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Taxes And Accounting

 
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Old 01-04-2018, 09:19 AM   #1
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Taxes And Accounting


I'm in the process of getting our S-Corp for my construction company and have been seeing a few accountants to learn how to do things. The explanation seems simple enough. Open a business bank account, deposit income, all business related expenses (materials, paying subs, etc...) get deducted and what's left over gets taxed.

Does anyone have any tips or advice they can share? I'm in CA if that matters and this company is between me and a partner.

-A fellow contractor told me I should be able to claim a loss the first few years. Thoughts?
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Old 01-04-2018, 09:43 AM   #2
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Re: Taxes And Accounting


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Originally Posted by mkb View Post
I'm in the process of getting our S-Corp for my construction company and have been seeing a few accountants to learn how to do things. The explanation seems simple enough. Open a business bank account, deposit income, all business related expenses (materials, paying subs, etc...) get deducted and what's left over gets taxed.

Does anyone have any tips or advice they can share? I'm in CA if that matters and this company is between me and a partner.

-A fellow contractor told me I should be able to claim a loss the first few years. Thoughts?

Not positive, but I think the only way to claim a loss is to buy expensive tools and vehicles that have a depreciation value and to claim a loss you have to have a loss.

I don't play games with taxes and I don't purposely buy things that depreciate. There is a saying, "pay in the beginning or pay at the end".
Everything is relevant. I run my business with all junk vehicles that I pay cash for. No high payments, insurance or DMV taxes.

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Old 01-04-2018, 11:35 AM   #3
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Re: Taxes And Accounting


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Originally Posted by daffysplumbing View Post
Not positive, but I think the only way to claim a loss is to buy expensive tools and vehicles that have a depreciation value and to claim a loss you have to have a loss.

I don't play games with taxes and I don't purposely buy things that depreciate. There is a saying, "pay in the beginning or pay at the end".
Everything is relevant. I run my business with all junk vehicles that I pay cash for. No high payments, insurance or DMV taxes.
There is a game to play here that can net some extra cash, but it is a very complicated one that I would not recommend to do without a certified accountant to show you the ropes. Most people that try this end up eating the cost.

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Old 01-04-2018, 11:59 AM   #4
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Re: Taxes And Accounting


I guess finding a reliable and good accountant to explain all the ins and outs is going to be my main focus then
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Old 01-05-2018, 08:52 AM   #5
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Re: Taxes And Accounting


Step ONE is find a good Construction Accountant. Choosing what type of business entity comes AFTER that - following their advice. Maybe S-Corp, maybe not.

You need to have a good accountant that knows your type of business before you even decide to start a business.
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Old 01-09-2018, 06:54 PM   #6
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Re: Taxes And Accounting


So the only ways to 'claim a loss' is either lose money or spend money on capital assets that you fully depreciate immediately (usually what is called a 179 deduction).

There seems to be a misconception among the general public and low level business owners, that they can pay little to no taxes. Usually this is done, by not reporting income (fraud), and writing off expenses that aren't ordinary and necessary business expenses, ie. a nice new truck that rarely gets used for work, vacations, and everything else. Many small operations, that don't really 'make big bucks' can skate under the radar for a loooong time. And often times, many are just straight up hardly making pennies after accounting for all expenses, yet they rack up debt but on the outside they appear 'rich'. That's very easy to do when the economy is healthy like it is now and make contractors can just pull off a ponzi scheme of sorts. While we're on cash management, you might want to check out this blog post I have on it.

I do have masters in accounting, but imo taxation isn't nearly as complicated as most people make it seem, particularly at the level of start up (maybe its because I have a masters in accounting). The complex 'loop hole' stuff you hear about, isn't really valuable unless you're earning revenue across state lines, internationally, or generate profits into the 8 figures.

On that note, you really don't need a 'construction accountant', you just need one that 'cares'. Ideally I would suggest a larger local firm, that you have a referral to -- a connection personally.
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Old 01-13-2018, 08:09 AM   #7
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Re: Taxes And Accounting


If you have a local community college, sign up from accounting. Generally taking a "101 and 201" would be sufficient. (A "Corporate Finance" class would also be good, as it helps you thing more big picture.) You will also learn the difference between cash flow and making a profit.

Quickbooks is a great accounting program, and if you aren't especially good at reading books to learn it, hire someone to train you and also set up your books.

Your simple equation about what gets left over is taxed is correct, but prior to that you your job costs, (labor & materials for the job) and overhead (office space, insurance, vehicles, equipment). The overhead if it is more than you can get from your work, it will lead you down the road to ruin.

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