 and implying it will change our lives...
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      07-26-2011, 04:49 PM   #266
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Originally Posted by mact3333 View Post
OMG you are funny...Microsoft went 30 yrs without issuing debt...they did this a few yrs ago...you are contradicting yourself yet again......they issued debt cause it was free money at such low interest rates...they didnt need this to grow or to be successful...do you know how much cash they have?...3B is nothing to them...its like you and me borrowing 10.00 and implying it will change our lives...
Thanks again for confirming that for what ever reason, Microsoft borrows money. Many companies borrow money for many reasons. Credit and debt is integral to modern business.
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      07-26-2011, 04:50 PM   #267
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Originally Posted by 11Series View Post
Many small businesses structure their start-up capital as a loan to the business entity, even when the start up capital comes from the pockets of the sole proprietor.

Don't know if you incorporated your lemonade stand differently?
If im using my money out of my pocket for a lemonade stand or ice tea stand, im not in debt to anyone, because i used my own money. Debt is when you owe some one money besides your self.
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      07-26-2011, 04:56 PM   #268
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Originally Posted by mact3333 View Post
OMG you are funny...Microsoft went 30 yrs without issuing debt...they did this a few yrs ago...you are contradicting yourself yet again......they issued debt cause it was free money at such low interest rates...they didnt need this to grow or to be successful...do you know how much cash they have?...3B is nothing to them...its like you and me borrowing 10.00 and implying it will change our lives...
In September, Microsoft’s board authorized the company to raise up to $6 billion in debt financing. Microsoft has already sold $2 billion of short-term debt, known as “commercial paper.”
http://vansantos.com/2009/05/11/micr...debt-offering/.


Intel Corp has $42Bill in cash, but they have $2.5B in debt as well.

Point is, a company does not have to have any debt to function and grow, but they do so now and then for various reasons.
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      07-26-2011, 05:02 PM   #269
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Originally Posted by KGB7 View Post
If im using my money out of my pocket for a lemonade stand or ice tea stand, im not in debt to anyone, because i used my own money. Debt is when you owe some one money besides your self.
That's all well and good, but how many companies can generate enough capital on their own to further their business? The course you suggest is often much longer and much, much slower (although granted, it's the nobler path!). There is also, of course, an element of risk management involved. If I want to grow my business, but I also know I need to keep a sizable amount of cash in hand (for a rainy day or whatever), the only way to achieve my goals might be to take out a loan.

Any medium or large corporation will tell you that debt financing is a critical aspect of their business, without which they would not have been able to grow. Cheap, easily available capital is a core pillar to business and capitalism. And yes, that includes small business owners. Ask the average guy starting his own restaurant or his first store; the vast majority of Americans cannot procure that initial capital on their own without some form of a loan (including private equity). In fact, the lack of access to loans and capital following the financial collapse played a large role in the sustained depression of our economy.

The problem we have today is that our government has been irresponsible in increasing the debt over the past decade. Large government surpluses during the Clinton administration have turned into large government deficits that will eventually become unsustainable. The economic collapse (and consequent drop in tax revenue) has not helped things one bit, either. I think we can all agree on this point.
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      07-26-2011, 05:07 PM   #270
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Quote:
Originally Posted by KGB7 View Post
In September, Microsoft’s board authorized the company to raise up to $6 billion in debt financing. Microsoft has already sold $2 billion of short-term debt, known as “commercial paper.”
http://vansantos.com/2009/05/11/micr...debt-offering/.


Intel Corp has $42Bill in cash, but they have $2.5B in debt as well.

Point is, a company does not have to have any debt to function and grow, but they do so now and then for various reasons.
+1 to this.
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      07-26-2011, 05:08 PM   #271
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Quote:
Originally Posted by KGB7 View Post
In September, Microsoft’s board authorized the company to raise up to $6 billion in debt financing. Microsoft has already sold $2 billion of short-term debt, known as “commercial paper.”
http://vansantos.com/2009/05/11/micr...debt-offering/.


Intel Corp has $42Bill in cash, but they have $2.5B in debt as well.

Point is, a company does not have to have any debt to function and grow, but they do so now and then for various reasons.

Yup...and AAPL, GOOG, etc and other successful co's sitting on 100's billions of it...but Mr 11 seems to think even profitable and great co's need to sell debt in order to be successful...strange.

Of course debt and financing is integral to smaller and up and coming co's that is a given, but its not needed for the established ones to succeed obviously.
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      07-26-2011, 05:08 PM   #272
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Originally Posted by pman10 View Post
That's all well and good, but how many companies can generate enough capital on their own to further their business? The course you suggest is often much longer and much, much slower (although granted, it's the nobler path!). There is also, of course, an element of risk management involved. If I want to grow my business, but I also know I need to keep a sizable amount of cash in hand (for a rainy day or whatever), the only way to achieve my goals might be to take out a loan.

