What do you guys do about taxes?

[twochains]

I am seeing a flicker of a bright light in the near future. I am fixing to switch logging crews pretty soon. Up till now i have always been on a payroll type deal with taxes being withheld. I am assuming this new crew doesn't withhold any. The pay is going to be much higher and I don't want to be slammed with a not prepared for 1099.

I have read where alot of you fallers out west are self contracted. Well how did you do it? Is it advisable for me to do the same for this new crew?

If I could just get some insight as to how you guys have done this and what you do for insurance, I would greatly appreciate it. Thanks in advance for replies. Cheers!

 

[DavdH]

keep records and then keep records of you're records. You will file but you may need to itemize deductions, you can deduct all business expenses. You will be stunned no matter how you figger it..You only ever see 1/2 you're taxes as an employee you never even get a peek at the real tax burden.

 

[Dog_River]

Unless you are good at handling money, record keeping and are organized I would not do it. I would also talk to a good book keeper/accountant to get you set up and on the right path if you choose to go that route. You will more than likely need to get set up with WCB and submit quarterly taxes just to name a few. If you are going to have other guy's working for you then it becomes that much more complicted. I suggest you take a hard look at yourself, what your strengths and weaknesses are before you venture in.

I am not a logger but this is busiess no matter what you do.

Dog_River

 

[KenJax Tree]

Taxes?? Are we supposed to pay those??

 

[TreeGuyHR]

Let me see...

As a contractor licensed in both Oregon and Washington (I am right on the border), where it is required for jobs over $500 as well as for enforcing a contract, I pay for licensing and CEU online classes; insurance (three kinds plus bonding); Federal and State withholding and employer contribution taxes for employees; sales tax in Washington (differs by city and County), a County tax in Hood River County on equipment (WTF?! -- that's a new one -- had to count up every roll of flagging, pencil, and chain :msp_wink; licensing and CEU fees for being a pesticide Operator / Applicator (both states).

That probably isn't all.

Right -- I have to get an ODOT sticker for my truck in WA --keep forgetting about that ($10,000 fine it you get popped, unless you weren't obviously unsafe and you get the sticker in a week); I was all set and now my truck needs more repairs (4WD High Range went out again) before I get to pay for the inspection plus an annual fee. Plus, I found out you need to pay close attention to Workman's Comp withholding, because the rates are estimated from the previous year -- so if you end up working your guys more, you better set more aside, or you get a big adjustment (got audited); plus, you have to pay attention to the work codes, because the rates vary from around 2% to 14% of worker pay -- and if there is a guy in a tree. all the guys on site are at the high rate.

Like the others said above, organization is key to managing paper and predicting what you will need to pay for your taxes and fees, both to put these costs in your overhead and to remember to set aside enough money. I actually tried to compute my first two pay checks, and gave up and pay a check prep service instead -- there are around six different taxes that are all at different rates, and most need to be filed electronically, on different software, and paid at different times. So you can't do it all yourself. I had to buy and use Quicken (small business accounting software) not a bad idea even without employees.

Is it worth it? It is the price you pay to rise above the low-ballers without the proper insurance or licensing, who you still have to compete against. It will save you from looking over your shoulder, or being pressured in to keeping two sets of books to land jobs with people who want to cheat on their taxes. My excuse: my accountant will just take the WA sales tax out anyway, so I have to collect it -- amazing how many people assume you will work less for cash to cheat on your taxes as well!

When I do bids, I sometimes will bring up low-baller issue if the homeowner appears to be on a budget; in talking to the more well off ones I don't bring it up,because they have most likely already checked me out when they called me.

Have to go and meet my accountant -- good luck!

 

[mitch95100]

Taxes?? Are we supposed to pay those??

Yea some funny man showd up the other day demanding money??? I stuck the dog after him...

 

[Gologit]

I am seeing a flicker of a bright light in the near future. I am fixing to switch logging crews pretty soon. Up till now i have always been on a payroll type deal with taxes being withheld. I am assuming this new crew doesn't withhold any. The pay is going to be much higher and I don't want to be slammed with a not prepared for 1099.

I have read where alot of you fallers out west are self contracted. Well how did you do it? Is it advisable for me to do the same for this new crew?

If I could just get some insight as to how you guys have done this and what you do for insurance, I would greatly appreciate it. Thanks in advance for replies. Cheers!

