Wood: Hardware Businesses Face Severe Tax and Cash-Flow Lag
Anthony Wood · Roku: Anthony Wood · Nov 21, 2022 · at 6:38
Roku founder Anthony Wood reflects on running his first hardware startup, describing the cash flow dynamics and tax liabilities inherent to physical manufacturing.
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“One of my big lessons was the amount of money you have to report on your tax return is unrelated to how much cash you have in the bank. In the hardware business, you know, you got to buy parts, you assemble them, So you got to buy the parts. You got to pay for the parts in advance. You assemble them into the things you're going to sell. And then you sell those things. And then those people that buy them, the stores, they take 30 days or 90 days to pay you. So you don't get paid for a long time after you buy the parts. And so it's a cash, you have a cash flow issue. And so, but you pay taxes on the sales, no matter what the cash situation is.”
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