It's almost the end of the year again, and I'm thinking about investing more of my money in office equipment, tools,etc. I'd rather have something for my money, than send it to Uncle Sam. I think I need it more than he does. Of course the hard thing is to pay it back, but I'll have to pay Uncle Sam anyway. What are some other thoughts on the matter? I don't really have the money to spend, but if I don't spend it on the company, I'll sure have to give it to the gov. Steve...
This is what you pay your CPA for: professional guidance as to making such purchases.
At this point, you ought to have a pretty good idea as to your tax liability. This weekend, play "let's pretend," and prepare your taxes as if the year was over. How much do you owe?
Now, do it all over again, only add, say, $3000 in office expenses. How does it change your bottom line? How much does it affect your tax obligation?
The 'dirty little secret' regarding tax deductions is ... you have to first make the money, before you can spend it. All the write-offs in the world won't help you if your business is already marginal.
In short, buy / lease something first of all because you need it, and it will carry itself. Any tax savings are but 'gravy.'
My tax preparer said all my tools were 100% deductible, and that a new computer etc. could be 100% deductible in one year, and not have to be depreciated. The bottom line of my taxes is that I expect to have to pay a bunch, around $5500.00 at least. Yea, I know, I should have been paying on it through the year, but haven't been able to consistantly. Thanks for the input.
When I had my business I always did the "lets pretend" John was talking about in December to see if it was a good time to buy something. If you are really going to be sending Sam money and there is something you need, December is the time to buy it.
Careful timing and a sharp pencil on your schedule C can reduce your taxable profits. Don't forget any "expenses" when you are tallying them up.
Interestingly enough, boots are deductible and jeans are not. Of course, tools and administrative costs are deductible (including your computer), and your truck if you use it only for business.
Anybody have any other tips on deductions out there? Be sure before you post, as I have been audited, and I can tell you, it is no picnic. They allow no "gray" areas whatever.
I was a contractor/inspector, paid on a 1099 and filing on a schedule C when I was working (retired now).
I always deducted the cost of CEUs and the various code books, CDs etc. That can be quite a big number if you get the whole set every cycle (electrical and building).
The strange thing was my books and disks was my biggest asset when it came time to pay my tangible taxes. My PCs were all junkers when I started and I never really had more than a hundred bucks in them through any given tax year.
I managed to get away with the dreaded home office too. Just keep good records. I had one audit and they ended up giving me money.
I still pay tangible taxes on my code books since I keep my license up but since I don't have any revenue I can't write anything off.
Spend, spend, spend! Help the economy, get some writeoffs.
I have done more than my fair share this month. Probably too much.
I started buying tools today, setting up ads in yellow pages,newspaper, and looking into getting a new computer setup. Thinking of other ways to advertise. I think that is my main goal now. I
GOT to get some work to pay for these things.
I guess I've always got the option to travel. I may have to if I can't pay for this stuff
Steve.....
Computers are normally 'LISTED PROPERTY' as defined ( listed by the IRS ) and are hard to deduct 100% in the first year.
So, beware.
We are in the early stages of a Great Depression, (GD2), and cash is king.
Be sure to report your income flows on a cash flow basis.
Get out of debt ASAP.
Do not extend credit, leave that to banks.
Many, many EC's will go belly up due to uncollectable invoices.
Save your license: establish income streams independent of the construction industry.
Most advertising will be a total waste: your prospects can't afford your service even if they want and need it.
There is a rule (194??) that allows 100% depreciation of PCs and some other office equipment in the first year. If you are really a "bleeding edge" guy that is probably accurate.
Tesla, I tried to take all that in consideration. If I don't get something for my money now though, I want get anything after the first of the year, because I owe it all to the gov.
I wish I had managed better, but income in itself was reasonably slow, and my needs were high, so I have to take what is before me now.
Yes I know times are bad and I certainly want to get out of debt ASAP, but under the circumstances I don't know what else to do. I done made many purchases including my computer,printer,monitor,etc... etc.. I ask my accountant about the computer and yes it looks like I'll probably just have to depreciate it over three years, but I needed one, since I was having to "hit" on my other one to get it to come on. This happened here in the last 2 weeks so that sorta made my mind up:( I got Quick Books 2009 etc...
Thankfully I've got a few credit cards, or is that really a blessing:( Wonder if the interest I pay will be deductible next year?
Right now I don't even have any work. I know that seems sort of dumb, but I just have to "trust in The Lord". I have even applied for several regular jobs working for the "other man". Nothing yet... Living day by day...All is well though, I've seen tuff times before. I've been going by myself for almost 9 years now. Thanks for all the infor and input... If anybody out there still believes in prayer, remember me...Steve....
If anybody out there still believes in prayer, remember me
A bon jovi song comes to mind
Whooah, were half way there
Livin on a prayer
Take my hand and well make it - I swear
Livin on a prayer
Best of luck to ya Steve