For those with muliple crews - a tax question

[DFW Area Landscaper]

Ok guys, for those of you who manage the business and haven't actually mowed a lawn yourself in years, what percentage of gross sales do you target for meals and entertainment expense?

I just pinned my accountant down on this and he says "I’d think in the 1% range wouldn’t raise concern". So I am like WAAAAY under budget but I will get there easily.

In my business, we are 100% residential with no commercial clients to entertain or anything like that. Hoping to get a similar LCO's input.

Is anyone pushing meals & entertainment to 1.5% or 2% of gross sales or even higher?

Later,
DFW Area Landscaper

[z_clark]

1% is my "goal". Eat up :drinkup: entertain away!

[Bigray]

imo, it would not matter if you were doing 10%, as long as you have the receipts, feel free /comfortable about deducting it. it is a legit deduction.

[rodfather]

It's not something I think about with over 200 mowing customers alone. Throw in all the fert, landscaping, snow plowing, etc. clients as well and maybe I will give it a second thought...maybe.

[bohiaa]

this is where it gets tricky, I came from Dallas area, I'm now in Houston, from time to time I go back home, well if I wanted to I can write off my milage meals, hotel expense, and call it a business trip, who's to know if I didn't see a client, it's NOT the right thing to do. but it can be done.

I try to keep mine at around 7to10%

but I only purchase meals for employees, Ice, and items like mp3 players.
MP3's ARE NOT writeoff per say. they can be given as gifts, or motavation items,

[bohiaa]

However,,,,,,

take some cash and deposit it your Business account.....when they see that they will leave you alone........

[T.E.]

These type questions, or problems...lol I leave to my accountant. What ever she is comfortable with should we get audited. The thing with receipts is to me something of a time bomb. What I mean is this. My old accountant before he got to feeble told me of an audit that one of his other clients was involved in. They presented the receipts for fuel, (I R S thought there was too much for fuel) the auditor slid the receipts back across the table, and said "PROVE" to me that the receipts are really fuel you bought. The point is they may try to make you prove that the receipts are for what you say they are for. I knew of a guy that would actually use other peoples receipts for his own. He is now is now in prison for other things. JMO, Tony

[bohiaa]

correcton............. .07 to 1.0 %

sorry

[bohiaa]

These type questions, or problems...lol I leave to my accountant. What ever she is comfortable with should we get audited. The thing with receipts is to me something of a time bomb. What I mean is this. My old accountant before he got to feeble told me of an audit that one of his other clients was involved in. They presented the receipts for fuel, (I R S thought there was too much for fuel) the auditor slid the receipts back across the table, and said "PROVE" to me that the receipts are really fuel you bought. The point is they may try to make you prove that the receipts are for what you say they are for. I knew of a guy that would actually use other peoples receipts for his own. He is now is now in prison for other things. JMO, Tony

yea dirty pool, hate to say it, but I'm glad he's locked up, "it makes it cheaper on me.

there are tons of ways to cheat, if you ever get started it's hard to keep up with, all the lies that is

[TJLANDS]

I am almost at 2% for 2006. I am constantly out to lunch with contractors,( irrigation snow etc). I also go out to lunch with my lead people to discuss work issues. I have taken charters out fishing with employees and clients.
Many rounds of golf with management companies, customers and employees. You can also write off trips to snow expos and green industry shows. Its a fun part of having your own business.
And yes I have been audited both state and federal and the meals and entertainment were never an issue.

[DFW Area Landscaper]

My views are this:

I own my own company. I invested my own capital and I work hard. I set goals. I meet them.

When I was in corporate america, I was just an employee. I invested no capital in the business. I risked nothing. However, if I made certain goals and objectives, there were free vacations to Paris and Hawaii. Free lunches on a regular basis. The Thanksgiving and Christmas dinner. The 5 year watch/pendant/whatever. There were Christmas parties with open bars. Casino parties. There were Rangers games. The list goes on and on.

Outside of rewarding employees for loyalty or meeting goals, there was no "business purpose" to these expenses.

So, as far as I'm concerned, if I spend 1% of gross sales on my own personal entertainment as a reward for my hard work, loyalty and sales abilities, IRS shouldn't have a problem with it. They should encourage people to take risks and start small businesses. These things are good for the economy, even if those businesses fail.

Just because I invested my own capital and took on risk, I shouldn't be prevented from being wined and dined by my employer. Technically, I'm an employee of my LLC. It just so happens that I am the only shareholder of the LLC who employs me.

Later,
DFW Area Landscaper