Any medium or large corporation will tell you that debt financing is a critical aspect of their business, without which they would not have been able to grow. Cheap, easily available capital is a core pillar to business and capitalism. And yes, that includes small business owners. Ask the average guy starting his own restaurant or his first store; the vast majority of Americans cannot procure that initial capital on their own without some form of a loan (including private equity). In fact, the lack of access to loans and capital following the financial collapse played a large role in the sustained depression of our economy.

The problem we have today is that our government has been irresponsible in increasing the debt over the past decade. Large government surpluses during the Clinton administration have turned into large government deficits that will eventually become unsustainable. The economic collapse (and consequent drop in tax revenue) has not helped things one bit, either. I think we can all agree on this point.

Taking a loan out so you can have cash for rainy day is not a great idea, because you still have to pay back that same money, thus you not doing anything beneficial for your self, instead you losing money on interest.

If you want your surf board shop to grow over night, then you get a loan, because most surf board shops dont have the capital to back it up. Or, you can save and save, and then after few years you can expand.

So you can grow with debt or with out it. Either one is a choice.


Im still doing some reading, but the only reason i can think of, as to why a company would take in debt, is so it doesnt have to risk its own money, even if it has $50Bill in cash. Heck, i wouldnt want to risk and lose $6Bill over night.
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      07-26-2011, 05:09 PM   #273
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finally some sensible talk!



Quote:
Originally Posted by pman10 View Post
That's all well and good, but how many companies can generate enough capital on their own to further their business? The course you suggest is often much longer and much, much slower (although granted, it's the nobler path!). There is also, of course, an element of risk management involved. If I want to grow my business, but I also know I need to keep a sizable amount of cash in hand (for a rainy day or whatever), the only way to achieve my goals might be to take out a loan.

Any medium or large corporation will tell you that debt financing is a critical aspect of their business, without which they would not have been able to grow. Cheap, easily available capital is a core pillar to business and capitalism. And yes, that includes small business owners. Ask the average guy starting his own restaurant or his first store; the vast majority of Americans cannot procure that initial capital on their own without some form of a loan (including private equity). In fact, the lack of access to loans and capital following the financial collapse played a large role in the sustained depression of our economy.

The problem we have today is that our government has been irresponsible in increasing the debt over the past decade. Large government surpluses during the Clinton administration have turned into large government deficits that will eventually become unsustainable. The economic collapse (and consequent drop in tax revenue) has not helped things one bit, either. I think we can all agree on this point.
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      07-26-2011, 05:14 PM   #274
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Originally Posted by KGB7 View Post
If im using my money out of my pocket for a lemonade stand or ice tea stand, im not in debt to anyone, because i used my own money. Debt is when you owe some one money besides your self.
If you incorporate your lemonade stand, you and your lemonade stand are separate entities. You aren't loaning money to yourself, you are loaning money to KGB Lemonade LLC.
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      07-26-2011, 05:15 PM   #275
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Originally Posted by 11Series View Post
If you incorporate your lemonade stand, you and your lemonade stand are separate entities. You aren't loaning money to yourself, you are loaning money to KGB Lemonade LLC.
KGB Lemonade LLC is ME. I am KGB Lemonade LLC. If KGB Lemonade LLC loses money, I too lose money.
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      07-26-2011, 05:25 PM   #276
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Originally Posted by KGB7 View Post
KGB Lemonade LLC is ME. I am KGB Lemonade LLC. If KGB Lemonade LLC loses money, I too lose money.

Clearly you have never started a business. You are a separate entity than your LLC. You don't automatically lose money just because your LLC loses money.


For example, your LLC gets sued for breech of contract for 1 million dollars and you lose in court. YOU don't lose 1 million dollars. You bankrupt the business and the debt follows the business, not you. You and the business are separate entities.

Another example. Your LLC fails to pay 1 million dollars in taxes and the Gov't seizes your business. YOU don't have to pay 1 million dollars in back taxes. Those taxes follow the business, not you. You and the business are separate entities.

Another example. You loan your business money, then pay yourself back with revenues, and you pay yourself a salary out of the LLC. Then after a few years of operation, your LLC starts losing money and you walk away with your original dollars, and all your payroll you issued yourself over the years. Your LLC loses money, but you don't.

A business with debt is a business with debt regardless of whether the loan comes from outside sources, or from a sole proprietor.

