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  #21  
Old 02-05-2013, 01:33 AM
newz7151 newz7151 is offline
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Here's a question, because I know there is a CPA on the board somewhere.. but if you've got a company credit card that carries an ongoing balance of say $25K+ that you can never fully pay off without exhausting all capital (money in the bank) available to cover daily and monthly expenses such as utilities, rent, supplies, payroll, do you ever really have PROFIT to pay income taxes on or are you just continuing every month to month hoping that one day something will happen and you'll be able to put that first penny on the wall in the frame?
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  #22  
Old 02-05-2013, 10:56 AM
205mx 205mx is online now
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I'm pretty sure those expenses are not deductible until you pay the bill for them.
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  #23  
Old 02-05-2013, 02:07 PM
nylesedwards nylesedwards is offline
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My first year I grossed $12,000 and made a net profit of $8,000. In my first year I just did grass cutting and did around 8 mulching jobs. I layed around 50 cubic yards. Plan on netting $20,000 this year
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  #24  
Old 02-05-2013, 03:48 PM
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LandFakers LandFakers is offline
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Originally Posted by 205mx View Post
we are in very similar situations!
Not sure if we are doing good or bad, but we at least are making enough to live
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  #25  
Old 02-06-2013, 11:33 AM
britsteroni britsteroni is offline
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Quote:
Originally Posted by newz7151 View Post
Here's a question, because I know there is a CPA on the board somewhere.. but if you've got a company credit card that carries an ongoing balance of say $25K+ that you can never fully pay off without exhausting all capital (money in the bank) available to cover daily and monthly expenses such as utilities, rent, supplies, payroll, do you ever really have PROFIT to pay income taxes on or are you just continuing every month to month hoping that one day something will happen and you'll be able to put that first penny on the wall in the frame?
Because you are a cash basis tax payer, I'm guessing you have deducted the the original $25,000 of expenses in the year they were purchased. You would only be able to deduct the interest paid on the credit card payments going forward if that is the case.

Example: Had $30,000 in gross receipts and $10,000 in regular expenses (paid in cash) in year 1. Also charged $25,000 in equipment, tools, handhelds, etc. ASSUMING you took bonus depreciation and 179 expense on the full $25,000, your first your loss would be ($5,000).

In Year 2 and going forward, all payments made on the credit card would not be deductible because you took the entire expense upfront in Year 1. Only the interest portion of the payments (assuming it wasn't 0%) would be deductible in Year 2 and beyond.

You should really strive to pay that balance down. It will be hard to keep much for yourself in a low margin business if you have large amounts of your cash flow going to interest payments.

Hope this helps...
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  #26  
Old 02-06-2013, 11:48 AM
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PerfectEarth PerfectEarth is offline
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I'm really wondering how many of these answers are confusing a lot of things like net income (profit), owner salary, revenues, expenses, etc.... Like, "OH, I did 20k this year and I have 6 in the bank! I profited 6k!"
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  #27  
Old 02-06-2013, 12:11 PM
205mx 205mx is online now
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Originally Posted by PerfectEarth View Post
I'm really wondering how many of these answers are confusing a lot of things like net income (profit), owner salary, revenues, expenses, etc.... Like, "OH, I did 20k this year and I have 6 in the bank! I profited 6k!"
In what capacity
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  #28  
Old 02-08-2013, 10:22 PM
KG26 KG26 is offline
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Took a loss the first year bought new equipment cash so my expenses were high I don't mind I'd rather not have some bank in my pockets every month.
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  #29  
Old 02-08-2013, 10:32 PM
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THORNTON SERVICES LLC THORNTON SERVICES LLC is offline
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First year was a loss , i would look for every write off posible , and invest back into your business as much as possible , will pay off in the future.
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