Expensing fertilizer

Discussion in 'Fertilizer Application' started by lawnworker, Jun 12, 2014.

  1. lawnworker

    lawnworker LawnSite Senior Member
    Messages: 897

    For those that have been applying lots of fertilizer for clients, how do you track your expenses for tax purposes. I am contemplating just listing fertilizer under supplies on my tax return. Does that make sense? Just buying a whole lot of bags and using what amounts are required for each customer.

    I don't use GAAP accounting procedures.

    I use individual spreadsheets for all customers and track expenses on a spread sheet. For jobs such as mulching the mulch goes on the spreadsheet as materials reducing income. The reduced amount goes on tax forms at end of year. Income - materials I do this because i carry no inventory.

    Fertilizer and chemicals are so different because a purchase can cover many jobs.
  2. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,231

    Fertilizer is like any other material and supply - no need to break it out per customer. The full cost of all the fertilizer you buy is a deductible expense.
  3. jbturf

    jbturf LawnSite Bronze Member
    Messages: 1,502

    I would suggest some good accounting software like quickbooks, and stay faithfull and make entries each week, it will make life much easier and tax time alot easier
    Posted via Mobile Device
  4. FdLLawnMan

    FdLLawnMan LawnSite Bronze Member
    Messages: 1,246

    I do not track it per customer. It is my income minus my expenses. I know what the fertilizer costs per k so I know my cost structure, but that's it.
  5. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    I track all materials per customer.

    I want to know exactly what the net for each customer is per year.
  6. foreplease

    foreplease LawnSite Silver Member
    Messages: 2,062

    I agree with 32vld: I want to be able to look back and pair expenses with work I invoiced - and to know actual vs estimated.

    If you are doing lawns everyday and using the same material for dozens or hundreds of lawns it it important to at least spot check yourself and the time to document each lawn may not be worthwhile. I almost never use the same material or rate from one job to the next as I do athletic fields only and they are all different.

    How you account for the fertilizer expense depends on your business structure: sole proprietorship, LLC, partnership, or corporation. Also whether you use cash or accrual method of accounting. Sounds like yours is sole proprietorship cash basis. If so, you expense non-capital items in the year you pay for them, whether you use them in that year or not. Mine is a LLC and this method is the most advantageous and simple for me but makes it difficult to compare from year to year how I am really doing. Since I answer to nobody else, total revenue is a good benchmark for me as long as I maintain my margins and have a good understanding of what the mix of work I had was (it is not all fertilizing and chemical applications for me). In other businesses I have been in, one (retail music) had a large inventory with 10-12,000 PLUs on hand at all times. For that, accrual based accounting and a good point of sale system was required. In another (construction), job cost accounting was important.

    Beyond satisfying the IRS it's all about having the information you want to have.

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