PDA

View Full Version : With the state of the economy/industry.....


ACA L&L
02-28-2011, 03:42 AM
Whats to keep you from flying un der the radar for say 50% of your customer base or say all of them. I was in the mower shop last week when the dealer was telling me that sales are way down, he has equipment that was dropped off by larger companies last fall and now its for sale do to non payment. He also told me about another comapny, the owner was doing Landscape installs and maint. for years, sold off his maint. and accounts to just do high dollar installs, when economy crashed he got back into mowing. Dealer said he was going under the radar this year, no signs on trucks, minimal payroll on books, all cash,or 50% cash, downsizing considerably, due to the fact that he cant compete with the lowballers, the weekend warriors, whatever have you.

Im sure its due more to the fact he is under charging/over exteneded, and trying to maintain his day to day as before, but whats to stop you from flipping all or most of your maint. accounts to cash? I see his reasoning, if hes still claiming 50% of what he takes in and pockets the other 50%, his operating costs will be covered and claimable on the books, im assuming he will keep insurance, 1 or 2 employees on payroll, but other than that hes going down a few notches to compete with the guys that are banking all the money they get from working under the table. I know fr a fact the trucks and trailers are already striped clean with no names or id on them other than his Ag lic #. He sold most of his landscaping equipment this winter as far as dump trailers, skid, and some other heavy equipment. He was at one point one of the founding members of the lawn and Lanscape associations in town. He was booted for withdrawing "funds" from the associations account on accident..........Makes me wonder has anyone else given any thought to this idea??

Ths story made me think, hes either genious, or he will regret this move more than anything else he has ever done in the biz for the last 30 years.......

Greyst1
02-28-2011, 04:04 AM
Tempting, but the IRS scares me. The next 10 years worries me.

Richard Martin
02-28-2011, 06:31 AM
There's not a good chance that the IRS will audit you but if they do you'd better be able to explain how you're living a $50,000 a year lifestyle on a $20,000 income. The IRS cherry picks the best of the best to work for them and it's not likely that you're going to explain away a $1,500 mortgage, a $500 truck payment, a $500 equipment payment, eating out and taking vacations very easily unless you show the income to pay for them. They can and probably will pull every bit of personal financial data that is available on you.

coolluv
02-28-2011, 08:31 AM
Before I went through all of that I would get into another line of work. You will lose the respect of your clients. If they pay you in cash then they will know you are a Jack leg. You hurt any future growth of your company as your reputation is ruined. You will not be taken seriously. You will only attract scum clients.

Id walk away before Id do something like that. And the IRS scares the hell out of me too!

Dave...

jonathanone
02-28-2011, 08:44 AM
We found that unless the incentive was at least a 25% discount for cash money few people were interested, taking credit cards was much more popular and profitable-but this doesn't let you go underground plus how can you hide anything unless you pay for fuel in cash and don't have any paper trail with regard to insurance?

gasracer
02-28-2011, 09:40 AM
I wouldn't risk it. The IRS has ways of finding things you didn't think they knew. What would you do about your millage for the day and the fuel you burned doing the cash sales at the end of the day?You get audited and you show 3 yards mowed on Tuesday,you claim 100 miles and $50.00 in fuel.

CLS LLC
02-28-2011, 10:13 AM
I wouldn't risk it. The IRS has ways of finding things you didn't think they knew. What would you do about your millage for the day and the fuel you burned doing the cash sales at the end of the day?You get audited and you show 3 yards mowed on Tuesday,you claim 100 miles and $50.00 in fuel.

Although I don't agree with doing cash sales. This post is a stretch. You don't have to show the IRS your service records. Who says you even kept them. I would assume if you're tying to get as many deductions as possible you wouldn't be claiming mileage on the truck so you would just be filling up with gas and claiming the fuel. And the IRS is not going to investigate how far each yard is from your home/shop and how much lawn there is and how much gas your equipment burns. Maybe the lawns are really far apart, maybe you come back to the shop after each stop, maybe your truck has a bad fuel injector and is only getting 3 miles per gallon.