Last edited by 11Series; 07-26-2011 at 05:43 PM.
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      07-26-2011, 05:33 PM   #277
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Originally Posted by mact3333 View Post
Microsoft ... issued debt cause it was free money at such low interest rates

Then you should be REALLY happy about the US gov't debt! Check out these low low interest rates!! Talk about free money!!

Based upon your logic, if we were to run the United States Gov't the way Businesses run, we should INCREASE the amount of debt we issue, so we can be more like Microsoft


COUPON MATURITY PRICE/YIELD PRICE/YIELD CHANGE TIME
3-Month 0.000 10/27/2011 0.07 / 0.07 0.015 / 0.015 16:59
6-Month 0.000 01/26/2012 0.10 / 0.10 0.000 / 0.000 16:58
12-Month 0.000 06/28/2012 0.19 / 0.19 0.010 / 0.010 16:51
2-Year 0.375 06/30/2013 99-31¼ / 0.39 0-01+ / -0.020 16:59
3-Year 0.625 07/15/2014 99-30 / 0.65 0-03 / -0.032 16:59
5-Year 1.500 06/30/2016 100-03 / 1.48 0-06¾ / -0.045 17:00
7-Year 2.375 06/30/2018 100-31 / 2.22 0-09 / -0.044 16:57
10-Year 3.125 05/15/2021 101-14+ / 2.95 0-13 / -0.048 16:59
30-Year 4.375 05/15/2041 101-17½ / 4.28 0-20 / -0.037 16:59

Last edited by 11Series; 07-26-2011 at 05:46 PM.
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      07-26-2011, 05:37 PM   #278
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Quote:
Originally Posted by 11Series View Post
Clearly you have never started a business. You are a separate entity than your LLC. You don't automatically lose money just because your LLC loses money.


For example, your LLC gets sued for breech of contract for 1 million dollars and you lose in court. YOU don't lose 1 million dollars. You bankrupt the business and the debt follows the business, not you. You and the business are separate entities.

Another example. Your LLC fails to pay 1 million dollars in taxes and the Gov't seizes your business. YOU don't have to pay 1 million dollars in back taxes. Those taxes follow the business, not you. You and the business are separate entities.


A business with debt is a business with debt regardless of whether the loan comes from outside sources, or from a sole proprietor.
My business cant function with out me, it cant make lemonade with out me, I AM the businesses. If i don't have employees, then it cant run on its own.

I used to have my own businesses and i still do. I used to cut grass in HS, now the tractor cant cut grass on its own, i have to be there to ride the tractor and cut the grass.

Same thing with cars that i buy and send over seas. Cars dont buy them selfs with my money and ship them selfs, I do all the leg work.

And as the sole owner, the Govt will go after my money to recover the back owned taxes. I know some one who owned money for back taxes, and the Govt took money directly out off persons bank account, not businesses account, but personal account.
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      07-26-2011, 06:08 PM   #279
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Originally Posted by KGB7 View Post
My business cant function with out me, it cant make lemonade with out me, I AM the businesses. If i don't have employees, then it cant run on its own.

I used to have my own businesses and i still do. I used to cut grass in HS, now the tractor cant cut grass on its own, i have to be there to ride the tractor and cut the grass.

Same thing with cars that i buy and send over seas. Cars dont buy them selfs with my money and ship them selfs, I do all the leg work.

And as the sole owner, the Govt will go after my money to recover the back owned taxes. I know some one who owned money for back taxes, and the Govt took money directly out off persons bank account, not businesses account, but personal account.

Sounds like you don't know the difference between incorporating and doing business as an individual. When you cut people's lawns, you were doing business as an individual. You probably don't even pay taxes on your "business" of buying cars as an individual and selling them overseas. You are probably a tax cheat, who hasn't actually filed for incorporation.

People who fail to set up their businesses correctly, or co-mingle funds, or do business as and individual, or commit fraud, or fail to pay certain taxes on behalf of employees can definitely expose themselves personally. But short of things like this, the IRS will not go after the owner of a business that fails to pay corporate income taxes. In this case, the exception actually PROVES the rule. Thank you.
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      07-26-2011, 06:10 PM   #280
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Originally Posted by 11Series View Post
Sounds like you don't know the difference between incorporating and doing business as an individual. You probably don't even pay taxes on your "business" of buying cars as an individual and selling them overseas. You are probably a tax cheat, who hasn't actually filed for incorporation.

People who fail to set up their businesses correctly, or co-mingle funds, or commit fraud, or fail to pay certain taxes on behalf of employees can definitely expose themselves personally. But short of things like this, the IRS will not go after the owner of a business that fails to pay corporate income taxes. In this case, the exception actually PROVES the rule. Thank you.

