Taxes - Writting things off.

[Canyonbc]

What can and do you as a company right off???

If you go to tommorw and spent 50,000 on a brand new chipper...can you write that off when it comes to tax time???

Thanks

Canyon.

 

[ropensaddle]

What can and do you as a company right off???

If you go to tommorw and spent 50,000 on a brand new chipper...can you write that off when it comes to tax time???

Thanks

Canyon.

What usually is done is depreciate it over several years
strong suggestion get a cpa if you get in biz they will keep
you legal!

 

[reachtreeservi]

My CPA tod me you could take 100% of the depreciation the 1st year, or do up to 20% over 5 years on vehicles and large equipment. When I bought a work truck last year I took the 100% the 1st year option.

 

[Canyonbc]

What usually is done is depreciate it over several years
strong suggestion get a cpa if you get in biz they will keep
you legal!

Thanks.

That is what i thought would happen.
Give the machine a set years "of life" divide the total cost by (x) years and write that number out.

So to conclude i am correct is this example correct?

Example.

Chipper 50,000
Life - 5 years

50,000 Chipper / 5 years = 10,000 a year

Taxes:
10,000 a year for 5 years are written off Taxes.

Is this example correct??

Canyon

 

[Canyonbc]

My CPA tod me you could take 100% of the depreciation the 1st year, or do up to 20% over 5 years on vehicles and large equipment. When I bought a work truck last year I took the 100% the 1st year option.

Thanks reachtreeservi and ropensaddles...

helping out a ton.

I need to get a CPA as i grow.

 

[reachtreeservi]

You really need one before you grow, he can save you a boatload of money. Call around and ask what the rate for an hour consult is... and go from there. I see my CPA every other month and he bills me about a hundred a session, his advice more than pays for itself, I wouldn't make a major decision without it.

 

[Canyonbc]

Ya i think i am gonna open up the phone book tommorw.

Thanks guys.

 

[ropensaddle]

Too complex as everyones finances are different depreciate
is better if you are not making huge profit or income I let the cpa
tell me and keep me straight.


By the way a cpa expense is a write off lol

 

[Canyonbc]

Too complex as everyones finances are different depreciate
is better if you are not making huge profit or income I let the cpa
tell me and keep me straight.


By the way a cpa expense is a write off lol

Haha...nice, i was going to ask that.

Business Expense right.

 

[omegajim]

When my folks ran their little farm, good year, depreciate more, bad year, depreciate less.

Another contractor put it to me this way "keep the numbers consistent, consistent amount of depreciation, a fairly consistent earnings level, and you won't raise too many flags."

In other words, depreciate at a nice steady consistent rate, big dips and increases raise red flags with the IRS.

Just a rule of thumb.

 

[Canyonbc]

When my folks ran their little farm, good year, depreciate more, bad year, depreciate less.

Another contractor put it to me this way "keep the numbers consistent, consistent amount of depreciation, a fairly consistent earnings level, and you won't raise too many flags."

In other words, depreciate at a nice steady consistent rate, big dips and increases raise red flags with the IRS.

Just a rule of thumb.

I like that rule..alot.

As a general rule can you write off any tools for the business.

What about gas.

I know i need to get a CPA, i am gonna go through the phone book in the morning and start making phone calls.

 

[reachtreeservi]

You can write off fuel , keep your receipts.

 

[Husky137]

As has been said, get an accountant. Ask around for a referral to a reputable one, not just one who can plug numbers into turbo tax and then doesn't want to sign the preparer's line. Just like any profession, there are accountants at the head of the class and those at the bottom of the class.

 

[Canyonbc]

As has been said, get an accountant. Ask around for a referral to a reputable one, not just one who can plug numbers into turbo tax and then doesn't want to sign the preparer's line. Just like any profession, there are accountants at the head of the class and those at the bottom of the class.

No i agree that is a huge thing. I have a few friends who are owners of other tree service business's i want to first contact them tomorrow and see who they use and there opinion on there accountant.

 

[Canyonbc]

You can write off fuel , keep your receipts.

That is awesome.

 

[lxt]

GET AN ACCOUNTANT/CPA

when it comes to depriciation keep this in mind!

your $50,000 chipper, 5 yr writeoff?
year number 6 you sell chipper for say $5000 = this is now a capital gain!! unless you reinvest!!

take the advice mentioned as Im sure you will, the writeoff`s & tax codes,etc.. are mind boggling!! good luck!

LXT...........

 

[Husky137]

That is awesome.

You can write off all legitimate business expenses, not just fuel.

 

[Canyonbc]

You can write off all legitimate business expenses, not just fuel.

Thanks everyone.

 

[omegajim]

As far as fuel is concerned, you have to keep in mind the mileage the gov't allows; last time I looked it was north of 50 cents/mile.

So after 10 miles, that 5 bucks. You may want to just keep track of the mileage on the truck. Maybe knock of 10% to be on the safe side and call the rest of it mileage. 10 k miles = over 5 k in writeoffs. However, if you use this method, you can't writeoff repairs, oil changes etc, because that 50 some cents a mile is taking that all into account. Including insurance on that vehicle, I believe.

your $50,000 chipper, 5 yr writeoff?
year number 6 you sell chipper for say $5000 = this is now a capital gain!! unless you reinvest!!

When you sell something that's completely depreciated, buy something else..............

"I have to get rid of this money, I HAVE to go to the store and buy something."

The dilemas of business.

 

[ATH]

As far as fuel is concerned, you have to keep in mind the mileage the gov't allows; last time I looked it was north of 50 cents/mile.

So after 10 miles, that 5 bucks. You may want to just keep track of the mileage on the truck. Maybe knock of 10% to be on the safe side and call the rest of it mileage. 10 k miles = over 5 k in writeoffs. However, if you use this method, you can't writeoff repairs, oil changes etc, because that 50 some cents a mile is taking that all into account. Including insurance on that vehicle, I believe.

VERY important point...you beat me to it, but I wanted to second that:

You EITHER write off actual vehicle expenses (fuel and depreciation included) OR standard mileage rate (48.5 cents), but NOT both. If you choose milage that is all you write off.

You cannot use the standard mileage rate if:
*You have used actual expense on the same vehicle in the past (I think since 1997...)
*You have 5 or more vehicles operating for the business at any one time
*Other stuff that wouldn't generally apply to us tree guys...

If you have a vehicle you don't put many miles on, you are likely further ahead writing off actual expense - more paperwork, but the depreciation on a low mileage vehicle is likely to outpace the 48.5 cents per mile. More expensive trucks or trucks with very low gas mileage are probably better off with actual expense too. Besides if you are depreciating it, you have to get a new (or another used one) one every 5 years to keep the write off coming :biggrinbounce2:

In all honesty, this isn't the best place to be getting tax advise...we in't joining you in court if things don't work out right

I don't have a CPA, but I spend a lot of time reading IRS pubs. It is a royal pain the first couple of years, but gets better once you have been through it a couple of times. I used to do it all by hand. Spent about $60 on HR Block brand "Tax Cut" software last year - well worth it.

There are a couple of pages here that will tell you more than you want about milage:
http://www.irs.gov/pub/irs-pdf/p463.pdf

Here is everything (and much much more) that you would ever want to know about depreciation straight from the Man:
http://www.irs.gov/instructions/i4562/ix01.html
and the form to do so:
http://www.irs.gov/pub/irs-pdf/f4562.pdf

Many of the normal business write-offs/deductions are covered on
Schedule C
Schedule C instructions (see especially Part 2 starting on page 4).

Have fun