We call that "running our own numbers" and it's got both good and bad sides.

If you're good at record keeping, like DavidH said, you'll be surprised at how much it's costing to work. Saving a record of every expense, no matter how small, is vital. Write off everything that you legally can but don't be tempted to play fast and loose with the tax boys...there isn't much they haven't seen.

I've only been audited once but it left a lasting memory and really improved my book keeping methods. :msp_biggrin:

The one place I see guys getting tripped up by running their own numbers is by not setting enough money aside to pay taxes and such. The checks look pretty good, sometimes they're more money than you've ever seen, but all that money doesn't really belong to you. Not even close.
Figure your tax liability and set up a special account for it. Put the set aside money in every time you get a check. Every time.

I've found that, running your own numbers or working for wages, you generally wind up with about the same amount of money in your pocket at the end of the year.

 

[Dog_River]

I was "self employed" for years but for me it was not worth the brain damage. :msp_scared:

Dog_River

 

[twochains]

I greatly appreciate all the replies! I knew there would be alot of book keeping...and yes, I will have to hire a book keeper! :msp_biggrin:

This will all be self employment and I will not be hiring any workers, so that sounds like that in itself will ease my headaches a bit. I will be working for a crew as a faller, the money seems very good...too good to pass up in my neck of the woods.

I spoke with my insurance agent today (she's hott :msp_wub she knows me good and gave some advice as far as business license and what type of insurance I should get...basically I just need health insurance. I won't be cutting near any high dollar targets so I don't have to worry with that type of insurance or bonding. In the past all my employers have just had workman comp., I asked if it mattered that since I was going to be working in the woods, whether or not I needed some sort of hazard insurance and she said no. I was sort of surprised by that answer, being that I race dirt bikes, had I have been injured "racing", she said the company would frown on those actions heavily! I'm thinkin' that doesn't really make since, due to the fact that logging is more dangerous .

Well, Thanks alot guys! I have a bunch of sorting out to do. Cheers!

 

[TreeGuyHR]

I greatly appreciate all the replies! I knew there would be alot of book keeping...and yes, I will have to hire a book keeper! :msp_biggrin:

This will all be self employment and I will not be hiring any workers, so that sounds like that in itself will ease my headaches a bit. I will be working for a crew as a faller, the money seems very good...too good to pass up in my neck of the woods.

I spoke with my insurance agent today (she's hott :msp_wub she knows me good and gave some advice as far as business license and what type of insurance I should get...basically I just need health insurance. I won't be cutting near any high dollar targets so I don't have to worry with that type of insurance or bonding. In the past all my employers have just had workman comp., I asked if it mattered that since I was going to be working in the woods, whether or not I needed some sort of hazard insurance and she said no. I was sort of surprised by that answer, being that I race dirt bikes, had I have been injured "racing", she said the company would frown on those actions heavily! I'm thinkin' that doesn't really make since, due to the fact that logging is more dangerous .

Well, Thanks alot guys! I have a bunch of sorting out to do. Cheers!

I pay in to Workman's Comp for myself -- if you are self-employed, that is the only way you can get it if you are out of work due to an injury. However, your rates may go up if you have a significant claim. Also check to see what kind of medical coverage it would pay out, compared to health insurance. I have both -- but my health insurance is through my wife's policy through her work; if I got my own it would probably cost more. Her's still has a $2000 deductible; a recent injury probably cost me about $3500 to meet the deductible and pay for co-pays. I still wonder if I should have made a Workman's Comp claim.

 

[Jefflac02]

I pay in to Workman's Comp for myself -- if you are self-employed, that is the only way you can get it if you are out of work due to an injury. However, your rates may go up if you have a significant claim. Also check to see what kind of medical coverage it would pay out, compared to health insurance. I have both -- but my health insurance is through my wife's policy through her work; if I got my own it would probably cost more. Her's still has a $2000 deductible; a recent injury probably cost me about $3500 to meet the deductible and pay for co-pays. I still wonder if I should have made a Workman's Comp claim.

Actually you can get short term disability that covers on the job for injuries in place of workers comp. it is pricey to do on a direct basis, but is still cheaper then getting comp on yourself and it covers off the job accidents and illness too. And don't forget that Aflac accident plan. Would of helped cover part or all of those our of pocket expenses. Pays you cash which is just as good as money!

