What Should I charge people?

[JTMcC]

What I wrote was,

"This depreciation comes off the top line along with a whole bunch of other expenses thereby reducing your taxable bottom line. In essence Uncle Sam will pay for your equipment. "

I thought it was clear that the money came from savings in taxes... unless you take the sentence out of context.

Right, right up to the last sentence. "THAT" was out of context, and wrong.

You were fairly accurate right up until you say the govt. will "pay for your equipment". Just flat wrong. Unless you are a phoney green enterprise, then the govt WILL pay for your equipment, payroll, executive bonus', the boat and the airplane/helicopters. Most of us don't fall into that category.

Anybody in flyover country, working in a real business, pays for their own equipment period. The tax breaks you get are usefull, but thwey do not pay for your equipment.

A deduction is still a net loss. No way around that, maybe neccessary, but a net loss at purchase.

JTMcC

[JTMcC]

That is really the extreme where someone is actually trying to write off hobby stuff and it is tax fraud 

Righto. People do try that.

In todays environment there are a lot of large, multi national construction companies that have lost money for several years. They will never get classified as a "hobby". A lot of factors come into play.

J

[JTMcC]

It was clear- jt was funnin' with the tank stuff

No I wasn't.

I'd also have a hovercraft (not those silly little hobby type, the Marine Corps amphibious assault type) and a fleet of M113's to patrol the compound, maybe a Bradley or two. Oh yea, a observation blimp as well. And a D-9 for road maintenance.

J

[Hardrock40]

Thanks Broccoli

[Broccoli1]

That would suck. As for the other post I wrote I hardly understand what I said myself. But I have tried to get this whole thing right. I guess I'll never be legit until I get laid off from my regular job or just switch all together.

Some interesting reply's here.

That is really the extreme where someone is actually trying to write off hobby stuff and it is tax fraud 😁

If your business just can't make it then you don't owe extra😳

If you are doing side jobs and collecting money be careful- even cash transactions can come back to bite you if the person decides to 1099*you because his expense is a write off for his business. Thank god they put the brakes on mandatory reporting of every transaction over $600.00 😳

* Although that is really only for labor if you worked a temp gig for someone, not service repairs etc etc.

Have you sat down with an accountant or tax person to go over your situation?

We are not tax people so for us, paying a guy to do it was well worth the $
We tried our first year and it seemed easy but then we met with a guy, on a clients suggestion, and he saved us a ton of money.

Good luck to you

[Hardrock40]

Another thing about the Hobby thing is that if the IRS decides that it is in fact a hobby you the owe them all of the tax money you didn't pay for those 3 years because you were calling it a business.



That would suck. As for the other post I wrote I hardly understand what I said myself. But I have tried to get this whole thing right. I guess I'll never be legit until I get laid off from my regular job or just switch all together.

Some interesting reply's here.

[Broccoli1]

What I wrote was,

"This depreciation comes off the top line along with a whole bunch of other expenses thereby reducing your taxable bottom line. In essence Uncle Sam will pay for your equipment. "

I thought it was clear that the money came from savings in taxes... unless you take the sentence out of context.

It was clear- jt was funnin' with the tank stuff

[Arizona Joe]

Well it's a shame, because if the govt bought my equipment I'd have a monster truck, a helicopter and a main battle tank parked in the front yard, all with a welding machine tucked in somewhere of course : )

J

What I wrote was,

"This depreciation comes off the top line along with a whole bunch of other expenses thereby reducing your taxable bottom line. In essence Uncle Sam will pay for your equipment. "

I thought it was clear that the money came from savings in taxes... unless you take the sentence out of context.

[Broccoli1]

Another thing about the Hobby thing is that if the IRS decides that it is in fact a hobby you the owe them all of the tax money you didn't pay for those 3 years because you were calling it a business.

😁

[Broccoli1]

Here is what happens when you try to start up a legit business.

You buy equipment, more equipment, advertise and more etc.

You file your taxes, assets / cost are deprecated but over a few or more years while also buying more equipment. You show a lose because you didn't make more money than you spent, so the deprecation amount is more than you made.

Three years of this shows your not a legit business but more of a hobbyist. Tax man says close the business, but keep trying and if you make money you have to reopen the business and pay tax.

What the he##, what if I make less than the deprecation of the assets plus the stuff I'm still buying? I can't keep showing a lose but I must pay tax because I made money???

The way I look at it, is keep everything,, receipts. Make money but until you can make enough to pay tax on which is over what your cost deprecation are, you can't call it a business. TAX man don't call it a legit business until you can pay tax on it.

Technically you can't do that because the " legit" part pertains to the tax credits they give you. So... If you make money, actually Charge , they don't really care if you make money- you are taxed on that transaction. Not immediately like a sales tax you see at a store but it is there floating in the ether of accounting to come due at tax time.
In very basic lingo ... At the end of the year you add up all yer money and then figger out what you owe on that income. You get to deduct all of your business expenses towards that dollar amount which reduces your total income which reduces what you then owe the gubment .
They give you a 5 year window for start up because there are more expenses during start up which can affect your income in to the red. This gives you a zero tax payment.
Hobby Loss Rule of Thumb. If a business reports a net profit in at least 3 out of 5 years, it is presumed to be a for-profit business. If a business reports a net loss in more than 2 out of 5 years, it is presumed to be a not-for-profit hobby.
They give you options on how you wish to offset big ticket items but after 5 years if you keep showing a loss then they'll climb up your arse and ask WTF? You can't keep buying equipment and supplies forever and not make any money.

[Precision]

What Should I charge people?

^^ they will give you a free cell phone too. :-)

[jpence38]

The government will not buy your equipment if you are a hard working business owner. However it is free if you are one of the following.

Don't like to work or work hard at doing nothing, are not here legally, can have a baby every 9-10 months, have a really stupid idea to qualify for the study of something, etc.

I will have to second that.

[MMW]

Well it's a shame, because if the govt bought my equipment I'd have a monster truck, a helicopter and a main battle tank parked in the front yard, all with a welding machine tucked in somewhere of course : )

J

The government will not buy your equipment if you are a hard working business owner. However it is free if you are one of the following.

Don't like to work or work hard at doing nothing, are not here legally, can have a baby every 9-10 months, have a really stupid idea to qualify for the study of something, etc.

[JTMcC]

Yes, of course.

Well it's a shame, because if the govt bought my equipment I'd have a monster truck, a helicopter and a main battle tank parked in the front yard, all with a welding machine tucked in somewhere of course : )

J

[jpence38]

Here is what happens when you try to start up a legit business.

You buy equipment, more equipment, advertise and more etc.

You file your taxes, assets / cost are deprecated but over a few or more years while also buying more equipment. You show a lose because you didn't make more money than you spent, so the deprecation amount is more than you made.

Three years of this shows your not a legit business but more of a hobbyist. Tax man says close the business, but keep trying and if you make money you have to reopen the business and pay tax.

What the he##, what if I make less than the deprecation of the assets plus the stuff I'm still buying? I can't keep showing a lose but I must pay tax because I made money???

The way I look at it, is keep everything,, receipts. Make money but until you can make enough to pay tax on which is over what your cost deprecation are, you can't call it a business. TAX man don't call it a legit business until you can pay tax on it.

Have you ever run a business??
Have you ever filed your own taxes on a business if you ran one??
By your comments I don't think you have on either question therefore how can you give advice???
Not trying to be an [email protected]$, but what you said made no sense.