Business expense or capital????

[mouse179]

Just wondering if anyone can give me some insight on the tax issues of starting your own business. I am trying to figure out if the purchase of my lawn tractor should listed as a business expense, or part of the capital costs of starting my business. Thanks for any input... Justin

[justin_time]

Lawn care business tips

Originally Posted by mouse179 Just wondering if anyone can give me some insight on the tax issues of starting your own business. I am trying to figure out if the purchase of my lawn tractor should listed as a business expense, or part of the capital costs of starting my business. Thanks for any input... Justin I would list it as an Asset. I am not an accountant, but I was told anything over $500 goes into Asset. Anything you use everyday and under $500 goes under Small tools

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Justin Pitre
Just in Time Yard Services

[lklandscaping]

Originally Posted by justin_time

I would list it as an Asset. I am not an accountant, but I was told anything over $500 goes into Asset. Anything you use everyday and under $500 goes under Small tools

Federal Level- Asset

Note: In a few states some expenses can be filed under multiple listings

[Yard Elements]

It is considered an asset if it last more than one year and the cost is not minor- IRS Definition-

But there is a legit way around the asset business expense fiasco.

Section 179 lets you deduct up to $125,000 worth of assets as business expenses through section 179. You still have to keep your books in proper order.

A lot of people over look this. or don't know how to do it. Until you buy over $125,000 worth of equipment in one year you can deduct the whole thing in section 179.

You assets is not an assets any longer and you can't depreciate it on future year.

There is an exception to the rule it's your car or truck. Has to be depreciated as an assets.

There's a million other things that go along with these deductions you should either get a good book keeper, or start learning.

A lot of people use quick books and think there doing proper book keeping but they miss out on so many deductions it crazy.

A lot of people also say "if you take so many deductions it sets you up for an audit" Who cares if it is all legit a documented!

Hope that helps

Source- My Wife is studying to be an accountant and I have read the IRS publication like a mad man.


I read in a book one time that one of the things that separates the rich from the poor and middle class is the rich take every legit deduction possible.

[Steve]

I read in a book one time that one of the things that separates the rich from the poor and middle class is the rich take every legit deduction possible.

What other deductions do you feel most lawn care business owners miss but should be utilizing?

[JP Landscaping]

like stated before, If you use it up in one year, it is a business expense and you can deduct the full cost that year. if you plan to use if for more than a year, you can deduct the costs spread thru the life of the machine.

For example, if you buy a mower that costs 5000 and you plan on it lasting 5 years. then you can deduct 1000 each year as depreciation. But any repairs you can take those as business expenses for the year.

The other option is to take it as a 179 deduction. then you can use the whole 5000 as a deduction that year but you won't be able to use those deductions the following years.

The problem with taking the whole deduction the first year is that the following years your net income is going to be much higher because you won't have those deductions and you will have to pay the higher taxes then.

you should try to find a balance. If you plan on having a lot more income the following years, perhaps don't take the 179 deduction and just depreciate the machines normally.

Another tax to take into consideration is self employment tax. Which is about 15% of net income. If you have employees, there's unemployment and workers comp.

Those are some things to think about.

[Yard Elements]

Originally Posted by Steve

What other deductions do you feel most lawn care business owners miss but should be utilizing?

Home Office Deduction can be a huge deduction

I deduct .25 of my utilities,(none of my primary phone) garbage, internet, and rent

Another is vehicle maintenance, and fuel. track your mileage! Anytime you use your personal vehicle for business use that's also tax deductible.

You can deduct a part of your taxes from self employment which takes the tax amount down to about 8% from 15.

Advertising is also sometimes over-looked

I find a lot of people seem to over look a lot of things I save all receipts from anything that is normal and necessary to my regular business and deduct it all. as long as it's a legit expense who cares about an audit!

And the other dude is write you might not want to section 179 it if you don't plan on expanding I plan to keep buying equipment like crazy until I spend over 125,000 a year I section 179 everything. I have so many deductions I don't need to depreciate.

[mouse179]

Thank you guys, you have been very helpful. I really appreciate all the help and knowledge you have shared.


Justin