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Discussion in 'Starting a Lawn Care Business' started by magicmike, Mar 7, 2013.
Most likely because there would be so like to depreciate over 5-7 yrs so take it all at once .
Exactly it is an old 85 f-150 and would not be worth the hassle of deprecating it out for several years. If it was newer and cost 10-15 grand with a small Biz like mine depreciating it would have made more sense.
Especially in the cases of low value, listed property vehicles you would do SMR...
My equipment is in great shape and I have no need to purchase anything new this year. So I will have very little in the way of write offs. (Just the usual operating expenses like Insurance, Mileage, mower up-keep excreta, excreta.) We are increasing our tax burden with our other incomes to off-set this. (We don't want to have to pay any penalties at the end!) I figure that we will be looking into new equipment if the need arises (it is all commercial equipment and I am the only operator so unless something blows it should last), but will use what we have till then.
It is so hard to really know what is best when it comes to buying new stuff. I won't do it just so I can save on my taxes. But I can see where it is a real benefit for those who can't afford down time on a machine. I know of a company that buys 50 new 21" commercial Toro's every season. He never has to worrier about down time and his equipment is always under warranty. His Biz is big enough that with trading things in, the write offs on the taxes and he pays next to nothing in maintenance on them. Now that is the way to do it, running brand new equipment with the least amount of risk and cost in the end. I am sure it would work on the smaller scale too, but I think I would not fare as well because the equipment would not be worked near as hard as if a crew doing twice the amount of work on each mower than I do individually. But it is a really good concept.
Could you not even justify a few new sticks or a blower? 21"-er? They'll mothball well, if nothing else...
Mothball that is funny but.
Only if they are not working I figure I would be better off having the cash to go pick one up when the need arises. I have a good trimmer, a good edger and a new multi-tool Trimmer/edger to back them, two handheld blowers and a backpack. and so on and so on. All in great shape. So why would I spend money on something that is working great. I can wait and see if something blows and then go get it with the money that is there just for that reason. Once the money is spent it is gone. I can't go back and say oh wait I thought I needed this but my chainsaw just seized and can you take this back so I can get a saw instead? I don't think they would. I'd rather have a several Grand left in the kitty to spend as needed even if it means paying some to uncle Sam because I made more this year and spent less.
Like I said earlier not a big Biz and I have no intention on expanding to more than I can handle on my own. I can see some one who has employees and grosses a lot of revenue and needs more write-offs, but I want to see this season if we come out ahead if we sock as much money away instead of justifying purchase after purchase saying well I can write it off.
Let say I have $10,000.00 to run things on and $12,000.00 in the Biz savings to make sure we don't cut our tax burden short (we have always split things three ways to be safe so through the year we only take a third for our house hold income till Taxes are figured). That is where we are at the end of 2013. and we have kept up with our tax liability's to this point (My wife and I have other taxable income that we withhold a lot extra through out the year) . I know that when all is said and done we may still come up short a few grand with-out any major deductions to write off. So Instead of buying a $6,000.00 or even hand-helds to offset taxes when I don't need them so I don't have to pay the gov. that couple grand I go ahead and settle-up with them (lets say they are entitled to $3,000.00 we owe plus 10% penalty what ever for grins $3,300.00. So we take it plus our tax preparers fees $700.00 = $4,.000.00 more we have to pay out of the $12,000.00 in the savings leaving $8,000.00 in the Savings part right? OK We always split this the following year half $4,000.00 to the Biz and half $4,000.00 to our house budget. That would leave $14,000.00 in the Biz as start-up capital for next season.
Or I could justify spending money on things that are going to depreciate in half the second I walk out the door with them just to keep from paying the government some extra money?
I know buying new and writing it off for the bigs make sense. But for the past five seasons I have spent every last penny from month to month on stuff and I don't see where it is going to be beneficial to continue this trend.
If you want to give money away,sponsor some stuff around town.
Are you doing a pass through with your company profit? Are you fully funding retirement plans ,health saving accounts, That collage plan for the future.
If you are a sole proprietor, a good way to reduce taxes is to put money into an IRA...that will mothball well...
Pass through? Net profit yes. But we just lump all our incomes together and that is where figuring whether buying this or that will help with our taxes. We do keep a itemized ledger for all expenses for running the Biz. and I am sure when the H&R block lady does our Biz it is done so that we pay the proper soc. tax and (self employment tax. which is figured and payed separate from our income taxes). My wife and her do all that and I just sign on the dotted line. We reevaluate everything after we do them and then adjust our with holdings in our other incomes. That is where it is hard to gage things because there are so many other deductions. 2012 Things worked out very well and only was off by $500.00. That is why I would like to just save money this season. We have a lot of deductions that will be applicable this year as well. There is two things we all have to do Death and Taxes, we take all we can as far as what is legal for us, but we still have to pay some taxes.
I agree but when I retired it kinda freezes my account from their. 90% of all the people that retired like I have from our company that have their IRA accounts have just thrown them away. I can do some kind of roll over but for now I just want to leave it alone. Forget about it until I can set one up for myself to add to a maybe a Roth. I will need some professional advice on that.
We have a lot of medical bills for my son that will never go away (in fact that is why we started our Biz while I was still working full time. So we do have to be careful with our spending.
One thing I want to do is pay my kids way through college as much as possible which will save us a lot in the end and is tax detectable. (I have two that will be going)