Writeoffs And How They Work?

GridRunnerFloor

Hello, Im new to contracting, (business end of it) I've been installing ever since i was a little boy with my father or uncle. I've worked as an employee installer nearly my whole career. I recently formed my own LLC company installing Tile, i'd like to know what i can write off and how it works.

ProWallGuy

A whole bunch of stuff. Talk to an accountant pronto.

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Teetorbilt

What Pro said. The're too many issues. You need a CPA close to home.

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R&D Tile

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Mike Finley

It's pretty simple, but it's complicated at the same time. 90% of it is simple, 10% of it is complicated.

The simple part of it is anything job related such as materials are a "write off" - by the way I would forget the term "write off" forever, in business it is expenses and income and profit. Income minus expenses = profit. Profit is what you pay your taxes on.

Where it gets complicated is vehicles, meals, entertainment, and tools...

Depending upon what it is and even dollars amounts you can deduct the full amount of some of these things, a percentage of them and some you have to depreciate over years. The IRS dictates all of this.

Get yourself some sort of business for dummies or business taxes for dummies books and get a handle on the easy 90% of it and then like advised, you need a good accountant or at the very least a very good book keeper who has been in the business for awhile and can do easy tax advising to you.

maj

Basically, keep record of everything that costs you money. Then let your tax person figure it out. Keep every receipt, bill, & check record. I also claim all finance charges on business credit cards. Keep record of house expenses, such as fuel, electric, & insurance. If you use any part of your home for business, you can deduct a percentage of home expenses. Keep a mileage log for the whole year for miles driven for work related business.

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GridRunnerFloor

now when i am keeping track of mileage i write down the actual reading starting/stoping or can i just set tripometer and write down the miles ?

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maj

I reset my tripometer every morning right after I start the truck, it's like habit now after 10 years. I have a form that has rows & columns, 12 months on top in columns, 31 days down the side in rows. I just write the miles for that day when I write down hours for the job.

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Mike Finley

It doesn't matter how you record it as long as you record your business milage. Most likely in 20 years you will have 20 years of mileage logs collecting dust that have never been looked at.

-Keep in mind you don't have to do anything, you can deduct anything you want, you can pay any amount of taxes or no taxes at all.

It's all about avoiding penalties and interest if you get audited.

ApgarNJ

I think in most states, if you write off the truck payments or depreciate the truck cost over a certain period of time, then you can't write off mileage also, this is what i have been told. my truck isn't able to be depreciated this year, so i am going to get a break on mileage. i don't write down what I drive each day, but I should start. i hope to have a new truck soon, so that will help things out. do you know if they need a log of each day or could you simply say, i drove 20k miles this year and it was all for business, since the only time the truck leaves the driveway it's for business.

jensenconstruction

You can either use depreciation or mileage but not both, also you can switch from depreciation to mileage but once you do you can't go back to depreciation so its best to talk to your bookkeeper before you decide.

for th mileage log it needs to be a daily log, the IRS wont accept the end of year total without a written log. Staples and Office Depot milage logs avaliable for around $5.00

GridRunnerFloor

i have an accountant now. and im going incorperated by the 19th of the month! exciting stuff. should help me in getting a home loan some day not being self employed eh?

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Mike Finley

It doesn't have anything to do with your state, this is only a deduction on your federal income tax return.

Basically you make a choice - true expenses or mileage. You do mileage you deduct 44.5 cents per business mile driven. You do actual expenses and you deduct for gas, oil changes, parts, interest on your loan, repairs... etc... you then can also depreciate your vehicle every year, of if the vehicle qualifies by weight - over 6000 lbs I believe you can deduct the entire amount in one year if you choose.