kai1836 Posted August 30, 2009 Share Posted August 30, 2009 Picked up a vehicle for the old vending biz today. Decided on a passat wagon. It has enough room for a rack posssibly two in it. Plenty of room to haul candy/toys whatever supplies I would need. All wheel drive and gets around 30mpg. Will let you all know how it works. I can deduct all the interest on the note, depreciate the car and write off the servicing. This will help offset the income I'm getting. Can't wait until next April! Link to comment Share on other sites More sharing options...
dsimms Posted August 30, 2009 Share Posted August 30, 2009 Picked up a vehicle for the old vending biz today. Decided on a passat wagon. It has enough room for a rack posssibly two in it. Plenty of room to haul candy/toys whatever supplies I would need. All wheel drive and gets around 30mpg. Will let you all know how it works. I can deduct all the interest on the note, depreciate the car and write off the servicing. This will help offset the income I'm getting. Can't wait until next April! your tax savings may not be as high as you think. I think the IRS already allows a certain deduction, and unless you exceed that then it will not do you much good. writing off the interest on your car is really small compared to writing the interest off on a home, so unless you have a lot of high dollar stuff to write off that exceeds what the IRS gives you, will not do much good. Link to comment Share on other sites More sharing options...
kai1836 Posted August 30, 2009 Author Share Posted August 30, 2009 Dsimms, Thanks for the advice. Have a goodnight. Link to comment Share on other sites More sharing options...
alyssamma Posted August 30, 2009 Share Posted August 30, 2009 Kai, Congrats on the vehicle...I hope it works out well for you. Do you have a business that owns it, or do you personally own it? There are a few options that you have - depending on how it is owned and how you use it, you might do better to take the mileage deduction instead of anything else. If you give me some details I can help you out. Thx. Kevin Link to comment Share on other sites More sharing options...
mike777 Posted August 30, 2009 Share Posted August 30, 2009 Do you have a business that owns it, or do you personally own it? There are a few options that you have - depending on how it is owned and how you use it, you might do better to take the mileage deduction instead of anything else. I think I'm going to use mileage deduction too but I had a question on it-- How do you track it? log book? Also, is there any reason you couldn't say you took the long way to each location.. or did the route in 3 trips instead of the 1 it actually took? I don't drive to my day job so I think I could probably easily fudge the numbers to have 100% of my car expenses deducted, or would that be too much of a red flag? Link to comment Share on other sites More sharing options...
whaletail116 Posted August 30, 2009 Share Posted August 30, 2009 One possible reason could be morals. Link to comment Share on other sites More sharing options...
kai1836 Posted August 30, 2009 Author Share Posted August 30, 2009 Honestly, I would reccomend consulting with a CPA or other qualified financial proffessional before attempting anything. My CPA is the one spearheading this. Good luck. Link to comment Share on other sites More sharing options...
T BIRD Posted August 30, 2009 Share Posted August 30, 2009 Dsimms, Thanks for the advice. Have a goodnight. LOL! Link to comment Share on other sites More sharing options...
T BIRD Posted August 30, 2009 Share Posted August 30, 2009 Picked up a vehicle for the old vending biz today. Decided on a passat wagon. It has enough room for a rack posssibly two in it. Plenty of room to haul candy/toys whatever supplies I would need. All wheel drive and gets around 30mpg. Will let you all know how it works. I can deduct all the interest on the note, depreciate the car and write off the servicing. This will help offset the income I'm getting. Can't wait until next April! Good luck with the vehicle kai! 30 mpg? Nice buddy! Link to comment Share on other sites More sharing options...
Jax Snacks Posted August 30, 2009 Share Posted August 30, 2009 I have a dedicated van as well. Every year I give my actual vehicle expenses (Gas, Maintenance, Insurance and Registration) AND the milage for the year to the CPA. Most of the time the milage deduction will exceed the actual deduction unless you have a real bucket-of-bolts that requires extensive maintenance. So the operator usually benefits from the milage deduction and it will usually trump the actual expenses deduction. But is still a good idea to track all vehicle expenses and save all receipts in case the actual method would be beneficial in a given year. Also, keep track of ALL toll receipts if your area roads and bridges have them. Tolls can be deducted in addition to the milage. The IRS will also want to know if the vehicle is 100% dedicated to the business and if you also have another vehicle for personal use. When your vehicle is 100% business, it's pretty easy to track milage and you just log the odometer every Dec 31 in a spread sheet. Anyone know if the IRS will audit your odometer? Jax Link to comment Share on other sites More sharing options...
