Advancing from "under the table" work

[Pizpoppa]

My business is rapidly beginning to increase and for next season I think I am going to have to become more professional like offer contracts and whatever else entails being more "professional." For example, do you guys with many accounts pay taxes? Well, I am sure you do, but how do you go about making this transition from under-the-table to professional? And is it possible to have over 50 accounts and still be UTT? Thanks

[SJR Lawncare]

If you want to be "Professional" you would pay your taxes like the rest of us professionals, besides eventually you will get caught evading taxes.

[Scraper]

Sore topic!!! Once you start paying taxes you'll see why we "Professionals" have to charge what we do...glad you are from the other side of town.

P.S. 5 or 50 accounts...you should be paying taxes. No excuse!

PPS Seeing as you are in Langhorne...you should be collecting state sales tax on nearly all services as well...which I'm sure you aren't!

[geogunn]

Originally posted by Pizpoppa
...how do you go about making this transition from under-the-table to professional?

you may find the transition easier than you think.

let me run this example by you. let's suppose you are a lawn care company that runs "under-the -table" (your words, not mine).

and there is another company out there that is "professional", read that to mean: conducts his/her operation legally.

let's further suppose that the "professional" guy is getting tired of busting his keester to make a living while the other guy rakes in huge profits from failing to report federal income tax, state income tax, fails to report sales tax-both state and local. you get the picture.

finally, after having a belly full of this illegal operator scamming everybody, he calls the IRS RAT LINE and spills the beans. a 1-800 number, by the way.

as the IRS is a very big agency with lots of things going on for them, it takes them a couple of years to get around to the complaint. but finally, the "under-the-table" guy gets a notice of audit. they can go back three or more years I think.

an audit? hey no problemo, right? just take all your records down there in a shoe box and dump 'em on the auditors desk and tell him to figure it out, right?

let's end the story here. suffice it to say that these people are trained to ferret out unpaid tax. very important: THEY AUDIT THE TAXPAYER, NOT THE RETURN! THEY WILL ASK YOU FOR ALL OF YOUR RECORDS, STATEMENTS, YOU HAVE ALREADY LISTED YOUR TOTAL INCOME FOR THE REPORTING YEARS AND THEY WILL GO IN AND ATTEMPT TO SHOW THAT YOUR LIFESTYLE HAS EXCEEDED YOUR INCOME. THEY CAN HAVE THE BANK REPRODUCE A RECORD OF EVERY TRANSACTION THAT HAS GONE THROUGH THE SYSTEM. HAVE YOU EVER TAKEN A CHECK TO THE HOMEOWNERS OWN BANK TO CASH, ONLY TO FIND THAT YOU HAD TO PUT A DRIVERS LICENCE NUMBER ON IT TO CASH IT? ever wonder why they care? HHMMMM?

once they establish that you have unreported income, they will ask for your client list.

so, sorry for being so long here. just giving a little food for thought. so to answer your question:

Originally posted by Pizpoppa
...how do you go about making this transition from under-the-table to professional?

you may find the transition easier than you think.

have a great day.

GEO

[Vandora Lawn & Landscape]

Is it really necessary to keep pounding home the fact the being under the table is evil. We KNOW that! Its obvious he wants to go legit. HELP HIM! Don't just tell him how evil he is. My advice would Pizoppa would be to contact your lawyer and accountant and discuss it with them. They should be able to set you straight tax wise and help you find insurance and the other exepenses you'll need to pay.

[Charles]

Interesting article in sundays paper Nov, 19.
By David cay johnston
NY time news service
SOME SMALL COMPANIES STOP PAYING TAXES
Edited by me.
Lake Shasta california,
Al thompson has 28 employees in his manufacturing company. Told his employees that only foriegn companies need to pay taxes. Said his employees and his business didnt need to pay taxes.
NO soocial security or medicare taxes either. The company no longer withholding taxes from their paycheck or telling the IRS how much money they made.
This company is among a tiny but growing and flamboyant fringe of american business. They are even bragging about this on their web sites and talk radio.
The irs has not only failed to go after these businesses but has in some cases given refunds after they claimed the had paid taxes they didnt owe in the past.
At least 23 business have made the decision not to pay taxes public. They are trying to persuade 1000s to join them.
IRS blames congress for cutting their funding and their ability to go after theses companies with limited rescources.
The artical goes on....

