Write-offs! Equipment We Purchased for Year-End Taxes

hey everyone it's mike from landscape business course and today we are at the bellingham shop and i'm going to show a little bit of the stuff that we have purchased at the end of the year really for tax purposes and give you hopefully a couple ideas if you watch this before the end of the year or even as you're planning for next year again the only reason you would buy things at the end of the year for tax purposes is because you've been profitable if you haven't made a lot of money you probably shouldn't be buying new stuff okay so when people talk about oh they're buying things at the end of the year for tax write-offs you don't need to be doing that if you just got started this year and you're not gonna be making much profit or you're gonna lose money all right you only need to buy things if you need them number one and number two if you've actually been profitable and it's leading to a tax write-off okay so i'm gonna walk you through a couple different pieces of equipment and things like that throughout the process i'll hopefully drop in a couple nuggets about taxes some of it will be super boring for you but for some of you it might help a lot all right so first things first the number one rule of tax write-offs when it comes to equipment and lawn care is you need the equipment don't buy the equipment because you want the equipment because you want to look cool in the equipment because it just looks nice that's stupid you want to buy the equipment because you need the equipment for the upcoming spring and you're going to have to buy it anyways don't buy it because the write-off buy it because you need it anyways but by buying a couple months earlier you're saving a substantial amount on your taxes okay so what did we buy we bought several of these backpack blowers the these are the br600s from steel and i'm very proud of myself that i actually know what the model is because i never know that um we bought a whole bunch of the combi systems uh that are new when these things hit about three four years old we get rid of them why because it can take 20 or 30 pools on a cold morning for the employees when they're getting started we don't want them to go through that it's a pain in the neck and so what we do is about every four years even if they're here and they've been maintained well well you just get rid of them because not worth all that time every fall and spring cold morning for them to be pooling on it for two or three minutes it's very where's the mount it's bad on their p4p and it just is bad for morale when equipment doesn't work so we usually every four or five years like some of the ones we threw out this year i think we threw out three or four we had we've had for like five or six years so we threw them out we bought new ones these heads cost i think about 375 dollars these are the 11s i think something elevens uh whatever yeah something 11 11 something ours or whatever uh there's a 130 but they're too heavy the 111s are a nice mix between commercial but light enough so use the combis and then we also have the straight the actual the shafts are the fs131s and these are the ones that actually have the whole shaft here these are the combi systems we like those because they can adjust to all of our attachments so these are our attachments they're working on this right now it's not done yet you can see they're building it it's basically a platform for all of these attachments to sit in so when they want to go on a job they can grab a weed eater grab a hedge headgear attachment you know grab a metal head for blackberry bushes a pole saw and then on here we have like dull and sharp chains whichever ones they need they can put and when they're done using it they can put it back on the dole one so this is still being built but i think it's pretty nifty they take pvc they put these in here they sit in here really nice much more organized and then you got extensions for them we eater heads very very cool so during the winter as we come to the end of the year if you're looking for tax write-offs we've gone through blowers we've gone through trimmers that are old get rid of them you can see this guy back here had this guy for ages i think he's probably six or seven years old handle's broken we have a zip tie holding together probably gonna get retired poor guy needs to go to a graveyard so he's gonna go to equipment heaven and we're gonna buy a new one um and then also attachments as well as in your shop if you're going to start organizing things remember if you're going to pay your employees it takes time and money get that done in the in this year so it's a write-off because it's payroll and so you know these two by fours purchasing all this stuff it takes them a good half a day to kind of build all this put it all together get that done this year now let's go check out the 30-inch mowers and the ramp racks that we also purchased as an end-of-year expense all right so back in here they're doing a bunch of maintenance on these these are all the 21 inch honda mowers these are our backups for the trailer lift setups uh so they're here and then what we've purchased though is another one of parking brakes on duh um well we purchased though is more of these 30 inch mowers so you can see here they are working on some stuff putting up some racking and things but these are the 30 inch mowers we got one two three four five six seven eight eight of the 30 inch these are 30x mowers okay remember they're different than the regular x-mark 30s the 30x has the kohler engine which is bigger than the kawasaki engine all right so they're 30 inches again they're kind of cool because you can do a side discharge by popping the side part off you do side discharge as well as bagging and we use these on our trailer setups these cost about twenty five hundred dollars with tax and everything they're about twenty seven hundred dollars if you get end of year deal you might get them a little bit cheaper but um you can get the the regular x mark 30s for a little bit cheaper because they have the kawasaki now if you are in a market where there's a lot of rain you probably want the cooler because when it gets wet the grass gets wet and the indian is not really the kawasaki engine is not really powerful enough and it leaves a little strip of grass and it clumps up quite a bit so the cooler has a little more power and it allows you to still cut when it's wet and we have a lot of rain around here so we needed the bigger engine literally we waited for that until we converted the 30 inch mowers until then we were using the honda 21-inch mowers so again 2 500 we bought a couple of these at the end of the year brand spanking new only because we knew we were going to need them in the spring because we were starting two more mowing setups for the upcoming spring and we knew we'd need them we did not buy them because we thought they were cool or because we wanted backups we did it because we knew we'd need them anyways in the spring we might as well purchase them now and get a little bit of a deduction on our taxes now you might be asking should i be an llc should