Like I said I don't necessarily agree with what he's doing, BUT if he is smart about it, there is no reason he can't get away with it. I'd honestly be more worried about a customer being disgruntled that you're not paying your fair share in taxes and ratting you out.

Richard Martin
02-28-2011, 12:17 PM
I'm going to put it this way. I keep a log of each and every stop. Date and mileage. If the job is for something other than mowing that is noted. I'll attach a scan of a page from my log. It's not pretty but it should get the job done in an audit. The numbers on the right side are a stop at the gas station to fill up my truck. I don't claim the fuel from my vehicles, just the equipment. I only keep those figures so I can watch my fuel mileage and know if something might be wrong with my truck.

It doesn't matter to me if anybody else keeps logs. It's not my butt that has to explain someone else's numbers if they get audited. What I don't want someone to do is read one of these threads and get incorrect information.

Here is the specific IRS rules about record keeping. Interpret them as you see fit.

http://www.irs.gov/pub/irs-pdf/p463.pdf

gasracer
02-28-2011, 12:29 PM
I keep a mileage and expense log on everything... You can write off your business miles on your work truck. A good accountant will make sure you keep up with everything.

Golfpro21
02-28-2011, 12:50 PM
keeping logs allows up here to claim 100% of all fuel used in the truck, the truck payment and the insurance payment
Going under the radar will not get you any further ahead......what happens when you need to get a loan, or financing for something, or your mortgage comes up for renewal.....you need income on paper....telling your bank that you can afford $1500/ month mortgage without being ablle to show the income does not work...not anymore

lawnkingforever
02-28-2011, 01:21 PM
There's not a good chance that the IRS will audit you but if they do you'd better be able to explain how you're living a $50,000 a year lifestyle on a $20,000 income. The IRS cherry picks the best of the best to work for them and it's not likely that you're going to explain away a $1,500 mortgage, a $500 truck payment, a $500 equipment payment, eating out and taking vacations very easily unless you show the income to pay for them. They can and probably will pull every bit of personal financial data that is available on you.

True, very few people % wise gets audited or investigated. Also like Rich said, income to expenses/assets ratio can trigger an investigation if the numbers don't add up. For a legit business to suddenly convert 50% of its' customers to cash and not claim that income could be trouble. Also, a friend of mine who works at a bank told me that business accounts of certain industries will be scrutinized more than others. She told me lawn mowing companies and pizza shops were just a couple of businesses they look at for illegal activity.

TNGrassCutter
02-28-2011, 02:45 PM
I'm going to put it this way. I keep a log of each and every stop. Date and mileage. If the job is for something other than mowing that is noted. I'll attach a scan of a page from my log. It's not pretty but it should get the job done in an audit. The numbers on the right side are a stop at the gas station to fill up my truck. I don't claim the fuel from my vehicles, just the equipment. I only keep those figures so I can watch my fuel mileage and know if something might be wrong with my truck.

It doesn't matter to me if anybody else keeps logs. It's not my butt that has to explain someone else's numbers if they get audited. What I don't want someone to do is read one of these threads and get incorrect information.

Here is the specific IRS rules about record keeping. Interpret them as you see fit.

http://www.irs.gov/pub/irs-pdf/p463.pdf

Richard, just wondering, why do you not claim fuel expenses in your truck?
Posted via Mobile Device

8404
02-28-2011, 02:51 PM
ya why no gas recepts for the truck?

Richard Martin
02-28-2011, 05:10 PM
Richard, just wondering, why do you not claim fuel expenses in your truck?

The mileage deduction pays me more.

ACA L&L
02-28-2011, 09:08 PM
Althought his is not something i would attempt to do....ever, i know his wife makes quite a bit of money. I think they are pretty well off, again dont know any details, I saw him yestrerday, but did not strike a converstaion, cuz i knewe i would of blurted a question out......I hope he was just venting, but again i could really care less, cash guys dont have a rep, dont really get top dollar, many other things to consider/ give up when you take the cash route.......I too am scared of that ugly building........so i will keep making deposits, and p[aying these gigantic payments every month. The people over there work hard for my money!!