[Scraper]

Yes...it is NECESSARY! And if you read his post he asked in the last sentence whether it is possible to have over 50 accounts and still be under the table! It is people like this that give us all a bad rap! Anyone on here can search and find all the information they need to be legit! Poor question if you ask me and a very SORE topic!!! Maybe you could e-mail him personally and help him out. If not...I hope the flaming continues and he sees fit to make everything legit...including this years receipts!

[awm]

This guy is just at a certainpoint in
progression of his buisiness.
I ll bet 90 percent go from a few mows
to something you got to do right.
Nows the time to get it right though
so contact a good tax man or accountant
and let him get you straitened out.
Gonna hurt a little but then you want
have to worry.

[thelawnguy]

"as the IRS is a very big agency with lots of things going on for them, it takes them a couple of years to get around to the complaint. but finally, the "under-the-table" guy gets a notice of audit. they can go back three or more years I think. "

If it is for fraud, or failure to report income by 50% or more, or failure to file a return, the statute of limitations is FOREVER...

[Scraper]

All right Vandora...what do you think now? The guy even advertises!

http://www.geocities.com/pizpoppa/prices.html


$25/hour? ARGHHHHHHHHHHHHH@!!!!!!!!!!!!! Thank GOD he's in Bucks County!

I think Stone ahs a word for these...don't worry...I won't say it! ;)


[Edited by Scraper on 11-20-2000 at 06:10 PM]

[Charles]

Lawnguy, I agree. I think eventually the IRS will come after these companies. Lawmakers in the artical were complaining that it could get out of control if they let it go on much longer. More companies are joining in in the tax evasion scheme. Doesnt seem fair to the payers to let them get away with it for very long. If congress is going to keep spending like crazy. They need to fund the IRS fully to collect this money. And most everyone can be made to pay their fare share

[thelawnguy]

Originally posted by Scraper
All right Vandora...what do you think now? The guy even advertises!
http://www.geocities.com/pizpoppa/prices.html


LOL has an email address too, I saved this thread and the website, now who wants to split the reward???

(Relax pizpoppa just start doing right and you will be okay.)

[GrassMaster]

Hello Everybody:

I've been audited 3 times & all three times I used a CPA. I would suggest finding a good bookeeper? CPA's are just overpaid Bookeepers with a piece of paper saying they went to school & did OK on thier report card. Then that convinces the CPA's & others that they can take advantage of the working man. Bleeding him to death & also make him pay for those few years of education till the day he dies?

They say besides somebody turning you in or your income changes very much one way or another yearly is what brings on a audit lots of times.

When they do audit you & they suspect you been skimming, that paying cash for food or gas is how a lot get caught. Why because the IRS can't find where you pay yourself cash to start with to have the cash.

If you not going to do it right & pay taxes then find another line of work. If you own a business you can just about write off anything you want & yes it's questionable. LOL that's what bookeepers are for?

You only have to pay what you get caught not paying. A friend of mine about every other year doesn't pay his taxes & he gets caught. The last time they audited him he owed them over $58,000 & they gave him so long to pay it. Well he showed up on the last day & all he had was $35,000. They were pleased & wiped the slate clean. He made out!

The IRS are really great people, LOL most of them are. If they audit you & it looks like a honest mistake, they will cut you some slack. They did me one year, my 72 year old bookeeper had made a continual error over a 5 year period. It came up to $33,000 in unpaid taxes, well after it was all over with. I payed them $5,200. I made out!

My wife does my books now & we get a bookeeper to do the taxes for us at the end of the year! We are happy, of course we are not making money either!

[Pizpoppa]

Ok listen guys,

It does not feel good to be the one who is 1. being made fun of, 2. being criticized, and 3. given a hard time. I am 17 years old and inexperienced about the business side of lawn mowing. I really enjoy this business, and in the future I am hoping to make a career out of it. I just asked this question because I want to learn to do it the right way. I was hoping to receive some information about how to go about doing it correctly, but instead I mostly got a hard time. So, sorry if I upset any of you with my comment, but i only asked the question because I want to learn how to do the business properly.

