Tax Question - Landscaping - Contractor Talk

Tax Question

 
Thread Tools Search this Thread Display Modes
Old 04-18-2014, 09:56 PM   #1
Member
 
jwatts's Avatar
 
Trade: c-27
Join Date: Sep 2013
Location: califonia
Posts: 41
Rewards Points: 78

Tax Question


Someone from another thread recommends not itemizing materials on clients invoices, and just lumping it together with labor. Then at tax time just claiming everything as "costs of doing business", rather than "costs of goods sold". Do you agree with this?
jwatts is offline  

Warning: The topics covered on this site include activities in which there exists the potential for serious injury or death. ContractorTalk.com DOES NOT guarantee the accuracy or completeness of any information contained on this site. Always use proper safety precaution and reference reliable outside sources before attempting any construction or remodeling task!

   

Advertisement

 

Old 04-18-2014, 10:12 PM   #2
Pro
 
cleveman's Avatar
 
Trade: custom home building
Join Date: Dec 2007
Location: Central Iowa
Posts: 2,836
Rewards Points: 2,624

Re: Tax Question


Sounds good to me until you are audited.

Does it make sense to you?

Advertisement

cleveman is offline  
Old 04-18-2014, 10:34 PM   #3
Pro
 
rselectric1's Avatar
 
Trade: Licensed Electrical Contractor and Remodeler
Join Date: Sep 2009
Location: Chicago Suburbs
Posts: 11,913
Rewards Points: 934

Re: Tax Question


We all preach, all the time, the terrible consequences that can occur when homeowners attempt to do something out of their league, and we're right.

The same applies with accounting and taxes for us contractors. A CPA is worth the money especially with the tricky business returns.
__________________
220...221...whatever it takes!
rselectric1 is offline  
The Following 3 Users Say Thank You to rselectric1 For This Useful Post:
griz (04-18-2014), pinwheel (10-16-2014), PrestigeR&D (04-19-2014)
Sponsored Links
Advertisement
 
Old 04-20-2014, 11:39 AM   #4
Thom
 
thom's Avatar
 
Trade: General Contractor/Homebuilder
Join Date: Nov 2006
Location: Albuquerque NM
Posts: 4,137
Rewards Points: 4,748

Re: Tax Question


Your statement is perverse. How you bill your customers in no way dictates how you report your income and expenses to G. You may charge your customers a fixed price with no obligation to break out expenses but, when you file your taxes the IRS has specific rules on how you break out your expenses.

You will probably not be audited but, if you are and you have not complied with their requirements, the heavy burden of defending your actions is on you.

Incorporate or form an LLC. Download the tax forms ahead of time (now would be good) then fill out the entire set for your business pro forma (estimate of what you expect). The exercise will help you understand what records need to be kept in order to properly file your taxes.

Many pay to much tax because they fail to properly identify and document countless legitimate but small expenses throughout the year. Read the tax code, keep up with changes, the time spent will probably be the most profitable time you spend working all year.
__________________
Patriotism is being loyal to your country all the time and your government when it deserves it. Mark Twain
thom is offline  
The Following 3 Users Say Thank You to thom For This Useful Post:
clydebusa (06-28-2014), EthanB (10-16-2014), jwatts (04-20-2014)
Old 06-28-2014, 11:51 AM   #5
Member
 
Watrousbrothers's Avatar
 
Trade: Landscaping
Join Date: Jun 2014
Posts: 41
Rewards Points: 119

Re: Tax Question


Have you spoke to a accountant about it? I dont itemize it one mine I've been putting it as one whole cost. But I will ask my accountant now that you mentioned it.
Watrousbrothers is offline  
Old 08-04-2014, 03:14 PM   #6
Pro
 
BugmanBCE's Avatar
 
Trade: Pest Control
Join Date: Apr 2013
Posts: 271
Rewards Points: 537

Re: Tax Question


I have everything broken down into categories. Office supplies, materials, tools and equipment, labor, etc. Seems like the right way to do it. That's how TurboTax does it, which is what I use. I would talk to an accountant because that sounds funky.

Haven't used that word in a coon's age.
__________________
Pest Control League City, TX
BugmanBCE is offline  
Old 08-05-2014, 10:39 AM   #7
Member
 
jwatts's Avatar
 
Trade: c-27
Join Date: Sep 2013
Location: califonia
Posts: 41
Rewards Points: 78

Re: Tax Question


Ok I think what I've gathered now after talking to some local contractors is to lump all costs together as business expenses, keeping that amount separate from labor but not necessarily itemizing.
jwatts is offline  
Old 08-05-2014, 11:07 AM   #8
Particulate Filter
 
Metro M & L's Avatar
 
Trade: Flooring
Join Date: Jun 2009
Location: Portland, OR
Posts: 4,430
Rewards Points: 1,484

Re: Tax Question


Save all your receipts. The first year you file, you will find out how everything gets categorized.
__________________
"A smart man learns from his mistakes; a wise man learns from the mistakes of others."

www.portlandhardwoodrefinishing.com
Metro M & L is offline  
Old 10-16-2014, 12:07 AM   #9
Registered User
 
GM Lawn's Avatar
 
Trade: Landscaping and Flooring
Join Date: Oct 2014
Posts: 1
Rewards Points: 2

Re: Tax Question


thorn is right, what your friend is inartfully trying to touch on is inventory expense (direct expense) vs. general expense (indirect expense). Since there is very little inventory in most landscaping business (especially mow and go) you will not have a lot of materials that you buy and cannot expense in the same year that they were bought. Your biggest accounting problems will be handeling wages, sales taxes, and equipment correctly. - the fact that you are asking this question tells me you should get an accountant - no offense.
GM Lawn is offline  
Old 10-16-2014, 10:33 AM   #10
Thom
 
thom's Avatar
 
Trade: General Contractor/Homebuilder
Join Date: Nov 2006
Location: Albuquerque NM
Posts: 4,137
Rewards Points: 4,748

Re: Tax Question


Think about your business expenses this way (the correct way). Start by separating those costs that apply only to individual jobs and those costs that are necessary but shared by all jobs.

Individual jobs would include things like:
Labor (including direct labor burden)
Materials
Equipment rental
Disposal/dump fees

Shared (Overhead) expenses would include things like:
Trucks
Trailers
Equipment
Management time
Phone costs
Marketing/advertising costs
Office and storage facilities costs

Some, probably most, of the things in those Overhead expenses would be expensed annually but some must be capitalized and depreciated. For example, you buy a new truck for $30K. That would be capitalized and depreciated over 5 years. Each year for 5 years you would deduct $6K as an expense related to the costs of the truck. In addition, the operating costs of the truck would be expensed annually.

Advertisement

__________________
Patriotism is being loyal to your country all the time and your government when it deserves it. Mark Twain
thom is offline  



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
New? Have A Question? Read This First. Seven-Delta-FortyOne General Discussion 58 07-31-2019 02:46 AM
I have a question about my truck loan VinylHanger Vehicles 23 06-08-2012 11:00 AM
Concrete repair question german Excavation & Site Work 22 05-17-2012 11:38 AM

Join Now... It's Fast and FREE!

I am a professional contractor
I am a DIY Homeowner
Drywall Talk is for
PROFESSIONAL CONTRACTORS ONLY!

At DrywallTalk.com we cater exlusivly to professional contractors who make their living as a contractor. Knowing that many homeowners and DIYers are looking for a community to call home, we've created www.DIYChatroom.com DIY Chatroom is full of helpful advices and perfect for DIY homeowners.

Redirecing in 10 seconds
No Thanks
terms of service

Already Have an Account?