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Tip Of The Day - 9/14/05 - Client Gifts

Discussion in 'Industry Surveys & Polls' started by Sean Adams, Sep 14, 2005.

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  1. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    sean, all of those things are included in my 10k per season operating costs. ok, i'm done discussing the 75% thing. it's a true number, i know how to use a calculator. anyhow.....i've heard so many guys on here say they do "little extras" for thier clients. they don't mind cleaning up a few leaves. they don't mind moving a few pieces of furniture/toys off the lawn. they don't mind bringing in the garbage cans, or picking up a few branches that fell, at no extra charge. they don't mind changing the cutting day, to accomodate a client who is having a party, or barmitzva. etc, etc, etc. when they start getting paid for every piece of extra work they do, be it 10 seconds, or 5 minutes, then, maybe, they should think about gifts. until then, a gift is only another way to suck azz. i keep my clients because we do the job properly, i communicate well with them, i am knowledgable, and i am firm, i simply, "outran the bear",not because of extra work for free, or a gift card to a resturaunt. now MAYBE, if my clients were worth 8, 9, 10,000 a season each to me, i'd send a fruit basket. but not, when you're cutting thier grass for $25, $30, $35. thank you, i have nothing more to say on this subject
  2. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    how you choose to care for your clients is of no concern to me...if it works for you, great....

    but how is SE tax included in your $10k total?
    if you are doing $120k + your SE tax would be more than $10k alone...

    I think you need to be a little more careful about how you throw around arbitrary numbers - isn't that one of the concerns of this site at times - people giving false information or misleading information...?
  3. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    mr addams, se tax is based on my NET, not my gross. my NET ( or what i refer to as taxable income) is roughly 75% of gross. se tax in nj is 15.3% of NET. anymore technical questions, and you'll have to pay me a consultation fee. good day. p.s, it's your site, WHY are you giving.... false and misleading information???? :waving: pp.ss- you're gonna have to wake up, just a little bit earlier....to outsmart me
  4. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    bobby - I never asked you any technical questions, I was informing you that you were incorrect...as far as "consultation" goes, consider this a freebie...

    1. self employment tax is based on your net (true)... but your net is NOT your taxable income - the definition of NET is what is left over from your GROSS RECEIPTS after ALL deductions, reductions, and TAXES are paid - it is not open for debate or what you perceive to be YOUR NET....NET IS NET, PERIOD

    2. you now say "roughly 75%"...

    3. Self employment tax is 15.3% in the US not just in Jersey

    4. if you do $120k in mowing and let's say another $10k in miscellaneous services you are grossing $130k (and this assumes you have no qualified dividends, capital gains, loss on assets, social security benefits, a deductibe IRA or Student Loan interest)

    therefore, your gross is $130k, your (so called) expenses ONLY total $10,000 which means you have $120k of taxable income, which after exemptions and deductions would be $112,376 of taxable income which means you would owe a little over $27,000 in taxes...

    so now, $130k gross, less $10k expenses and $27k taxes, your net is already less than 75%

    and let's look at your "$10,000 only" in expenses

    I'm sure many of the following you will claim you do not pay or do not have to pay, but here's a list to ponder....

    accounting fees, attorney fees, advertising (truck signs, biz cards, ads, etc.), bank fees, depreciation, dues & fees (associations, magazines, etc.), entertainment & meals, insurance (liability, vehicle, workers comp), licensing, office supplies, postage, rent (office, garage, equipment), repairs and maintenance, telephones (office and cellular), tools, vehicle payments, uniforms, utilities, and of course gasoline, equipment payments

    Now if you think that with gas at $3.00 a gallon, the new equipment you purchased, and the fact you claimed you have an employee plus anything else you have to pay for is all going to total only $10,000 in a year's time, your are one of two things...

    1. a horrible bookkeeper


    2. cheating

    Outsmarting you is not what I'm trying to do here. I'm trying to show you that "netting" 75% is a ridiculous claim...
  5. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    What Bobby has only one ridiculous claim on this site. Actually Sean I think you have been sucked into another one of Booby's baiting/trolling games to see how long someone with stick with the bait. :D
  6. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    I usually think I am pretty good at recognizing when someone is trying to mess around versus when someone has inserted their foot in their mouth...

    Even if bobby is trolling I just don't want people to think that "netting" 75% is realistic...
  7. git er done landscaping

    git er done landscaping LawnSite Member
    Posts: 61

    sean. thanks for posting that break down. with the #s given 75% seems unreal.
  8. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    Sean, It is true that Net includes tax paid, but Bobby is thinking like most americans. If they get a job making 60K a year that is what they make, Tax to them is just a duty and not an expense.

    I think Bobby is just using the term Net lightly. A business owner has 2 Nets. The first Net is money left over after normal business expense. The Net from the first is your profit. The second net is your profit minus tax.

    Many americans working for the man only have the second net. If you ask these people how much they make a year 99.9% of the time they will tell you their Gross income.
  9. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    Good point but hopefully people have the common sense to know that if it sounds to good to be true then it probably isn't true. But again you never know how much common sense people have. :D
  10. Sean Adams

    Sean Adams LawnSite Gold Member
    Posts: 3,597

    Soupy - I know what you mean, but there is definitely a difference between someone earning a check where their taxes are already deducted for them versus a business owner who has the responsibility to report their earnings, as well as pay insurances, etc...

    Whether there is confusion created by net and net/net in this particular scenario the true point is that with employees and normal operating expenses bobby is not "netting" 75% of his gross receipts - not legitimately at least.

    I'm not calling bobby a criminal here - don't think that is what I'm doing. I'm just trying to make it clear to those who are scanning this board that it is unrealistic to think that they can generate $100,000 in sales and walk away with $75,000 of it in their pocket.
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