Scraper, you made me cry.

[Eric ELM]

Go to a proffesional person that does bookwork and have them let you know what you need to do to get ready for tax time. It's coming up soon, so now is the time to start doing it right.

[lawnboy]

Hey, I think you definately need to start paying taxes, it is part of life. I would sit down with an accountant and review your business. It would be wise to hire one as well in order to have all your records straight. You are less likely to have problems with the IRS. Don't worry about Scrapper, he is always negative in his postings, never has any real advise to give.

[Ssouth]

Pizpoppa,
Think you pissed some people off. Don't worry, most of them probably started out "UTT". Glad you are trying to find out what to do in order to be legitimate. I'm no expert, but the first thing I would do is to get a license for your business. When you are at the local Court House, ask who you should speak to about taxes. They should be able to point you in the general direction. Your should also have liability insurance in case you mower blows up and destroys some home, care, & etc...
Also, the IRS will send you a cd-rom (at no expense to you) titled Small Business Resource Guide (what you need to know about taxes and other topics).
Do not be discouraged by all of the negative attention your post received. These people are mad because they all pay their taxes, ins., license. (As I do) Just find out what you need to do and do it.
I'm glad to see that you are seventeen and are thinking about the consequences of your actions. It shows that you wany to become a true "professional". Take it one step at a time.

Good luck,
Ssouth

[Twotoros]

Let me relay a story of a guy in my town that went gang busters stating out with a #1 set-up from trucks&trailer down to blowers and yellow page ads . Three years later the IRS got him and he hadn't been paying any taxes. He even charged a fairly high price.
Next season a lot of us here are going to organize and that is one of our goals - turn in the "undertables" .
Don't take chances.

[Lazer Man]

You ask a good question , what do you need to do to become legit. First get commercial liability insurance , start keeping good records of your expenses: equip. purchases , fuel reciepts , the fuel includes the fuel for your vehicle uses also . If you are more than a one man operation you will need workers comp on your workers . Contact your state dept. of revenue to find out if you need to collect sales tax for the service you are providing (most do require it), so you can get a tax id # . You don't have to go to see an accountant but is not a bad idea. What you will ultamatly will be paying taxes on is whatever money is left after youv'e paid all your expenses . Next year when its tax time is the time to take all of your well kept records to an accountant , to go see one now is just another expense , talk to your parents they probaly could set you up with one . You are being very smart for your age, sounds like you want to do this job the way it should be done. You didn't need to be read the riot act . By the way it sounds like by looking at your web page that your pricing yourself on te very low price end, you need to start raising your prices. Just do some research in this site and you should see what I mean.

[turfman99]

Being under the table is just creating a situatin for yourself where it becomes very hard to climb out form under the table before Shep the dog farts on you.

When you begin to pay taxes and obey contracting laws, you do a couple of things for your self.

1. You begin to build a legimate paper and financial trail for your business, that will allow you to obtain credit and financing. It's hard enought doing that being self employed, but when you have no documentation as to your business performance, you are just SOL as far as geting any type of financing for well, anything??

2. You remove yourself from the possibility that the IRS, the state,any other taxing agencies will deal you a death knoll with a retroactive tax situation and lien situation, and that would be at least 9 per cent interest. And if you can not prove it, they may just make it up and there won't be a damn thing you can do.

3. You will possibley put your self in a better income situatin by being able to deduct legimate business expenses off your income, albeit cash as it is. Your not running that through a bank are you??

4. You will save your self from having your housed and equipment firebombed by irate legimate business people paying taxes and obeying the law. It is in your best interest to become "above the table ASAP".

50 accoutns better be making you about $4,000 a month. You can afford to pay taxes on that income at 17 years old. Wait unitl you have kids to feed.

Good Luck

[Lazer Man]

Comeon people firebombing houses !!!!!
I beg to pardon but I'd bet my bottom dollar that most of you who started out at a young age did it under the table maybe even at an older age , so lets lighten up on this young man. Some made valid points on starting a legitate paper and financial trail, thats what banks do look at when handing out loans. I already told you about prices.

[turfman99]

Tounge in cheek comment about some of the reactions you see about this subject. It was meant to poke some fun at ourselves.

