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First year in buisness...TAXES?

Discussion in 'Business Fundamentals' started by michigan Joe, Jan 18, 2005.

  1. michigan Joe

    michigan Joe Junior Member
    Messages: 18

    This is my first year and I started an LLC. I didnt make any money at all in 2004, because there was no snow, but I purchased quite a few things to get prepared such as tools, driveway markers, quickbooks, office supplies, printer, buisness cards ect...not to mention a brand new f250 w/plow. I saved all my receipts as well as gas receipts. What I need to know is what exactly can I write off as a buisness loss and I was also wondering if there is any depreciation of the value of my truck I can write off. Actually I need to know anything you guys can help me with. I dont know a d@mn thing about buisness taxes. Thanks for any help.
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Check with your tax preparer. You may be better off starting your business effective Jan 1st of this year. Otherwise, you may only be able to write off a portion, prorated from the date of purchase. This would apply to items you depreciate, such as your truck. Each year you can depreciate a lesser percentage, so you may be better off applying the first-year percentage to a full 12 months. Another factor to consider is that the IRS is picky when it comes to business being profitable vs being a "tax write-off". If you start your business effective 2004, you automatically have one year of no profit. About the third or fourth year of business, you're going to start getting antsy if you're not profitable, as the IRS can go back and declare previous years to be "not profit oriented" and you could wind up owing back taxes, penalties, interest etc.

    But don't take my word - I'm by no means a tax expert. I pay someone to do my taxes.
  3. michigan Joe

    michigan Joe Junior Member
    Messages: 18

    Thanks for the reply. I didnt expect a response from an accoutant. The advice of a person who has been in my position before will do just fine. Anyone else has any input I'd like to hear what you've got to say. Thanks again. Hey guys, I'm plowing tonight its starting to come down in my part of town. Finally. :cool:
  4. SteveVB

    SteveVB Member
    Messages: 66

    Get an accountant or tax preparer to give you some advise since you havent done business taxes before.
    That said Turbo Tax can handle a simple businesses with a good question section about expenses- if you are using QuickBooks and its set up correctly you can import directly into Turbo Tax with little effort. The effort comes if the expenses arent catagorized correctly then you have to go back and check everything. I would use TurboTax and then take it to a CPA to review just for piece of mind.
    I would claim all of the expenses in the year they were made. O4 in your case- if you have a loss over other income you can carry forward into 05 and beyond. You wont be able to deduct expenses made in 04 in 05. I wouldnt worry about the hobby status unless you buy more equipment than you need every year and have other income to "cover". I think the rule is profit in 2 out of 5 years, but theres probably some exceptions, and you could make a case for a business run for profit even if the weather doesnt cooperate for the next 5 years I would think.

    You can expense the plow, the truck and its use(with restrictions based on percentage of use for plowing) any repairs, insurance, supplies phone use etc, if you use equipment in more than one business make sure you dont double count the expenses and that they are allocated correctly.

  5. drplow

    drplow Senior Member
    Messages: 174

    its always better to let an accountant do it the first couple of years. after that you may be able to pick it up and do them. for the cost that an accountant would charge its totally worth it. if i were you i would try to start the business effective jan. 1st. and then anything you purchased before that would be OK to write off this year. call a tax guy and an accountant and he will tell you everything you will need to know.
    educate yourself now all about business stuff and in the log run it will save you lots.
  6. wstwind

    wstwind Senior Member
    Messages: 103

  7. IndySnowPlow

    IndySnowPlow Senior Member
    from Indiana
    Messages: 214

    Year 1 for you = Tax accountant

    Year 2 Enroll in a business class

    Year 3 ( if you pass business class ) use quickbooks & turbo tax business.
  8. andrewlawnrangr

    andrewlawnrangr Senior Member
    Messages: 339

    im sittin here at my dad's office ( CPA and Accountant) i had him read the post. i am goin to have him post later on today........

    happy plowing
  9. SteveVB

    SteveVB Member
    Messages: 66

    NO MATTER WHO does your taxes this is a great idea. No one will know your business better than you. You dont have to have a CPA, but you should be familiar with whats going on so you can ask the right questions, and be able to make the strategic decisions that businesses must make- no matter how large or small.
    A general business course, and an accounting primer I would recommend to anyone running or thinking of running a business of any type. Local community colleges have classes that would fit the bill, or you could even check out some of the online courses offered by local universities/community colleges. The courses would be money well spent.
  10. 1BadHawk

    1BadHawk Member
    Messages: 68

    Tagging along since Im in the same boat. Except I didnt buy a brand new truck, I went used.

    Truck, plow, salter, software, repairs, and other expenses, from Nov to Dec of 04 with no snow or income for those months. Jan, it looks like Ill have alittle income.

    Personaly I plan on using the tax guy I always use, assuming he'll do it. Only thing is, hes old fassion. Doesnt use computers, does everything by hand. And is basicaly by the book. the book that he knows of course, or atleast the chapters their in. Unfortunately I dont think this guy knows many of the loop holes that are in the tax system that can benefit a small business. But since up until now hes just done our personal taxes its seemed to work out fine.

    I have a feeling though Ill have to go to a more modern, professional this year.

    In any event, ill be taggin along to for personal referance.