how do you manage your money

Discussion in 'Starting a Lawn Care Business' started by browningv308, May 9, 2008.

  1. browningv308

    browningv308 LawnSite Member
    Posts: 160

    I used to work in heating and air but got laid off early spring and now have started to mow I hooked up with a property management company and picked about 20 rental houses and 3 apartment complexes these I mow every 10 days for a total of about $2400 I also do heating and air and maintenance for several other property management companies as well I don't have enough of either to do one full time so I do both plus I also pick up some landscape jobs here and there as I can, All together in the past 10 days I have brought in around $4200 i'm putting about 15% of every check I get in a savings account to pay taxes with at the end of the year My mower is an xmark walk-behind i bought 2 years ago for my personal use at home and it is paid for my truck is paid for every thing I have is paid for so I have no expenses except for gas to write off for taxes I have thought about getting some new equipment but don't need it At tax time I'm going to get hit hard My question is if you were in my shoes what would you do with your money
     
  2. Frue

    Frue LawnSite Bronze Member
    Posts: 1,472

    I would save it! Send in you quarterlys and save save save.........
     
  3. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    hire an expert....

    Lets face it guys....We know how to cut grass and install ac units...

    WE "MOST OF US " dont have a clew how to handle money....
     
  4. browningv308

    browningv308 LawnSite Member
    Posts: 160

    i don't have a buisness licence for either service i perform before i started mowing i did heating and air if i did any work for a buisness they just send me a 1099 at the end of the year and i would just pay taxes again my thought is if i did make it legal and if things did not work out i cant go on unemployment if i had to go back to heating and air most companyies in this area just don't pay
     
  5. Jay Ray

    Jay Ray LawnSite Fanatic
    Posts: 6,510

    If you send it in at the end of the year you will get penalty and interest. They want the estimated tax money quarterly.

    It sounds like you will be doing maybe 100k to 160k revenues and 15% probably won't be near enough with low expenses. You really need an accountant to get setup kosher. You have a lot more real expenses, credits, and depreciation than you now know you have (and you will need every one of them). You are doing so well you can easily afford the accountant.
     
  6. mngrassguy

    mngrassguy LawnSite Silver Member
    Posts: 2,167

    Talk to an accountant about when to make some new equipment purchases to offset profits.
     
  7. AI Inc

    AI Inc LawnSite Fanatic
    Posts: 25,539

    Definatly, sell the ex and truck , pocket the cash. Let your company buy replacements.
     
  8. brucec

    brucec LawnSite Senior Member
    Posts: 469

    Keep it away from the wife!!!
     
  9. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,842


    Cry................
     
  10. richonsa

    richonsa LawnSite Member
    from georgia
    Posts: 66

    Some good advice and some real bad advice on here for you. Let me help you.
    1. You can depreciate your truck and your mower and all of your other big ticket items. The truck and the mower qualifies for section 179 expensing (form of depreciation)
    2. You can take mileage instead of depreciation on your truck, if you choose.
    3. Your prior year tax is important when figuring what to pay for income taxes. Let's say your tax last year (total tax, line 42, I believe) was $2,000. This is the amount of tax you owe before you get the child tax credit, etc. OK. If you had total tax of 2,000 last year, you will be safe (safe harbor rule) if you send in at least 2,000 during the year for your tax on income. It doesn't matter if you net 100,000 bucks this year. As long as you pay 100% of your PRIOR YEAR TAX as witholding this year, you are safe.
    4. You have to realize that you have to pay the entire 15.3% for FICA and then you also have income tax.
    5. Form a corporation.
    6. Elect to be an S-corp with the IRS (form 2553)
    7. Pay yourself a minimal salary (12-15K/year) and let the rest flow through as ordinary income on your K-1 to you. This gets you out of a TON of FICA taxes. (However, congress WANTS to make passthrough income subject to FICA taxes (social security, medicare).
    8. You can deduct cellphone and many other items; anything related to the business.
    9. Get a decent accountant in your area to help set it up. You will get great advice each year. It costs money, but you will keep your butt out of trouble.

    Ric (BTW, I am a CPA and I am working on a Master's degree in Taxation. I do this stuff every day)
     

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