So why did Madoff go to jail and not the furniture in his office?
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      07-26-2011, 06:12 PM   #281
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Originally Posted by KGB7 View Post
Taking a loan out so you can have cash for rainy day is not a great idea, because you still have to pay back that same money, thus you not doing anything beneficial for your self, instead you losing money on interest.

If you want your surf board shop to grow over night, then you get a loan, because most surf board shops dont have the capital to back it up. Or, you can save and save, and then after few years you can expand.

So you can grow with debt or with out it. Either one is a choice.


Im still doing some reading, but the only reason i can think of, as to why a company would take in debt, is so it doesnt have to risk its own money, even if it has $50Bill in cash. Heck, i wouldnt want to risk and lose $6Bill over night.
What I bolded is what I meant, when I made the 'rainy day' comment. Sorry if that wasn't clear.

I think there are two big reasons for taking out a loan:

1.) Your example of the small business 'surf board store' owner.

2.) A large business wants to start a new project, that will generate them a lot of cash. However, they don't have cash in hand to make the investment. What do they do? Take a loan, and use the profits they bring in to pay off the loan, and pocket/invest the remainder earned.

After those two, you get to more complicated reasons. You have interest rate swaps, currency swaps, your $50 billion example, etc.

Basically, I agree with you. Just clarifying my point a bit
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      07-26-2011, 06:14 PM   #282
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So why did Madoff go to jail and not the furniture in his office?
Well, he was guilty of criminal misconduct.

An LLC LIMITS your liability to your business/corporation, it doesn't EXCLUDE you from any liability. Hence the name "Limited Liability Corporation."

So in essence, both you and series11 are wrong
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      07-26-2011, 06:17 PM   #283
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So why did Madoff go to jail and not the furniture in his office?


Oh god. *face palm* Did you seriously NOT know the answer to this?!?!?!?

Because he committed fraud. I covered that in my previous post you quoted in your response:

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People who ... commit fraud ... can definitely expose themselves personally.

Last edited by 11Series; 07-26-2011 at 06:40 PM.
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      07-26-2011, 06:20 PM   #284
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Originally Posted by pman10 View Post
Well, he was guilty of criminal misconduct.

An LLC LIMITS your liability to your business/corporation, it doesn't EXCLUDE you from any liability. Hence the name "Limited Liability Corporation."

So in essence, both you and series11 are wrong
Where was I wrong? I clearly stated that fraud would expose a business owner to personal liability:

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Originally Posted by 11Series View Post
People who ... commit fraud ... can definitely expose themselves personally.
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      07-26-2011, 06:23 PM   #285
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Don't lump ME in with this guy. I clearly stated that fraud would expose a business owner to personal liability.

And a company not paying back taxes is a fraud as well. Not paying taxes is a fraud. Because the chairs that are part of a company cant be sent to jail or held responsible for fraud, let alone pay taxes on time, even though they are part of a company.

Here i found an example that clearly shows that you are wrong. And he wasnt trying to commit fraud or avoid paying taxes.

http://www.bizjournals.com/wichita/b...axes-pays.html
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Last edited by KGB7; 07-26-2011 at 06:29 PM.
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      07-26-2011, 06:35 PM   #286
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And a company not paying back taxes is a fraud as well. Not paying taxes is a fraud. Because the chairs that are part of a company cant be sent to jail or held responsible for fraud, let alone pay taxes on time, even though they are part of a company.

Here i found an example that clearly shows that you are wrong. And he wasnt trying to commit fraud or avoid paying taxes.

http://www.bizjournals.com/wichita/b...axes-pays.html
Not paying taxes CAN be fraud, but it is NOT fraud in all cases. You really have never run a business, it is very clear.

Just like buying cars as an individual and selling them overseas as a profit and not reporting it on your personal income taxes CAN be tax fraud, but also could just be handled with a penalty and back taxes due, without triggering criminal arrest and criminal charges. When exactly did you file for incorporation?


http://www.andoveramerican.com/lifes...-process-error

The lien wasn't against him or any of his personal property, it was against his business.

"Andover mayor Ben Lawrence said he has taken care of a $58,000 federal tax lien against his business, Collision Center of Andover"

And there was no forfeiture, or seizure of anything of Lawrence's taken by the gov't according to either article.

Nor does either article state that Lawrence's PERSONAL money was used to pay off the lien. And neither article says that anyone FORCED him to use personal money, even if he did.

I can guarantee that if he used personal money, it was booked as a loan (or similar) in Collision Center of Andover's ledger.

This is getting childish. You don't even understand your own sources. You don't know the difference between incorporating and doing business as an individual, you don't understand the concept of piercing the corporate veil. It's like debating with a recent high school graduate.

Last edited by 11Series; 07-26-2011 at 06:45 PM.
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