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Old 03-10-2000, 08:39 AM
yardsmith yardsmith is offline
LawnSite Senior Member
Join Date: Jan 2000
Location: Ohio
Posts: 627
I have heard a few diff. schools of thought on this one. <br>I work a full time job in addition to my mowing business, & have a little extra taxes taken out from work to ease burden for business.<br>My acct. combines the 2 incomes, & deducts all my mowing expenses for the year. I've gotten a refund every year, but a friend told me if you get refunds 3 years in a row with a business, that's an easy way to get audited.<br>My acct. said as long as you increase income & show steady growth, it's ok to declare a loss each year, 'cause you're upgrading your equipment, truck, etc. And it's only part time income.<br>Who's right? Is either wrong, partially or totally? I've heard acct's say both ways, too. Naturally, I don't want this to go on forever, but I am holding off on my taxes until I can get a few opinions. What have you guys done?<p>----------<br>Smitty ô¿ô<br>
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Old 03-10-2000, 09:11 AM
JasonPC JasonPC is offline
LawnSite Member
Join Date: Feb 2000
Location: Massachusetts
Posts: 79
Smitty,<p>As long as you're being honest about your deductions and what you make, you can get money back. You don't have to claim a loss to get money back. For instance, we had thousands in deductions this year, but still made a nice profit. But I paid in 20% after supplies to the IRS and MA, so we took the full equip. deductions and got a few thousand back. <p>The IRS rapes us and every other small business. There's no reason we can't get a refund back every year. In fact, many business owners use the IRS as a tax free savings account. ;-)<p>You shouldn't be more vulnerable to an audit just because you're getting a refund for 3 or more years. If you're making $100,000 or more, you're already more vulnerable to an audit. But your chances of being audited are about 0.1% to 1% at most. So don't worry!<p>-Nicole
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Old 03-10-2000, 09:14 AM
Barkleymut Barkleymut is offline
LawnSite Bronze Member
Join Date: Jan 2000
Location: Richmond, Virginia
Posts: 1,117
Don't listen to friends when it comes to business or taxes. Would you listen to them if you wanted medical advice? No you would contact a doctor. As long as you have a good accountant I would trust them much more than a friend. Good Luck
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Old 03-10-2000, 09:44 AM
thelawnguy thelawnguy is offline
LawnSite Silver Member
Join Date: Dec 1999
Location: Central CT
Posts: 2,412
The refund has nothing to do with profit or loss, just shows a person doesnt know how to plan ahead. The IRS loves to give refunds, it means uncle sam had a free loan for the year.<p>Profit and loss, however, is a different story. <p>Dont be afraid of an audit unless you have something to hide. If you are audited and things are legit they leave you alone but if an error is found I can almost guarantee every year thereafter you will get that lettewr asking for more information, or substantiation.<p>Bill
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Old 03-11-2000, 06:14 PM
crew crew is offline
LawnSite Member
Join Date: Jan 2000
Location: St. Paul,MN.
Posts: 163
As long as your accountant is going to sign at the bottom you gotta go with him. His a** is on the block right with yours.
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Old 03-11-2000, 06:30 PM
MRPLOW MRPLOW is offline
LawnSite Member
Join Date: Jan 2000
Posts: 88
Actually your accountant's ass is not on the line, your's is. He's just filling out the forms with the information that you have provided him, it's not his responsibility to verify your deductions or expenses.
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Old 03-11-2000, 11:57 PM
Lazer Lazer is offline
LawnSite Bronze Member
Join Date: Jan 2000
Posts: 1,446
Most of what is here is good info.<p>If your business looses money year after year, at what point does it become a hobby?<p>Loose money for 3 years, sure, but hopefully you're growing and/or will be making money some point in the next 3.<p>If you loose money too many years, your side business becomes reclassified as a hobby.<br>
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Old 03-12-2000, 12:38 AM
yardsmith yardsmith is offline
LawnSite Senior Member
Join Date: Jan 2000
Location: Ohio
Posts: 627
The reason I consulted my friend is because he is sort of my mowing mentor; he helped get me started, as he is in the biz too. He ends up owing every year & can't hardly fig. out how I can do it.<br>My revenue grows each year, & I buy bigger & better equip. as needed; just had me worried to a point because he's been in this longer than me. So maybe it's the way we have our bus.'s structured (a little different).<br>I have also heard acct's. differ on the same subject; it's the who do you trust-it better be the right one deal.<br>I'm also aware of the hobby classification clause too. Not much chance of that happening.<br>Thanks for the posts thus far. Anyone else get refunds?<p>----------<br>Smitty ô¿ô<br>
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