i be an s corp what kind of what kind of tax implications does that have you need to talk to an accountant for your specific situation but in general in llc any sort of distributions ie profits that you get are going to go directly onto your tax return and you're going to get you're going to pay taxes on them but you're also going to pay a 15 percent self-employment tax and that's the part that kills you on a single member llc is that you pay 15 then you pay your regular ordinary income tax bracket percentage to the federal government to the state whatever you might have in washington state we do not have a state state uh income tax we only have federal which is great i'm glad i don't live in california and have to spend like 12 13 it's ridiculous but when an llc you're gonna get you're gonna have to pay 15 self-employment tax on any profits okay whereas with an s corporation you are going to have what's called what's called pass-through entity which means any profits in the business go directly to you which basically means you just pay your ordinary income tax on the profits in the business there's no 15 self-employment tax now that changes all the time in 2018 that self-employment tax went down considerably okay but every administration i guarantee the next couple years this is going to change you're going to see tax brackets change you're going to see percentages change on the self-employment tax you're going to see that you're going to see the change in corporate tax rates all of that stuff is going to change but the biggest difference with the corporation is you make a separate tax return it's not it has nothing to do with you you pay yourself as an employee you take a w-2 from your own business and then any profits left over is taxed at your ordinary tax income rate hope that makes sense let's head over to the ramp racks that's where we store these bad boys for our trailerless setups and we bought i think i think nine of these bad boys in the past few months all right so this is the ramp rack this is one of nine that we have purchased and are installing on our trailer setups uh you can see another video lee has made that does a walk around on this thing i'm not gonna walk through in detail i'm gonna walk through the numbers of it because these bad boys are about three thousand dollars we do not get the headache rack and the the the big uh you know shelf in the front that costs a little extra if you go to ramprack.com um however we just buy the simple model so it costs us three thousand dollars but as a franchisee at augusta we get a big chunk off 26 let's go so we get 26 off because we're franchisees at augusta and so uh they only cost us about 2100 2200 but then with delivery it's about 2500 so let's just say this is 2500 we bought nine of them again year end we don't need them now but we will in the spring because we're switching everything over to trayless if you watch previous videos you saw me have the aluminum racks that would come off of these ball hitches and then we'd put like the 21 inch or the 30 inch mower on the back the push mowers so no more no more of that we are now having the ramp rack where this thing will come down i'm not going to be able to do it here because up against the office oh this thing comes down it's spring assisted so it's not too heavy um and then we're gonna be able to store the mower in the back and still have plenty of room to dump clippings because we have to have clippings stored and hauled around here which stinks what did the video about the ramp rack that we did about how we set up the racks but here's the example of them being set up one of you had given me a great uh idea of using some product to make these look green again because they're kind of worn out but we do get these racks from trailer racks.com again we get 15 off because we are franchisees bless their hearts and so we will get racks for all of the the uh ramp racks we'll get the trailer racks and so all in with the racks and the ramp all in we're looking at about thirty four hundred dollars uh and that's per truck so we got nine of those again another year-end expense again we know we needed them we know we were expanding by two trailer trailerless setups next spring so we got these again another tax write-off for 2020. again another tax write-off for 2020. nice [Laughter] oh man okay so now i just need to close it out right okay let's do it someplace else so you can cut it we didn't really i guess we that was last year nevermind okay so whether you're watching this before the end of 2020 or you're going to be thinking about this at the end of next year when you become more profitable when your business has grown some these are valuable lessons to learn about taxes like if you look at your personal expenses and let's say your tax bracket is 30 all right 30 of your income going to the government so it's probably a good idea to figure out how you can reduce that and again you're not trying to like do tax evasion you're trying to use the law to make sure that you are able to pay less taxes because the government wants you to buy more stuff they want you to hire more employees they want you to invest in real estate they want you to buy stocks they want you to do those things so what i do is like a nice good little boy i go buy what they want me to buy so they give me tax tax benefits right so if you're watching this before the end of 2020 or you're going to be doing your taxes in the spring of 2021 if you have taken the pp loan ppp loan or the eidl grant or the eidl loan or a disaster relief uh loan from fema you need to make sure that's on your taxes all right i feel like there's gonna be a big issue in about six months from small businesses that do not claim the ppp or the eidl on these years taxes if you got money from the government you got it it's taxable like it's money it's income okay the new regulations that are coming out are allowing you to use ppp money and then if you bought stuff to be able to deduct from your like as a regular expense that's all new regulation and legal legislation or whatever that's coming out it's probably going to change as always but you got to make sure you claim it in 2020 all right but regardless if you're watching this in 2020 or beyond hopefully that some of these things helpful in terms of what can you buy you need to make sure you need this stuff and that you're not doing it just for the tax write-off you're doing because you need the equipment it's going to improve the business and you're going to buy the equipment anyways but you can just do it a couple months earlier so you can get the tax write-offs hopefully you learned something i'm mike andy's landscape business course we'll see in the next one

Channel: Mike Andes

Views: 77,162

Keywords: lawn care, lawn care business, mowing lawns, mowing franchise, lawn care franchise, agusta lawn care, augusta lawn care, augusta lawn care franchise, lawn care youtube, mowing, cutting grass, how to landscape, landscape business course, lawn care business course, mike andes, michael andes, mike andes podcast

Id: zdPEP552j08

Length: 13min 28sec (808 seconds)

Published: Sat Dec 26 2020