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Tax question

Discussion in 'Lawn Mowing' started by BobbyKnight, Sep 16, 2004.

  1. BobbyKnight

    BobbyKnight LawnSite Member
    Posts: 45

    I know we are still a little ways off on tax time, but I was wondering what I should do. I'm definately not in the lawn mowing business big time like most of you, but I did purchase a new mower this year primarily for my own place. Invested $7000 in a new JD z-track. Anyway, I picked up 10 lawns to help earn a little more money and help pay for my mower. What I was wanting to know about is whether or not I need to report my income made on these accounts (which probably doesn't total over $4000), and is there anyway I can write off my mower as a business expense, or is there a whole lot more to this? Anyone with some advice on what to do here would be appreciated. Or, future advice would be great. Thanks.
  2. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    If you report your income, then you can write off your mower, gas for the mower, gas for the truck, your internet connection, yada yada yada.

    If you report your income, you'll get all the tax money back anyways, since with only $4,000 earned this year, with the mower alone, you have enough expenses to offset the income, for this year and probably next 2 or 3.
  3. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    1) You can't take the mower as a business deduction unless you report the business and the business income. Then it will be deprecated over a set schedule of years not deducted all in one year.

    2) You HAVE to legally report the income regardless. The amount of income made over the least allowed (what ever it is now $4,000?) is for TOTAL income from ALL Sources.
  4. kingenterprises

    kingenterprises LawnSite Member
    Posts: 25

    A good accountant could be of assistance here.

    Reporting your income would allow you to deduct a plethora of expenses for this tax year. You could take the mower expense all in one year or better yet spread it out over 3 years. You would not only pay no taxes for the income you generated, it could allow you to receive refund for some of the taxes you paid on your day job.

    I do it myself. Good accountant + lots of questions = large tax refund.

    Good luck Sir~!
  5. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,439

    MMLawn, if you are depreciating new equipment, you might want to seek the advice of an accountant or find a new one. As of tax year 2003, you can deduct up to $100,000 worth of equipment purchases and no longer must depreciate it. Obviously, if you are buying more than this, you must depreciate after the 100k mark.

    Don't take my word for it. Everyone should always at the very least consult an accountant.

    Dayton, Ohio
  6. MMLawn

    MMLawn LawnSite Gold Member
    Posts: 3,569

    Tonygreek, that may work for you since you are new to the business in your first 2 years but we prefer to deprecate as I and my accountant find that it is better on taxes in the long run and I have been filing business taxes for a long, long time.
  7. mbricker

    mbricker LawnSite Senior Member
    Posts: 505

    Okay, I guess I am going to be the grinch here:

    I say if you are doing mowing (or anything else) for money, even if it is a sideline because you also have a full-time job, you report income and expenses and pay the taxes due. If you are VERY part-time, you will quite likely show a loss, which (as already pointed out), can offset some of your tax bill from your other income source. But, there are rules about how many years you can continue to show a loss from a business enterprise.

    IF YOU ARE NOT REPORTING WHAT YOU MAKE, YOU ARE COMPETING WITH THE REST OF US ON AN UNFAIR BASIS. You are able to underbid the rest of us and make the same profit, or you are able to charge the same as the rest of us and make a larger profit, because you are sparing yourself one major expense, the tax that is required by law.

    If you do that, my friend, YOU ARE A SCRUB.

    Personally, I very much resent the people in my own market who are doing that.
  8. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,601

    Best to download the small business publications from IRS. Publication 334 and 535. Generally you include and deduct all income and expenses associated with your business. Assets (equipment) used both personally and for business purposes are apportioned between personal and business use. i.e. the business portion can be deducted, the personal portion cannot. That is why I don't use my equipment for personal use :) Order and read the publications for a weath of knowledge.

    Fvstringpicker, CPA, PE

  9. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    If you were to run it soley as a business it sounds like the only way to get your own yard in on the deal is to make it a paying customer. There are different depriciation methods stright line , double declining balance method etc. and your accountant(provided he is a good one) will choose the one that benefits you the most.
  10. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,439

    MMLawn, you simply said "Then it will be deprecated over a set schedule of years not deducted all in one year." I gave the flipside to this which you did not address nor allude to as a very recent and very viable alternative to depreciation.

    As for your inference that I'm somehow new to business, nor fully understand taxes given your "paying them for a long, long time", I own 3 vastly different companies, have owned 2 others (and sold them), a bachelor's in business, and an mba that says I might be eligible to explain to a new business owner that depreciating is not the only course of action as you indicated. Apparently since I'm new to the landscaping business, all of the previous was for naught.

    As I said, always always always consult an accountant to decide what's best for your situation.

    Dayton, Ohio

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