lurtsman Posted August 30, 2009 Share Posted August 30, 2009 One possible reason could be morals. Agreed. The possibility of jail might also keep people honest. Link to comment Share on other sites More sharing options...
alyssamma Posted August 30, 2009 Share Posted August 30, 2009 Well, jail won't happen Worst case you'll have to pay penalties. Jax probably gave the best response. Or at least the most "correct". My answer would be to simply take the mileage deduction. Like Jax said, it is normally more, and there is less record keeping. Simply track starting and ending mileage before your run and you are done. Keep a record in a spreadsheet or something and you are all set. If you are concerned about this, or any other financial issue, definitely consult a CPA. But for something this simple, I'd say you are fine going on your own. You can absolutely fudge the numbers - and many do. Just like in a cash business, many don't report all of their income. There isn't anything in mileage deductions that would set off a red flag. Primarily because you don't report the vehicle (the mileage is an expense), so unless you are already audited there shouldn't be any worries. Kevin Link to comment Share on other sites More sharing options...
dsimms Posted August 30, 2009 Share Posted August 30, 2009 LOL! I do not think he believes me. The IRS already gives you X amount of dollars for business deductions/losses, if it falls below that amount, then you are just really paying your CPA an extra expense that you could have kept track of yourself. You guys keep saying do your own locating...so why do you need a CPA for a small business, do the forms yourself and save your money...small/med size vending is not that complex that you need a CPA...I am also going to assume most do not even pay taxes on your income, if you did, then you would be looking at 30-40%, so if you are a small/med vendor that pays charity, commissions, machines, other, then on top of that, up to 40% to IRS, then most everyone would be out of business. Link to comment Share on other sites More sharing options...
alyssamma Posted August 30, 2009 Share Posted August 30, 2009 dsimms, I assume what you are talking about is for personal taxes? This has nothing to do with the topic here which is expensing items. Your personal tax exemption is calculated like this: 1) Take your flat amount from the IRS (based on your filing status) 2) Add up your deductions (interest, medical, some other things). 3) See which is bigger. What we are talking about here is what counts as an expense. People are using the word "deduct", but what they really mean is an expense. Mileage (or vehicle maintenance) is treated as an expense. This goes into calculating your gross income. What you are talking about occurs *after* your gross income is calculated. Hope this clears things up. Kevin P.S., I do agree that 90% of the people here don't need a CPA. Link to comment Share on other sites More sharing options...
chowchowjailboss Posted August 31, 2009 Share Posted August 31, 2009 Alot has to do if you set your business up as an LLC or a Corporation. I set mine up as an LLC as it provides the best advantages from a tax standpoint. Do keep in mind that you can show a loss for three year before you need to show black ink (profit). The mileage amount is the way to go if you are on a smaller scale. Sleeping at night has a value as well. Good Luck Link to comment Share on other sites More sharing options...
alyssamma Posted August 31, 2009 Share Posted August 31, 2009 Chowchow, unless you mean C-corp, the tax advantages should be the same between an S-corp and LLC. With a C-corp, you can actually get a better tax break (usually), but the paperwork required for a C-corp outweighs the tax advantage for most small business owners. Also, there isn't a 3yr limit for showing a profit. In *general* the IRS wants you to show a profit in 3-5yrs, but all that happens if you don't is that they'll take a closer look. They want to make sure you aren't using this as a hobby or for a tax shelter. As long as you are running it as a legit business you should be fine. Kevin Link to comment Share on other sites More sharing options...
Poplady1 Posted September 3, 2009 Share Posted September 3, 2009 I realize many of you are running your business part time. I think Kevin is right on with his advice on learning expenses, deductions, and taxes. You want to build credit so you can go to a bank to buy more machines, finance an auto or someday purchase your own warehouse. You will want to show a track record of some income and expenses. Hopefully some profit and growth too. If you are showing high expenses to prevent taxes (which are really rather low in the small business world) then you are wasting the opportunity to show you know how to make money and you are a worthy candiate for a business loan. There is nothing worse then sitting in front of a banker showing him 3 or 4 years of losses. I would never encourage anyone to fudge your figures (there is no need, just write down your actual expense and you will be fine). You might find out its fun to just learn how its done, do it and see if you have made any money. Just my two cents. Bev Blue Moose Link to comment Share on other sites More sharing options...
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