Backyard Shaping and Taxes

General Discussion
21
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I've even heard that buying something like hummus or pita bread and swiping your grocery card can trigger an alert since middle easterners eat that stuff too.

No worries for me - I always buy beer with my hummus & pitas. Not allowed for Jihadists :wink:

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... to say nothing of those trips to open up markets for your product in other countries...costa rica, portugal, etc...all the same. keep records of the shops in costa and portugal, brasil, bali, that you talked to and what you left with them (if anything) as samples. like a board, or a video, or business cards, or print handouts, etc....get the names of the people you talked to.

R&D: new designs that you are trying out for yourself or your team…all deductible…like that gun for hawaii.

pete.

No doubt, the travel is the best part. Went to Maui last year, brought along a board. Left it in a shop on consignment when I left. Got the check in the mail from the shop (out of state sales don’t even require sales tax declarations) and that $220 declared revenue was a green light to deduct my $800 airfare expense. :slight_smile:

22

Ewww. I saw a political post. I would never…

Now what about Backyard Shapping and Texas?

PS: Since Dr Paul lives in Surfside (somewhat of a misnomer lately), TX, surfers may expect a liberty-filled bro deal on shipping hazmats (peace be upon him), and I guess expect hefty, nay, unlimited Paul campaign contribution credits (why not?) against oh yeah, um, non-existent income taxes.

23

Thanks for all the input.

So my accountant adivsed to accept a loss in building surfboards which will help offset my tax payments on my freelance ‘real job’. She was actually pretty excited about it. We’ll she how it goes. She also advised to open a seperate account to run all surfboard building through in case of an audit.

So my personal bank account.

My business sole propreitary bank account

and surfboard building bank account.

hopefully this all becomes easy someday

24

That’s right - and good advice.

The big advantage is the ‘loss’ factor.

Most tax deductions - mortgage interest, medical expenses, deductible childcare, etc. - merely decrease your taxable income. Of that, only an average of 35% or so goes to taxes, so that’s your actual savings.

For example, $10K in mortgage interest paid, decreases your income by $10K, which reduces your taxes by about $3500.

But a business loss of $10K reduces your actual tax bill regardless of income by the same $10K. So its spent either way - for your R&D / startup costs or to the IRS.

And yes, keep careful records. Get a mileage book to keep in your vehicle, and record the odometer readings, not just the totals. Save emails & receipts. Don’t get greedy - yes, I expensed my airfare to Maui, but not my 10 nights of lodging or any meals, and none of my family’s airfare.

This is how the corporate guys do it. We may not like all the rules, but its easy enough to play within them & remain honest at the same time.

25

this is the one ugly demon that forever haunts this industry.

starts in the backyard and works it’s way into the factory

where “cash is king” eventually drives contract workers with no medical and no rights…

eventually poor OSHA/EPA compliant work areas become the norm

and the folks that try to do the right thing suffer

with every new entry into this “underground economy”

do it right

just like folks here have indicated

it’s not that hard to do

the underground economy is no different

whether you push off a surfboard or crack

both satiates an addiction

and both eventually hurt someone downstream.

barter or trade are even better options

done to accomplish the same legally

don’t play around in this space

intentionally or unintentionally

there are several famous folks here who’ve already paid their dues

to the government because of their mis-sight

at the level where they actually decide to pursue you

there will be no mercy

I probably hang around some of those folks

too much for my own good mental health…

26

From what you describe it sounds as though the profit margin is very small. You can deduct the portion of your home costs that account for the square footage used to perform the work. For example…you use a 20’x20’ garage (400 sq’) exclusively for making boards. The house is 2000 sq’, so you use 20% of the building. You can expense 20% of mortgage, utlilties, proprty taxes and all other expenses to maintain your home. After you do that, you probably have no profit. If you do, pay the $3.29 in tax and relax.

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I’ve even heard that buying something like hummus or pita bread and swiping your grocery card can trigger an alert since middle easterners eat that stuff too.

You’ll appreciate this, John…one of the biggest consumers of the grocery card data is the health insurance industry, who scan the personal shopping data for lifestyle factors. They like the hummus, but grade you down on the red meat, beer, tequila, ice cream, canned goods, pharmacy goods and anything else the candy-assed actuaries don’t favor at the momeent. Unconfirmed at this point is if large employers do the same…but they do check your credit card history. Once medical records are computerized “to protect us” then the trifecta will be complete.

More on topic, and mindful of oneula’s comment about mental health, Mr. Dylan once wrote that “to live outside the law, one must be honest”, or something to that effect. It’s also a lot easier to keep track of your life if you only have to try to remember one set of facts. And if for some reason anybody with tax authority wants to ask you a bunch of questions, there only are one set of facts. Tell the truth and work things out. Tell a lie and you will fry.

Business permits vary with states, county, and local regulations. The city I live in wants a percentage of your estimated or previous year’s income for permitting a sole propriorship (??sp??) business. Others I know pay flat fees they can cover recycling aluminium cans.

Nels

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Business permits vary with states, county, and local regulations. The city I live in wants a percentage of your estimated or previous year's income for permitting a sole propriorship (??sp??) business.

Nels

That’s the point of the PO Box (in an unincorporated town). Don’t do the ‘home office’ deduction, because that would gain me less than my city would charge in their lovely gross-receipts / stated-minimum tax.

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That’s the point of the PO Box (in an unincorporated town). Don’t do the ‘home office’ deduction, because that would gain me less than my city would charge in their lovely gross-receipts / stated-minimum tax.

The fire dept. inspection my city requires was the bugaboo for me…2 computers and peripherals and a copier and telephone with answering machine all in one room (less than the average 12 year old girl has running in her bedroom in her McMansion)…would have had to rewire and add a breaker to the main panel…which was/is 1960’s vintage…potentially would have had to bring the whole panel to current code…just to run a business that wasn’t making more than it cost.

I’ve heard the home office deducation and home office equipment depreciation are almost never worth it unless you have legitimate verifiable clients coming to visit on site…otherwise it’s just hardship and hassle for you.

30

Rick, I believe it’s a 1040-C & 1099 forms, but I’m not sure if I remember correctly.

Janklow, unless Dr. Ron Paul has moved, he’s from Lake Jackson where I grew up. He was known as ‘Dr. No’ when it came to the good-ole-boy network, playing ball under the table, pork barrel politics, etc.

Edit: Meaning he didn’t go along with the dirty politics.