Gross versus net for the year

Discussion in 'Business Operations' started by twins_lawn_care, Dec 3, 2003.

  1. twins_lawn_care

    twins_lawn_care LawnSite Senior Member
    Posts: 932

    I know guys/gals, this is not an Uncle Sam friendly post, but I am curious mainly about how to go about keeping the books legit. This is my first year doing business, and now it is time to straighten out the taxes. Up to this point, I have not taken any money for all of the work done. It is all merely sitting there in an account. I want to find a good way to balance everything, and see how to "pay" myself any sort of bonus, or draw? I am kind of unclear about this, and just wanted to get some input. I am going to meet with an accountant/friend who is going to actual take care of the books for me, but I would just like to get some input from those of you who have been through it.
    I am part time by the way, so I will have additional income to report in addition to the LCO.

    Thanks as always for the advice, and hope everyone had a successful year.

    I am off to hibernate now :sleeping:

    Rob
     
  2. twins_lawn_care

    twins_lawn_care LawnSite Senior Member
    Posts: 932

    This may not be somewhere people would like to post, so if you'd like you can just send me an email. I am just trying to get some input.
    Thanks everyone.
     
  3. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I'm set up as an LLC doing business as a corporation for IRS purposes.

    The way my accountant told me to do it was this: Since I put $30K into the business, that $30K is treated as a loan payable to shareholder. I get to take the first $30K out without fooling with taxes with holding or anything like that. I just write out a check every month on the 15th to myself.

    As for the LLC, it's showing a profit for the year, but it'll all be wiped out by my depreciation. The LLC won't show much of a profit until year two (I hope).

    Later,
    DFW Area Landscaper
     
  4. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    the simple thing to do is take the gross income that you have earned over the year, and minus the expenses (overhead, direct, indirect) and that is your net if your are sole owner. Now usually if I remember correctly you are taxed 15% on the net. Now I am not an accountant, so my information might be outdated. That is why I have an accountant do everything for me. If you are worried about being taxed for that money just sitting around stick some of it into a retirement fund.
     

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