Tax Write-Offs

Discussion in 'Starting a Lawn Care Business' started by cibula11, Aug 27, 2011.

  1. cibula11

    cibula11 LawnSite Member
    Posts: 55

    I have a friend who is wanting me to mow their town home complex. It would just be the one job, but over time I would be willing to look into adding a couple more.

    I was told that if I make $400/yr. I need to claim it on taxes, so I am considering getting a tax i.d. number as this job will pay about 3-4K/season. If I get an i.d. how much can I write off in taxes. I figure it would help pay for start up costs, including a mower, trimmer, etc. Ideas on this part of the business?
     
  2. JDiepstra

    JDiepstra LawnSite Bronze Member
    Posts: 1,511

    Basically everything u use can be deducted. Truck, gas, mower, trimmer, edger, blower, insurance, uniforms, phone, paper, envelopes, stamps, trailer, gas cans, oil, tires, parts, repair bills, trimmer line, pruners, gloves, advertising, tool box, computer, internet etc. Of course for some items you use for work and personal use, you can only deduct the amount you are using for business use and not personal use. Consult a tax professional.
     
  3. cibula11

    cibula11 LawnSite Member
    Posts: 55

    I'll be giving our CPA a call for sure. So, for example, if I need a zt mower and trimmer, I would recoup those costs when filing for taxes? Or is it only a part of what i spent on them?
     
  4. vencops

    vencops LawnSite Bronze Member
    from NC
    Posts: 1,537

    You can recoup all business-related costs. You just might not be able to recoup them all in one season.

    Ask a tax professional.
     
  5. JDiepstra

    JDiepstra LawnSite Bronze Member
    Posts: 1,511

    Its not as easy as it may sound. Take this as a general guideline.... When its a large item you deduct the cost of the item from your income over multie years. So say its a $5000 mower, you deduct $1000 from your taxable income for the next 5 years. Let me be clear.... If you buy a $5000 mower, you do not pay $5000 less in taxes. Maybe $1000. If you buy a smaller item like a $500 dollar blower you duduct it all from your income for that year. So instead of paying tax on, lets just say $50000, you pay tax on $49,500. You do not deduct the amount paid for an item from your taxes due. Its a small % of the item. Please remember i am giving you very basic and general guidelines here and not advice you should base any decisions on.
     
  6. JDiepstra

    JDiepstra LawnSite Bronze Member
    Posts: 1,511

    Here is another way to look at it. If you were able to recoup the full cost of the mower by paying less taxes, that would be like the government GIVING u the mower. Do u think they are going to do that? Heck no. They only give things to lazy people who do nothing!
     
  7. vencops

    vencops LawnSite Bronze Member
    from NC
    Posts: 1,537

    Not really.

    If you were getting the mower for "free", the gov't would have to be forgiving $10,000.00 in taxes due. If they allowed you to write off the $10,000.00 paid for the mower in one fiscal year, they'd only be forgiving the tax due on $10,000.00 (at whatever your tax rate is).
     
  8. JDiepstra

    JDiepstra LawnSite Bronze Member
    Posts: 1,511

    What you are saying is correct and what i am saying is also correct, but it appears you may have interpreted it in a way other than i had intended. The point is, if you buy a $5,000 mower, it will save you much closer to $1000 in taxes than $5,000.
     
  9. vencops

    vencops LawnSite Bronze Member
    from NC
    Posts: 1,537

    True (save you $1K v. $5K). BUT, he should check with an accountant. If I'm not mistaken, he could probably qualify for a $10K start-up write-off (if he goes LLC). I did.

    If you're small enough, that may be enough to keep you from paying ANY taxes in your 1st season (that, alone).
     
  10. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 12,961

    Don't get tooo excited about write-offs there is a standard deduction that you will have to exceed.
     

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