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heygrassman
03-08-2002, 01:13 PM
1) If I purposely bid a job below cost in the attempt to get a job for the portfolio picture, can I reap tax benefits and how?? Marketing Exp?? looking creative but legal

2) Same scenaio above and bid the job at cost. Am I able to recoup anything?

I know there will be yelling but I need 2-3 maybe 4 landscaping jobs for my portfolio (that currently only has my yard in there.) This will not be common practice I need a few. From there I can show why I deserve the fair bid.

jf

Nebraska
03-08-2002, 01:27 PM
Do you use an accountant?

How comfortable would you be defending it in an audit should that happen?

heygrassman
03-08-2002, 01:36 PM
Yea.. I have an accountant but he is pretty untouchable until 4-16. I have a few I am looking at going after by the end of the month.

I am not looking for IRS troubles. I would want any alternative to be pretty set in code.

jf

Nebraska
03-08-2002, 03:27 PM
I don't know if this helps but I deduct the $ paid for referral as an advertising expense.

LawnLad
03-08-2002, 03:34 PM
Unfortunetly you can't write off opportunity cost. Otherwise we'd never pay taxes. Can you imagine... "Oh gee, I should have made another $500 on that job, so I'll just take that as an additional expense!". Gosh, this would be nice.

What you can write off is the actual expense for the job. So if the job cost you $1500, and you bid it at $1200, you lost $300.00. So you got the write off... you lost $300.00.

I thought about this a while back with respect to charity work. If we donate labor/equipment to Habitat for Humuanity - I'm loosing money by not working. All you can declare is your out of pocket expenses, which you'd have on a for profit job anyways. You just loose the revenue. In otherwords, it's an opportunity cost. It's like maintaining your mother's house. Got to do it... and it's a loss.

BRL
03-08-2002, 05:00 PM
What? You don't charge Mom? ;)

LawnLad
03-08-2002, 05:14 PM
Okay I lied in my previous most... darn straight I charge her. Terms are net 10 days, 2%.

Nebraska
03-08-2002, 05:45 PM
I am curious about the opportunity versus "real" costs.. Where do you find more information about this?
I ask because what if I had a friend of a friend that does a church for which the friend provides an invoice at the regular rate, they then provide a receipt that reflects the invoice and they write the full amount of as charitable contribution. The friends accountant say's it alright?

LAWNGODFATHER
03-08-2002, 09:20 PM
Simple simple simple.

"IF" you payed for material, you write those off correct?

"IF" you pay employees, you write that off correct?

"IF" you don't make any money on it, humm no taxes to be paid.

So how do you get writing off the job, that has already been done.

"IF" you don't make a profit off it, that's "your" fault, not the IRS.

Do that job at whatever price for you portfolio.

Next thing you need to do, is spend about $100 talking to an accountant.

You just flunked Business 101.

LAWNGODFATHER
03-08-2002, 09:24 PM
Originally posted by Nebraska
a friend that does a church for which the friend provides an invoice at the regular rate, they then provide a receipt that reflects the invoice and they write the full amount of as charitable contribution. The friends accountant say's it alright?

Well that's not the same as what we are discussing.

Nebraska
03-08-2002, 11:07 PM
Having good day LG?

It does relate to the thread directly to the issue of Charity Work.

LAWNGODFATHER
03-08-2002, 11:11 PM
Originally posted by Nebraska
Having good day LG?

It does relate to the thread directly to the issue of Charity Work.

Doing charity work is tricky.

Doing work for free or a real low price for advertising is not the same, nor any where close to charity except for the customers check book.

Not all charity work and 100% of it is tax deductable.

LawnLad
03-09-2002, 10:10 AM
Nebraska... I'm not sure what you mean when you're looking for more information on "Opportunity Cost". It's a concept - not really an accounting function that is a line item.

In Accounting 201 I remember the professor said to us, "What does your college education cost you for a four year degree?" It isn't just the $10 K a year in tuition times four years or $40,000. You have to ask yourself, what could you have been doing those four years you weren't in school. Earning money - maybe $80,000 over those four years with no degree. Therefore, the true cost to get the education is $120,000, including opportunity cost.

Beyond this, I don't know what more info there is on it. It's truly a question of economics... if you have limited resources - how do you best apply them to get the maximum return? If you feel advertising will give you more long term return than a job today, than make the investment, take the accounting loss and move on. You choose how to allocate your precious resources; time, capital, materials, etc. We all do this every day when we decide to turn down a looser job for one that has more profit potential.

Nebraska
03-09-2002, 10:25 AM
Understand all that. Just wondering if it relates to charitable contribution of services.

bruces
03-09-2002, 01:10 PM
Originally posted by heygrassman
1) If I purposely bid a job below cost in the attempt to get a job for the portfolio picture, can I reap tax benefits and how?? Marketing Exp?? looking creative but legal

2) Same scenaio above and bid the job at cost. Am I able to recoup anything?

I know there will be yelling but I need 2-3 maybe 4 landscaping jobs for my portfolio (that currently only has my yard in there.) This will not be common practice I need a few. From there I can show why I deserve the fair bid.

jf
Your tax "benefits" are that you have no profit on the jobs (or a loss on the job). This is really the same scenario as just bidding a job poorly or having something go wrong that you can't bill the customer for and taking a loss on a job. You have your revenue and have your expenses.

There is nothing wrong or illegal about this.

You don't have anything to recoup, whatever you bill is income and expenses are expenses, it is that simple.

OBRYANMAINT
03-10-2002, 08:51 AM
I would'nt bid at cost or lower at all just to have a nice corner property that some may see and to hope to get leads off it!


If you need work soo bad you will lose money in a gamble to gain it you may work on running you biz in a more profitable fashion with what you have.

I have tried to do something similar in the past to schmooze a large plowing account in efforts to gain .....regretted it