Your right about virtually everyone starting out under the table, I did when I got laid off from a job with a wife and baby to support back in the finacial disaster called 1981.

Does anyone remember 18% bank rates and 25% inflation?? Made cash business look damn good then.

The kid is coming correct and I think some of us offered advice and some of us expressed frustration. Both legimate concerns. I was more interested in gils and cars at 17 than a business. Give him a break..He probably does not have a house to firebomb.

[KirbysLawn]

First, Pizpoppa did not state he was 17 in his first post, therefore Scraper and most everyone here figured he was an adult.

When we were 17 did we pay taxes from cutting grass? As for me, nope. But...did I advertise myself as a professional business, nope. I think the advise given above after we knew the age of the person asking the question is good advise.

As for ADULTS who are under the table and walking happily through life making the big profit.. http://www.unionturf.com/bamm.gif

Ray

[Scraper]

Not to be harsh Pizpoppa, although your age is not an excuse and seeing that you have been a member since July...you should have known, but without knowing your age...I got a little po'd and I apologize. That said...if you have any questions about what needs to be done in PA feel free to e-mail me with your questions (oscapes@yahoo.com) and I will help the best I can...or at least steer you in the right direction.

Peace.

P.S. Kirby...where the hell do you come up with those graphics? LOL

[Edited by Scraper on 11-21-2000 at 12:40 PM]

[Greenkeepers]

Piz-

You need to get legit as soon as you can. As for it being a hard process? No not at all. It sounds as though you are a sole proprietor, which means it is just you. Your question "but what if I have employees". That is Ok but you will have to setup payroll and withhold taxes from their checks.
The problem with being a sole prop. is the liability. You are solely responsible for any and all liabilities of the business. This includes from lawsuites to credit card fees and they can seize personal property. The process of becoming a corp isn't that complicated either, so you need to decide what direction you want to go.
Next, do you file a 1040? The sole proprietorship is filed as a schedule C on the 1040 and is just a summary of your income and expenses, not that difficult.
Glad to hear that your going in the right direction, Good luck and you shouldn't be advertising heavy if you don't pay taxes. It's just a popcorn trail to you.

Mike
Greenkeepers

[awm]

Your service presentation is impressive

[Albemarle Lawn]

Do whatever you want until you are 18.

[crazygator]

I appreciate that at least your asking the right questions, about going legit. This is the best move you can make, whether you stay in the lawn care business or not. It will educate you and make you appreciate everything to your business that you will not get any other way. It will raise you above others your age and get much respect from us older ones as well. Go to the state offices and get legal, and while there ask them some of your questions. They will be glad to help, or point you in the direction of the help. I hope it all goes well for you and look forward to your posting in the future telling us you made the move and are a legal company. Good Luck!!!:cool:

[bruces]

I'm a CPA and part time in the lawn business. You should see an accountant (CPA) or qualified accountant (perhaps someone who is not a CPA but qualified with the IRS that has the designation of "Enrolled Agent") or other qualified accountant. Your parents may use someone or someone they or friends who are in business use.

If you are going to go legit, don't wait until next April to consult an adviser. You might be in for a big shock as to how much tax you could owe, and you could miss out on a lot of deductions and breaks because you didn't know what receipts to keep, records needed, etc.

Depending on your situation, you might also want to consider incorporating or forming a limited liability company.

Definitely get liability insurance. You've got a lot of exposure and you should be able to get a million dollars of coverage for $1000 per year or less. Also insure your equipment.

[Esby]

How many customers do you have? In your original post you noted you had 50 customers....but now lets check that web page someone brought up and click on the "back" icon on the bottom of the page, you stated here that you currently serve only 15 customers.....this is a very big difference. I would say for 15 customers.......now everyone go ahead and tear me apart on this one, but you could get cash for these accounts and not worry about it. For 50 accounts however, you had better find a way to get out from "under the table" and start paying you taxes. I dont know where you are in your business, as you have contradicted yourself. Best of luck

[AltaLawnCare]

Just curious, as to why this old post was brought up? Pizpoppa last posted 4/30/01 and this thread is a year old.
Maybe all the fields in the profile should be mandatory and we would know the age of members.
It's pretty interesting reading, but why would anyone anounce to the world that they operate "under the table"....
:confused: :confused: