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Old 10-02-2002, 08:36 AM
1mowlawn 1mowlawn is offline
LawnSite Member
Join Date: Dec 2001
Location: southern il
Posts: 44
My 1st year in Lawn Care

Ok guys please give my some advice, I started doing lawn care for some of the elderly people at my church and since then it has grown to pretty good partime business, I've gotten enough customers that I had to buy Insurance, a better 21" push mower, ZTR, trailer, tow behind core aerator, trimmers, blowers etc. I have even done some small landscaping projects. My question is the accounting side of this small Business and how to properly keep track of everything. I had purchased close to 10K in equipment and ytd have about 10K in sales which about 3/4 of those sales are cash, and the other 1/4 is from commercial accounts that they have told me upfront that they report their lawn maintenance as a bus expence on the taxes, I would like to get a good idea of what I should acually report on my year end taxes, I know I need to show the commercial accounts but do I need to show all the cash payments? also equipment cost and expenses, can I write off any of this? I have a friend that operates a excavating bus and he said that he would not even consider reporting the cash jobs ? I would like to keep my partime bus small and uncomplicated but I also don't want be audited. I currently keep track of all my customers on a Excel work sheet. I just need some good advice. Thank You in advance!
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Old 10-02-2002, 08:55 AM
ScottH ScottH is offline
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Join Date: Jan 2001
Location: Lower Burrell, PA
Posts: 60
I highly recommend finding a good small business accountant. The questions you ask can get very complicated. And, while an accountant will cost you a few bucks they will generally meet with you, talk over your situation and give you some general ideas for free.

i wouldnt report every small $35 job, but you do need to be realistic and keep the operation classified as a business ( where you can write off losses against other income) vs a hobby ( where you can only writeoff expenses to the extent of your revenue. )

How you write off/expense assets like mowers/blowers etc gets complicated. And, don't forget that one of the key ideas for small business' is to be able to write off what for most people are personal expenses. the key is to describe expenses correctly and document.

in short, i believe a GOOD accountant will be well worth the cost.

Good Luck - ScottH
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Old 10-02-2002, 09:30 AM
greenman greenman is offline
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Join Date: Jun 2002
Location: Little Rock, AR
Posts: 1,405
I don't record every little cash job, if it goes directly into my pocket. Some peolpe think they don't don't need to file every little cash job. Not true, if that cash is deposited into your account it needs to be filed, because its traceable. There is software available on this site that will keep track of your clients, schedules, pay, receivealbe, etc. If you already have an accountant, (don't know your age) he/she can help you with the tax side of things (hopefully). (My accountant didn't inform me that sales tax has to be applied to my commercial accounts).
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Old 10-02-2002, 10:36 AM
bruces bruces is offline
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Join Date: Jun 2001
Location: Independence, MO
Posts: 648
Any IRS agents on this board?

Hope there aren't any IRS agents who are members here. The first post says "hey, do I need to pay tax on my income?", and the next two both say, nah, if it is cash it isn't taxable, don't pay tax on the cash you receive.

If you are not reporting all of your income, a public forum isn't a good place to disclose it.

If it is earnings of $1, it is taxable income to you. It doesn't matter if the person who pays you is reporting it or deducting it on their taxes or as a business expense.

That said, if you bought 10k worth of equipment and had 10k of income, you can probably break even on taxes if you report every dollar of your income. You can depreciate up to 24k of equipment in the year of purchase. You will also have your other expenses (gas, supplies, insurance, etc.), so you might even wind up with a loss.

If you have a tax preparer or accountant, talk to them, get some advice on setting up and keeping records, and maximizing your tax deductions. The money spent will be well worth it. If you don't have one, get one.

Again, I don't intend to come off as holier than thou, but if I'm not paying tax on all of my income, I'm not posting it for public information.

As a practicing CPA, I tell my clients if you don't want me to know something, don't tell me!
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Old 10-02-2002, 11:11 AM
dr grass dr grass is offline
Join Date: May 2002
Location: Flint, Mi.
Posts: 242
bruce - you hit the nail on the head there buddy! wow .... 1mowlawn i would be REAL careful about advice, and question posting on here if i were you. you could get yourself into some deep doo doo if uncle sam gets wind of this. be careful! hate to see one of us go down like that.

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Old 10-02-2002, 11:28 AM
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bubble boy bubble boy is offline
LawnSite Bronze Member
Join Date: Jun 2001
Location: north Toronto
Posts: 1,020
$10000 in revenue, with the expenses he listed i really doubt he would owe the IRS anything.

have you kept track at all of profits from the business???

you need to keep everything biz related seperate...all money for biz, all expenses...ideally in a seperate bank account.

but as for the previous transactions, try to sort it out.

in ontario, at $10 000 you wouldn't even need to charge sales tax.

and here, at that income, even double that, i wouldn't bother with an accountant. just declare it as other income on your personal income taxes. but you should check with your state tax office.
"I am ready to meet my Maker. Whether my Maker is prepared for the great ordeal of meeting me is another matter."

Sir Winston Churchill
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Old 10-02-2002, 12:14 PM
1mowlawn 1mowlawn is offline
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Join Date: Dec 2001
Location: southern il
Posts: 44
The purpose of the post was so that I can do the right thing and run a good business, and get some pointers from more seasoned lawn care operators. I never said I didn't intend to pay taxes or cheat the IRS in any way. I will take good advice that was given and contact an accountant and spend the time and money to do all this right, like I said it is a partime venture and I have no intentions of making this a fulltime career.
Thanks again.:blush:
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Old 10-02-2002, 08:07 PM
The Lawn Choupique The Lawn Choupique is offline
Join Date: Mar 2002
Location: The Occupied South
Posts: 199
The best course of action would be to report all earnings. Allthough as we all know cash transactions are not traceable as there is no paper trail, it would be dishonest not to report the income. As allways, send the government everything that you feel that they have comming to them. That is the best bet.
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Old 10-02-2002, 08:52 PM
Doogiegh Doogiegh is offline
LawnSite Senior Member
Join Date: Oct 2001
Location: Central N.J.
Posts: 877
Hey 1mow

You THINK it will be part time... for now.

Stuff happens, and you lose your fulltime job...

You go to MOW to make extra money.. This happens next spring.. You HAVE to advertise cause jobs are tough.. And you get a great response.. And now you are super duper busy.. And now you might forget about looking so hard for a new full time job cause you suddenly love making your own schedule, working when you want to, and being your own person...

I work in a business office Mon-Fri, 8:15 to 5:15 every day.. Gets a little boring, but the benefits are great and it's nice to have a "regular" reliable job. I've been cutting on Saturdays only and love it so far. I have no idea how far I will take this "part time" mowing thing..

But, I would definatly recommend reviewing and doing the tax piece of things.

Other thing is then you become a legitimate business and you can get business credit.. Otherwise all you are reporting is your full time job, when really you can get more money because of the business income you have...

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Old 10-02-2002, 10:38 PM
Darryl G Darryl G is offline
LawnSite Fanatic
Join Date: May 2001
Posts: 8,033
I actually report 100% of my income, even cash. Just yesterday, I deposited a $50 bill that IRS would have never know about. Am I stupid? No! I want to be able to categorically deny any improper money management. Also, I'm in my first year and need to show all my income in order to impress banks and others who care.

I agree, you need an accountant, at least to get you started in the right direction. Also, here in CT, lawncare and landscaping are taxable services. I don't know how it is by you.
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