Profit Talk - What's The Year Net?

bradjacob

All this talk about percentages, profit, etc... At the end of the day (or year for that matter) - what's everyone making in construction?

$50k, $100k, over $100k ?

rbsremodeling

Profit wise you mean? If your smart $0 and if you don't know what I mean you got a ways to go

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SalesMGR1011

Once again
We will hope to break even

bradjacob

Oh yeah, I know I have a long way to go. Actually very long way. I'm just getting started in the biz and need all the help I can get.

davitk

Where's the Snow Man?

Mike Finley

Berry, berry good year, even with all the freak'n crazy sh*t we've all gone through and are going through as a country. Booked til Feb. I'd say I'd keep my fingers crossed, but it ain't blind luck, it's all just the result of spending more hard earned cash on advertising to take work away from somebody else is all.

Grumpy

I file every year at a loss

Ed the Roofer

I am still filing with Loss Carry Overs from about 5 years ago.

One of these days I hope to earn minimum wage.

Ed

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Mike Finley

Sorry guys, that whole showing a loss thing is bull sh*t.

HallisseyDesign

IT kinda is but when you have a rough year and show almost nothing I like the lose better. This year was extremely slow but I am doing a 1200 square foot addition for my grandparents on the back of my parents house and the g-rents love to pay! hah should turn out really good come dec 31.

Ed the Roofer

I am not showing a loss for this year, but being allowed to use a Loss Carry Over from several years back. It's sort of like Income Averaging when that was available for the regular 1040 filers.

One bad year, or extremely bad year can actually save you quite a bit in the next few years, depending on the whole table of other deductions you are allowed to utilize.

I swear, I didn't mean to show a loss that year. It hjust happened.

Ed

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J F

Is it true the irs is more likely to audit a business that shows consistent losses year after year (unless you're an airline or automaker of course)?

I seem to remember reading/hearing that awhile back and am curious if that's the case overall.

Ed, how does the carry over for losses work (are you an inc, llc,?). Maybe this crappy year will have a silver lining after all .

Jay

Mike Finley

I'm not saying the tax laws aren't beneficial in the fact that they are somewhat malleable in regard to profit and loss and of course being able to show a loss means no taxes due and possibly being able to offset income the next year with a carry over of the remaining loss...

... but when people in a prideful way say, "I show a loss every year, or break even" or something along those lines that's simply spreading miss-information to those here who are less sophisticated in their knowledge of the financial aspects of running a business.

While somebody might have a goal to show a loss every year or to break even , I'd rather earn so much profit that I can't offset it. I don't care how many deductions or manipulations somebody pulls if I show a million dollars profit above and beyond the manipulations you are able to pull off, I've came out way ahead of you.

Bottom line - is earning more profit that you can offset it is much more preferable goal to me. The other way around is akin to somebody saying I don't want to work any harder because I will actually make less money because I will have to pay more taxes. Statements like that are made by people who really don't understand how things work.

J F

Yeah, I claim every stinkin' $ we make (as well as every deduction), but we're only in our sixth year and maybe later on down the road our accountant will need to look for some legal loopholes.

So far just paying uncle sam and bitchin' and moanin' about it. And yes we do take every legal deduction of course. I've always been of mind that I want to show a profit (while minimizing our tax liability in every legal way). Why be in business if not? (and if i change my tune 10 years down the road, i'll be sure to report back in on this thread).

I already don't every sleep very well, I don't need to be worrying about the i.r.s. knocking on the door. If I were to be audited with the way we've kept our books, I wouldn't sweat it.

Jay

PA woodbutcher

Well said Mike. Third year in business and will show profit even after depreciating all major tool purchases. If your business is making money it is viewed as an asset. I prefer to have assets

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Mike Finley

You've hit on the other extremely important issue, that you're going to have an hard time building the business, purchasing large ticket items in the company name, getting lines of credit and of course what should be the most important thing - eventually selling your business if when those times come and someone wants to see the company financials all you have to show them is year after year of either losses or slight profits.

rbsremodeling

Not true this and the statement above are broad generalizations. Their are several reasons why it would be hard for my company to show any profit because of certain factors.

While I agree most should strive to show profits if possible. I usually can't.

My receivables/profit usually rolls into the following year. Hence a loss on paper. Anyone reviewing it like a bank or lending institution will see the reason for a loss.


This is another topic I think needs further discussion I will come back to this when I have more time.

My first reply was more humor than anything else but I will change tone for this topic

Good thoughts Mike and PA

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SalesMGR1011

In our company which is a LLC, everyone is stil paid well don't get me wrong but we continue as we grow and expand to reinvest our money into vehicles, supplies, etc.

Mike Finley

As long as you are in business year after year that shouldn't matter unless you have a year that is unique, (unusual loss or unusal profit).

It's like receivables rolling into next month. Sure you have $10,000 of recievables for March not showing up until April, but in March you have $10,000 of receivables from Feburary showing up being carried from the month before.

To not complicate things its this easy

Bad= business that show a loss always
good= business that shows a profit always

I want to sell 2 identical businesses. Business A has 1,000,000 in sales and shows a break even year after year. Looking at the books, you see, yeah, it breaks even, but the owner is taking a $200,000 salary! NICE! So you analyze the books and say, yep he's writing down everything he can, I can see that, but he's also taking a larger salary than indusry standards, with the owner taking a more normal $80,000 a year the company would be showing a $120,000 a year profit.

Business B has $3,000,000 in sales and shows a $2,00,000 profit year after year. Looking at the books you see, yep, $2,00,000 in profit, the owner is taking a $300,000 salary, and they are writing off everything they can, but they are so profitable they still show a $2,000,000 profit.

Now which one is worth more? The 2nd business is of course. Which is what I'm talking about. Would you rather have a business that only earns about as much income as it can write off, or would you rather have a business that is generating so much damn profit you can't write it all off?

rbsremodeling

Do I want to buy the one that is worth more and spend a ton of money or buy the other one that appears to be worth less on paper and improve on it and make it something at a cheaper purchase price while making 200k a year


I think a lot of your opinion, ideas and business practices are sound. But for most guys that live in the real world they ain,t worth a pluck when the mortgage is due.

They are however very good goals to work towards

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