Profit

[Duekster]

Originally Posted by lifetree

This is an under statement ... if this person has to ask these basic type questions he really shouldn't go into business for himself ... at least until he gets a better understanding of these things !!

I am pretty sure it is regulations and poor tax accounting that put most new businesses out of business. Doing the work is the easy part for most entrepreneurs. Add an employee and that is a ton of other paper work that willl get you in hot water if not managed.

CPA's and accountant have no guts or glory. You have to learn this yourself because the IRS and other agencies are looking at you and your business.

[Duekster]

Originally Posted by Sean Adams

Obviously it is easier for someone who has a year or two (or more) under their belt to look at their expenses and get an idea of what they are working with.

You need to set up a chart of accounts and do your very best to guesstimate what you will spend on all of these different categories... usually the things hardest to guess on are labor, subcontractors and cost of goods sold (fertilizer, seed, soil, mulch, etc.)

Numbers never lie. Everyone's situation is different. Everyone runs their business differently. Everyone has different expenses.

I hope you are using that as a phrase and not an accounting term. COGS applies to manufacturing not services with pass through purchases.

Most of us and for sure start ups are qualified small businesses that use cash accounting and do not maintain inventories.

[larryinalabama]

Originally Posted by jsslawncare

I use to work like that, I just don't care too anymore.

I do plan on slowing down quite alot this year, I dont care that much anymore eighter

[larryinalabama]

Originally Posted by Duekster

Rural vs urban but even then

The town I service is 10 miles from the ranch, I thought about buying a home in town but the extra personal expense wouldnt be worth it. Plus I haul alot of debris as well as grass clippings and I couldnt dispose of them in town.

[Duekster]

Originally Posted by larryinalabama

The town I service is 10 miles from the ranch, I thought about buying a home in town but the extra personal expense wouldnt be worth it. Plus I haul alot of debris as well as grass clippings and I couldnt dispose of them in town.

You made it sound like 40 miles round trip for one lawn.

[CL&T]

Originally Posted by Greensmith33547

Ok, I'm a little confused. I'm starting a lawn business around March of 2013 and my wife and I met with our accountant who said that we would take the amount we charge per hour, minus the cost of business, then take 25% for taxes from profit and the rest is net. I have seen questions like this open a can of words, but can someone give me a simple yes or no?

Let me see if I can put this in simple terms. You accountant is giving you a very basic explanation of how a business works. You take the amount of money you get from your customers, subtract from that whatever it costs you to run the business. That is your net profit that you will be paying income tax on. He is saying that you can figure (roughly) 25% out of that will go to the IRS and state but you should know what you are already paying along with your wife. So, what's left after taxes is what you put in your pocket.

Your cost of business is the money you spend on gas, oil,cell phone, advertising- any money that you lay out for your business. But be careful. Your truck payment (and larger equipment) is most likly a depreciable item meaning you can only claim those payments for a limited time. Your accountant will explain this to you.

Once you know what your expenses are it's a simple matter to figure how much you have to charge to pay for them. You will want to make more than that in order to put money in your pocket.

[larryinalabama]

Originally Posted by Duekster

You made it sound like 40 miles round trip for one lawn.

I thought I said 40 miles per "Day"
I generally only do 2 to 3 homes per day, and sometimes dont move the truck.

There is a small market for a 21" mower and a small Pickup, would that make life sweet??

[Smallaxe]

Sounds like there is a lot of pie in the sky thinking going on here... stay out of debt and keep your expenses as low as possible and earn as much as you can...
At the end of the month, decide which expenses are deductible and set aside at least 15% to cover FICA tax on the remainder...
From there you can begin to see what the figures might be on your year end 1040 Form...

Estimating before your first client is kind of delusional and will only give you a false understanding of how business works,,, or doesn't work...