TAX DEDUCTIONS

Discussion in 'Lawn Mowing' started by yardsmith, Mar 10, 2000.

  1. yardsmith

    yardsmith LawnSite Senior Member
    from Ohio
    Posts: 627

    I have heard a few diff. schools of thought on this one. <br>I work a full time job in addition to my mowing business, & have a little extra taxes taken out from work to ease burden for business.<br>My acct. combines the 2 incomes, & deducts all my mowing expenses for the year. I've gotten a refund every year, but a friend told me if you get refunds 3 years in a row with a business, that's an easy way to get audited.<br>My acct. said as long as you increase income & show steady growth, it's ok to declare a loss each year, 'cause you're upgrading your equipment, truck, etc. And it's only part time income.<br>Who's right? Is either wrong, partially or totally? I've heard acct's say both ways, too. Naturally, I don't want this to go on forever, but I am holding off on my taxes until I can get a few opinions. What have you guys done?<p>----------<br>Smitty ô¿ô<br>
     
  2. JasonPC

    JasonPC LawnSite Member
    Posts: 79

    Smitty,<p>As long as you're being honest about your deductions and what you make, you can get money back. You don't have to claim a loss to get money back. For instance, we had thousands in deductions this year, but still made a nice profit. But I paid in 20% after supplies to the IRS and MA, so we took the full equip. deductions and got a few thousand back. <p>The IRS rapes us and every other small business. There's no reason we can't get a refund back every year. In fact, many business owners use the IRS as a tax free savings account. ;-)<p>You shouldn't be more vulnerable to an audit just because you're getting a refund for 3 or more years. If you're making $100,000 or more, you're already more vulnerable to an audit. But your chances of being audited are about 0.1% to 1% at most. So don't worry!<p>-Nicole
     
  3. Barkleymut

    Barkleymut LawnSite Bronze Member
    Posts: 1,117

    Don't listen to friends when it comes to business or taxes. Would you listen to them if you wanted medical advice? No you would contact a doctor. As long as you have a good accountant I would trust them much more than a friend. Good Luck
     
  4. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    The refund has nothing to do with profit or loss, just shows a person doesnt know how to plan ahead. The IRS loves to give refunds, it means uncle sam had a free loan for the year.<p>Profit and loss, however, is a different story. <p>Dont be afraid of an audit unless you have something to hide. If you are audited and things are legit they leave you alone but if an error is found I can almost guarantee every year thereafter you will get that lettewr asking for more information, or substantiation.<p>Bill
     
  5. crew

    crew LawnSite Member
    Posts: 163

    As long as your accountant is going to sign at the bottom you gotta go with him. His a** is on the block right with yours.
     
  6. MRPLOW

    MRPLOW LawnSite Member
    Posts: 88

    Actually your accountant's ass is not on the line, your's is. He's just filling out the forms with the information that you have provided him, it's not his responsibility to verify your deductions or expenses.
     
  7. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    Most of what is here is good info.<p>If your business looses money year after year, at what point does it become a hobby?<p>Loose money for 3 years, sure, but hopefully you're growing and/or will be making money some point in the next 3.<p>If you loose money too many years, your side business becomes reclassified as a hobby.<br>
     
  8. yardsmith

    yardsmith LawnSite Senior Member
    from Ohio
    Posts: 627

    The reason I consulted my friend is because he is sort of my mowing mentor; he helped get me started, as he is in the biz too. He ends up owing every year & can't hardly fig. out how I can do it.<br>My revenue grows each year, & I buy bigger & better equip. as needed; just had me worried to a point because he's been in this longer than me. So maybe it's the way we have our bus.'s structured (a little different).<br>I have also heard acct's. differ on the same subject; it's the who do you trust-it better be the right one deal.<br>I'm also aware of the hobby classification clause too. Not much chance of that happening.<br>Thanks for the posts thus far. Anyone else get refunds?<p>----------<br>Smitty ô¿ô<br>
     

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