Lawn business and taxes

Discussion in 'Business Operations' started by jaymo3141, Sep 27, 2013.

  1. jaymo3141

    jaymo3141 LawnSite Member
    Posts: 15

    I have a small lawn route, about 20 lawns a week. i do all my lawns with a helper on Saturday because i'm a full time student during the week. i pull in about 1700$ a month, pay my helper about 600$ a month, and have to pay about 150$ in expenses. how much of this do i need to report on taxes? can i keep it all under the table or is this dangerous? if i do report all of this for taxes, can i write off all my expenses if i have all the receipts? thanks for the help.
     
  2. Roger

    Roger LawnSite Fanatic
    Posts: 5,917

    You need to report it all for taxing purposes. The $1,700 is gross income, but you have many expenses that will offset most of this, leaving you with far less net income. All the items you listed are "expenses," but there may be many more you are unaware. This is why an Accountant who is skilled in tax law is of great help to you. He/She can explain what expenses are permitted, what is not permitted. Your tax burden is based upon the net income, so you want to find as many expenses as possible for minimum taxes. Yes, you need your receipts to justify expense in the event of audit.

    Also, you will need to file Estimated payments. Again, the Accountant can help you through what minimum tax payments need to be made while the season is in progress. Your final tax calculation will be done after Jan 1, 2014, when you have all your income, all you expenses, and what you have already paid during the year. This is known as reconciliation -- that is matching your estimated taxes, against the actual taxes, and finding the difference (either added payments, or refund).

    I strongly advise you to work with a financial management software, such as QuickBooks. QB will enable you to track each customer, prepare invoices, manage your bank account and credit card account. It will permit you to prepare the necessary reports needed for the Accountant to do final tax preparation.

    You don't say how you are paying your helper. Are you paying taxes on his behalf? Do you have a payroll system established, or farming this out to somebody else?
     
  3. jaymo3141

    jaymo3141 LawnSite Member
    Posts: 15

    Im paying him cash at the end of the day.
    Posted via Mobile Device
     
  4. windflower

    windflower LawnSite Bronze Member
    Posts: 1,079

    With this small amount of income it is doubtful you need to make quarterly payments. Have you filed returns in past years? If you were due a refund that expected refund will offset any tax due. Need to owe $1000 in taxes annually to make quarterly payments. There is a work sheet on form 1040 es http://www.irs.gov/pub/irs-pdf/f1040es.pdf that is helpful. Really should report all your self employment income. Chances are minimal you'd ever be caught if you don't have a business checking account. Bank reports deposits to IRS.
     
  5. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,079

    I ran a part time business and didn't need accountant. Just think simple you can easily keep receipts in a box for expenses and don't get into writing off a room in house or depreciation. In the end you will pay little tax unless your state robs you.
     
  6. Roger

    Roger LawnSite Fanatic
    Posts: 5,917

    He is in CA, a state that robs 12% personal income tax.
     
  7. jaymo3141

    jaymo3141 LawnSite Member
    Posts: 15

    i just started this business a year ago so i haven't filed taxes yet. I've made about 10,000$ gross over the course of the year.
     
  8. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,276

    That sounded off to me and sure enough it is. That may be the top bracket but he's dirt poor he's most likely in the 2-4% brackets in that state. He would need to make a million to kick himself into their top brackets.
     
  9. Roger

    Roger LawnSite Fanatic
    Posts: 5,917

    It is my understanding CA income tax has no brackets. The rate is a straight 12%, regardless of income levels. Their taxing rules are unlike Fed rules, with brackets.

    Remember, CA is broke, ... broke, big time. The strategy for remedy is to tax their way out of the problem.
     
  10. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,276

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