Regarding starting a business. . .

Some of you might know, but I've been running a small side business recently, selling used car parts--both reselling junkyard parts, and parting cars. My primary customers will be racers. I need some advice regarding taxes. I'm likely going to incorporate the business (S-corp, probably).

I'm wondering about writeoffs, specifically. I don't own a decent truck (using my wife's SUV is likely to put me on the couch for a long spell) and my Volvo wagon isn't cutting it. Can the business buy/lease a truck, so I can use it for both parts transport and towing the race-car?

Also, how does the "writeoff" thing work regarding racing? I'm certainly cheap, trying to camp rather than use hotels when at the track, but can I write off the entire weekends expenses, since I'm both selling/transporting product, and "advertising" with the race car?

Thanks, all. If I'm way off base, or a complete idiot, I'd appreciate the advice!

Every piece of advice from a forum is worth exactely what you pay for it: nothing. Go talk to an accountant for answers.

What I believe: yes your business can purchase a vehicle that you may also use (although technically all of the use should be business oriented and personal use should be noted and you should pay taxes on it).

You could classify racing as marketing. Just make sure your business name, phone number, and logo are plastered on the car. You would be able to write off everything associated with a weekend from the trip there and back to entry fees to race car parts. If you actually make sales at the track, you're doubly in clear.

My businesses are S corps. Taxes are murderous if you're incorporated any other way.

Like stumpmj sez, tax advice from teh 1ntr4w3b, yo, is worth zero or less.

Explore other business entities. A LP may give you the same advantages as a corp (separate entite), taxes flow through to your personal taxes like a S corp, lawsuit protection is better and it's cheaper/easier. You Esquires know what a CHARGING ORDER is? Remember that.

Anyway, why form a corp at all? There is no liability protection, really, and a lot more paperwork to have to deal with. You have a small business now. You should be filling out tax forms on that (Schedule C). You can deduct your expenses on there, including your automotive expenses. Buy your truck (used Toyota, of course), keep a detailed log, don't use the truck much for other purposes and you get so much a mile. I forget what the current rate is because I have no small business with vehicles anymore, but if you get a Toyota Truck, you can deduct enough that you'll actually make money on the deduction because your true expenses will be under the allowance.

You need Turbo Tax Delux.

Also, be careful classifying racing as a business expense. Unless you are making $100, your expenses are $5 and your racing budget is $5, if the Feds come after you, they are going un-business-a-fy your small business, go back 3 years and ream you a new one.

I will agree with the two previous posters-our advice is worth zero.

Gotta disagree on the corps, Doc. For a small business a properly structured corporation can have a lot of advantages, liability and otherwise. Find an accountant who will discuss the differences, although you should realize that it is illegal for you to form a corporation for the purpose of saving taxes, and your accountant knows that, and must be careful what he says because of it. Take what he says accordingly.

I also disagree on Turbo Tax. It is an Intuit product, and although it is very capable of easily producing lots of very nice reports, I found the process of working with them getting more limiting the longer I stuck with them. They controlled my information in ways that later made it hard to break loose from them, increased their fees significantly over time, and forced me to continuously upgrade. For accounting, I find it better to use the package my accountant uses- free upgrades, more protection of my private information, and lower accounting costs. H&R Block's Tax Cut is also a good option.

Don't know about racing as a business expense, but lots of advertising and marketing is an expense in excess of any related income.

But again, nothing we say matters a bit.

Hire an accountant. It is worth what you pay them to keep the feds off you back.

Trucks, as long as it is used only for "business" all expenses are deductible. Purchase price is deductible depending on price. Check with your accountant. If over a certain amount the deduction has to be spread over several years. A dual use vehicle, business and personal, you need to keep up with the mileage and either claim personal mileage as income or business mileage as deductible. Personally I find it easier to have a business only van and write off all expenses. Call an accountant.

Do not run your business out of your personal checking account. Run a separate account and use it only for business. We pay everything with debit cards, that way you have a record of all purchases. Call an accountant

Usually racing and other activities are only partially deductible. Expenses to and from the track, hotel, food probably is deductible. The car, probably not. Call an accountant.

My recommendations on incorporating, do an LLC, you get the liability protection of a S-Corp or a Inc., but the tax advantages of a sole proprietorship. We did ours through Legal Zoom. Easy and cheap, about $400.00. Call an accountant.

What ever you do call an accountant. Mine charges me about $100.00 per month to handle all taxes, personal and sales, EOM reports, EOQ reports, and payroll taxes and withholding as well as business licensing is about 30 towns and cities. I receive the appropriate forms on my desk with a post-it note telling me how much the write the check for and the address to send it to. The two audits we have had were no problem.

Oh and have I mentioned, CALL AN ACCOUNTANT. Most of them will meet with you and offer suggestions for starting a business for next to nothing. The smaller firms want to help you get started to add a customer.

My .02, and it is worth what you paid for it.

Call an accountant. Make sure they do business taxes. H&R Block won't cut it.

Toyman01 wrote: What ever you do call an accountant. Mine charges me about $100.00 per month to handle all taxes, personal and sales, EOM reports, EOQ reports, and payroll taxes and withholding as well as business licensing is about 30 towns and cities. I receive the appropriate forms on my desk with a post-it note telling me how much the write the check for and the address to send it to. The two audits we have had were no problem.

That's excellent. If I could get anywhere near that kind of service for that price, I wouldn't even BEGIN to consider any of my own accounting.

I was only suggesting H&R Block's Tax Cut (Pro, or Home and Business) as an alternative to QuickBooks, definitely NOT as an alternative to an accountant, and not their walk-in personal tax service.

I also post that I am not an accountant, so take it for what it's worth

You can claim your racing car but be careful, if it feels shady it probably isn't legal.

That said so long as marketing is appropriate, (ie selling ladies bloomers at the race track probably would raise a few eyebrows) but selling used car parts at the race track would seem to me to be a logical and reasonable manner to market such a business.

If you pass that test its in the same category as a yellow pages ad and probably mush more effective.

By the way what parts are you selling....

aussiesmg wrote: By the way what parts are you selling....

Right now, inventory is limited to early Miata stuff. I tend to specialize in Honda, Nissan, and Mazda, but I shop to order--I'll take requests and try and find 'em at local yards.

Thanks all for the advice. I have an accountant, just want to arm myself for my next meeting with him.

I'm an LLC fan for several of the reasons described earlier but in a COMPLETELY different business/market.

Ankola: Do you sell canoes?

DOH!!