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  • Tax Question

    Hello all,
    I have not been around the forums much since I started mowing two years ago. And I think it has hurt my business side because of it.
    However, something still bothers me. And it's that evil word, Taxes.

    Before I can ask the question, I have to give you all a little background on what I have been dealing with. I work full time for a company that gives me great benefits, insurance, and pays perty decent for the last 11 years. However, I got a divorce and now I pay child support for three kids. I started a lawn business two years ago to supplement my income. Since the mowing job is a part time job, I started out small, 4 yards a week with only a 30inch walk behind mower, a weed whip, and back pack blower. I didn't really make any money since I underbid (didn't know what I was doing) and the costs of startup. When must you claim or do taxes on a small business? I am a sole person for this "company" and I am just not sure what to do to be honest.

    Anyone out there know what a single owner/operator must do for taxes? I don't have a tax ID# either. I haven't made anything the last two years.

    Hope this isn't all too much and my question makes some sense.

  • #2
    Hello all,
    I have not been around the forums much since I started mowing two years ago. And I think it has hurt my business side because of it.
    However, something still bothers me. And it's that evil word, Taxes.

    Before I can ask the question, I have to give you all a little background on what I have been dealing with. I work full time for a company that gives me great benefits, insurance, and pays perty decent for the last 11 years. However, I got a divorce and now I pay child support for three kids. I started a lawn business two years ago to supplement my income. Since the mowing job is a part time job, I started out small, 4 yards a week with only a 30inch walk behind mower, a weed whip, and back pack blower. I didn't really make any money since I underbid (didn't know what I was doing) and the costs of startup. When must you claim or do taxes on a small business? I am a sole person for this "company" and I am just not sure what to do to be honest.

    Anyone out there know what a single owner/operator must do for taxes? I don't have a tax ID# either. I haven't made anything the last two years.

    Hope this isn't all too much and my question makes some sense.
    When you're a Sole Proprietor LLC, it's the same as filing a personal tax return.

    1. Get a business name (make it a LLC), and register it with the State in which you live.
    2. Get a tax ID for the business name.
    3. Open a checking account for the business, under the tax ID.
    4. Deposit checks you receive for the business.
    5. Keep EVERY receipt for business related expenses.

    When tax time rolls around, claim everything you can in addition to the receipts mentioned above - mileage on the service vehicle, sq footage of the home used for your "office" and storage area of equipment, vehicle depreciation. There's a lot of things in your favor.

    Granted you have another income, but if you claim enough (a loss) for the business, your return should be about the same from your other job.

    Accountants are up to date on what you can claim and know the loopholes (and most can guarantee you won't get audited).

    Comment


    • #3
      First off you have to keep in mind we are not accountants, so take this advice for what it is worth.

      I didn't really make any money since I underbid (didn't know what I was doing) and the costs of startup. When must you claim or do taxes on a small business?
      Ideally, you should do it from the start.

      Say you made $20,000 at your job and you made $1,000 with lawn care in a year. You would pay tax on that money. That is the short answer.

      Now as stated above, you need to keep your receipts and deduct everything you can deduct.

      This isn't difficult at all to do. Either have a tax pro help you or get turbo tax that deals with businesses and it will walk you through it all. In an hour you should be done.

      I am a sole person for this "company" and I am just not sure what to do to be honest.
      You don't need to be registered to be a company. If your name is John Smith and you have checks paid to you as John Smith, you can operate. Or you can accept cash and you can operate. Or heck, with all the ways to accept credit cards now, you can take paypal, or anything else.

      Having a D.B.A. allows you to use a fictitious business name, such as Great Grass Lawn Care. With that dba certificate, you are registered in that county to use that business name and you can open a bank account under that name.

      I don't have a tax ID# either. I haven't made anything the last two years.
      I don't think you need a tax id other than your own social security number if you are a solo operation. A Tax ID is also known as an employer identification number. So no employees? No need for an employer identification number.

      If you lost money, you can actually claim that loss on your taxes. Which can help lower the amount of taxes you need to pay.

      Now keep in mind, you can only claim a loss from your business for a few years in a row before it is considered a hobby. I think the area is like 3 or 4 years so you have to look that up.

      But if you have loses, why not use them to your advantage?

      Again, get one of those turbo tax programs for business or have a local tax professional walk you through it. It always seems like this big monster the first time you get your business going and get your taxes situated but I have to say it's not that big of a deal once you get into it. You can do this.

      Let us know what you decide to do next and if you have any further questions.
      - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
      Download your Free trial of Gopher Lawn Care Software.

      Comment


      • #4
        Thank you to both of you. First, I want to say thank you for answering my post. I know I get a little long winded and it was extreamly late and still not get the msg accross as well as I had hoped.

        I have already created a name and associated it with the state. "Quick Draw Lawn Service" However, I did not add LLC to the end of the name. I believe I signed up as a self propriator but didn't use the LLC. Should I have? What happens if I don't? What could happen? Pros and cons on both sides?

        I remember getting asked when I opened my checking account what I wanted to use my ss# or an ID and for me to keep it somewhat easy I just decided to use my ss# as my tax ID. I am sure this is something I can change down the road if for some mirical the business takes off.

        I did not realize that turbo tax online covered small businesses as well. I went thru some of it last night and was amazed how much you can deduct/claim. Milage, office space and being able to spread my costs over 7 years is damn nice.

        With the help you guys give me, I just hope we are not competing for the same houses. Haha

        Thanks again.

        Comment


        • #5
          I have already created a name and associated it with the state. "Quick Draw Lawn Service" However, I did not add LLC to the end of the name. I believe I signed up as a self propriator but didn't use the LLC. Should I have? What happens if I don't? What could happen? Pros and cons on both sides?
          If you registered a DBA at your local county court house then you can't add llc, inc, corp, and I think a few others to your business name. Those words can only be used if you are incorporated.

          If you registered the dba and someone registers a corp with the same name in the state, there could be a problem. You may not be able to stop them from doing business in other counties of your state but you might be able to stop them in your county. But you also might not.

          If you are incorporated in the state, I do think you have a better chance at defending your brand with dba's registered in the counties.
          - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
          Download your Free trial of Gopher Lawn Care Software.

          Comment


          • #6
            Thanks Steve. I decided to just stick with the self proprietor and skip the llc for now. If someone wants to take you to court, they will do it either way and what are they going to take? I am not a multi millionaire.

            Again, Thanks for the help.

            Comment

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