 

[4x4American]

wow...my head is spinning from all that confusing tax stuff....I cant imagine what the real deal is like running yer own numbers:msp_confused:

 

[Rounder]

Keep every receipt, lots of help from an amazing wife/partner, and pay a tax pro.

 

[funky sawman]

My taxes were cornfusing cause I get paid for my saw (saw rent) that is non taxable income. had to keep every reciept for a year to use them as deductables, yea what a mess, turns out I had money out in sawing gear that I got paid for!

 

[madhatte]

I made a botch job of my one attempt at running a business. I don't have a head for finances at all. One thing I did learn about keeping receipts and itemizing is that you give up your standard deduction(s) that way; depending on how your fortunes fare in a given year, you may be better off not itemizing at all, but you'll never know until the W-2's are in and you run the numbers both ways. I remember holding a big bag of receipts I'd guarded with my life and thinking "You mean I didn't have to do this?" Nope, not that particular year.

 

[cffr]

I know it varies by state but here i cant get workers comp on myself because i am the owner. My advice would be to look into a general liability policy that covers fire especially. It may never happen but you are working with a saw in the woods and if a fire starts you will be held responsible and it gets very expensive very quick. I have a million dollar liability policy that covers fire and lots of other things and only pay around $1200 a year and it is very well worth it having the piece of mind and coverage if anything does happen.

 

[djones]

"Taxes, we don't need no stinkin' taxes"

 

[twochains]

I still am researching out all my options. One problem I have with health insurance is the fact that I have asthma. It is very well under control, but insurance companies like to throw that crap in my face! :bang:

I am going to see what Aflac has to offer...and of course there is always Obumble Care :bang: LOL! (just joking obviously)

 

[Grouchy old man]

I am seeing a flicker of a bright light in the near future. I am fixing to switch logging crews pretty soon. Up till now i have always been on a payroll type deal with taxes being withheld. I am assuming this new crew doesn't withhold any. The pay is going to be much higher and I don't want to be slammed with a not prepared for 1099.

I have read where alot of you fallers out west are self contracted. Well how did you do it? Is it advisable for me to do the same for this new crew?

If I could just get some insight as to how you guys have done this and what you do for insurance, I would greatly appreciate it. Thanks in advance for replies. Cheers!

I would be very careful here. What you are actually asking is should you be an employee or an independent contractor. At your present company you are an employee with the company taking withholding and also providing workmans comp, unemployment and other insurance. Basically, if you only work for them, they set your hours and tell you what to do, where to do it and provide equipment you have to be an employee and you get a W2.

You are an independent contractor if you have your own company set up, work for other people, come and go as you please and provide all the equipment necessary to do a job. An independent contractor gets a 1099. He would have to pay estimated taxes quarterly (the IRS want's you paid up before April 15) and provide all insurance himself. He would carry general liability, but often it's not possible to get workman's comp unless he had employees.

Many companies try to get away with saying that the people who work for them are independent contractors when they are really employees and give them 1099s at the end of the year. It is illegal. They get out of paying WC insurance, unemployment and paying half your social security payments as well as sending money to the IRS every week. It's not much of a problem for you if you work for a company that does this as long as you pay your estimated taxes and file your 1040 on April 15. But know that you are paying more than what you should be and you have no insurance if you get hurt on the job. All it takes is one person to let the labor department know what the company is doing and they are in BIG trouble. I recently heard of an instance where someone like you, who thought nothing of getting a 1099, was laid off after 15 years. They went to sign up for unemployment as they thought they should. That's all it took. The company is now out of business because they had been giving all their employees 1099s. The IRS and state assessed them with the witholding for all their employees back I don't know how many years plus penalties and interest. Had to be in the hundreds of thousands.

 

[twochains]

Ok, so I had to read that a couple times but I think I got your point. You are basically saying that if I have an extended stay with this crew, that actually the employer, legally should hold taxes and workman comp etc. And that companies who continually, year after year, give you a 1099 instead of treating you like a full time employer, are actually acting in an illegal manner. Now that is something I wouldn't have ever thought out! You have definitely raised my awareness.

I would love to land this job and do well enough for him that I stay around for a while. This guy is a fairly big timber buyer and known as a very stand up logger...plus he has offered me a VERY high starting out pay. Thanks!