Members woodandsteel Posted November 16, 2011 Members Report Posted November 16, 2011 Some advice given to me from a $ savvy friend was to start two businesses. The business that actually makes the end product will be an LLC so your personal finances will be protected in case of lawsuit and the second businesss will own every single piece of equipment and lease it to the LLC holster making company. The LLC should have as close to zero assets as possible. Bronson Interesting! Quote
cleveland Posted November 16, 2011 Report Posted November 16, 2011 Some advice given to me from a $ savvy friend was to start two businesses. The business that actually makes the end product will be an LLC so your personal finances will be protected in case of lawsuit and the second businesss will own every single piece of equipment and lease it to the LLC holster making company. The LLC should have as close to zero assets as possible. Bronson Wow, that is a fantastic idea! I will be moving forward with that one. Quote
mlapaglia Posted November 17, 2011 Report Posted November 17, 2011 A good piece of advice. Ask a good tax lawyer!!!! Short fact. My Tax guy says I can not write off equipment at 100% amortized over 5 years if I use it for personal use. I have to estimate how much time its for business and how much use is personal. He suggests never writing off something for more than 78% if it can be used for personal use. He says the Tax people assume you will use it for personal use also. This applies to writing off space in your house for the business. If its at 100% you better never use it for anything else. Better to write off less than 100% and be safe. This so you do not set off flags on your return. This is what my guy says. Dont trust him or me. Ask your tax person. YMMV Michael Quote The key to immortality is first living a life worth remembering. Bruce Lee
Lobo Posted November 17, 2011 Report Posted November 17, 2011 A good piece of advice. Ask a good tax lawyer!!!! Short fact. My Tax guy says I can not write off equipment at 100% amortized over 5 years if I use it for personal use. I have to estimate how much time its for business and how much use is personal. He suggests never writing off something for more than 78% if it can be used for personal use. He says the Tax people assume you will use it for personal use also. This applies to writing off space in your house for the business. If its at 100% you better never use it for anything else. Better to write off less than 100% and be safe. This so you do not set off flags on your return. This is what my guy says. Dont trust him or me. Ask your tax person. YMMV Michael We have a winner! Asking for tax advice on an internet forum is like going to an automobile mechanic for dental work. Generally speaking, if a piece of equipment is acquired specifically for business use, and is used in generating taxable income, then that item is a deductible expense. The firearms that I purchase specifically to make holsters to fill orders from customers that generate taxable business profit are most certainly necessary business expenses. The accounting methods for deducting durable business equipment vary widely, based upon the useful life of the equipment, and may require depreciation schedules over the course of several years. Also, any subsequent sale of the equipment that generates return of investment and/or profit may result in reportable income (recaptured depreciation, business profit, etc). No two businesses are identical, and no two tax returns will be identical. Now, the fact that I make holsters, and the fact that I have developed a number of unique holster designs, clearly shows the need for me to test such designs and evaluate their performance with various handguns under actual field conditions. So, the fact that I might be carrying a "business" firearm in a "business" holster while on a hunting trip brings up additional interesting questions. Is my holster testing incidental to the hunting trip, which I might have taken otherwise anyway, or is the hunting trip a necessary "field test" of a holster design intended to be suitable for use on a hunting trip? Is the hunting trip itself a tax-deductible business expense? License? Travel expenses? Meals? What about the large critter, butchered and in my freezer, consumed by my family; is that imputed business income? It should be obvious that sound advice from a tax professional (CPA or attorney) is the best means of avoiding problems with Big Scary Government Agencies that have full legal authority to shut you down, seize your assets, and attach your bank accounts. Quote Lobo Gun Leather serious equipment for serious business, since 1972 www.lobogunleather.com
mlapaglia Posted November 17, 2011 Report Posted November 17, 2011 We have a winner! Asking for tax advice on an internet forum is like going to an automobile mechanic for dental work. Generally speaking, if a piece of equipment is acquired specifically for business use, and is used in generating taxable income, then that item is a deductible expense. The firearms that I purchase specifically to make holsters to fill orders from customers that generate taxable business profit are most certainly necessary business expenses. The accounting methods for deducting durable business equipment vary widely, based upon the useful life of the equipment, and may require depreciation schedules over the course of several years. Also, any subsequent sale of the equipment that generates return of investment and/or profit may result in reportable income (recaptured depreciation, business profit, etc). No two businesses are identical, and no two tax returns will be identical. Now, the fact that I make holsters, and the fact that I have developed a number of unique holster designs, clearly shows the need for me to test such designs and evaluate their performance with various handguns under actual field conditions. So, the fact that I might be carrying a "business" firearm in a "business" holster while on a hunting trip brings up additional interesting questions. Is my holster testing incidental to the hunting trip, which I might have taken otherwise anyway, or is the hunting trip a necessary "field test" of a holster design intended to be suitable for use on a hunting trip? Is the hunting trip itself a tax-deductible business expense? License? Travel expenses? Meals? What about the large critter, butchered and in my freezer, consumed by my family; is that imputed business income? It should be obvious that sound advice from a tax professional (CPA or attorney) is the best means of avoiding problems with Big Scary Government Agencies that have full legal authority to shut you down, seize your assets, and attach your bank accounts. Well said Lobo, You and I are total opposites in the Business world. You have a full functioning business with employees or contract people and mine is a hobby that generates a small, very small at the moment, income. Your ability to write off equipment is very different than mine. As we both said, Ask your Tax person. If you do not have one and plan to try to write off office space, shop space or equipment I suggest you get one before you file. You should ask around and maybe not go with the big generic tax groups like H&R Block. They have their place in the world but I am not convinced that small business is something they are good at. I could be wrong. Michael Quote The key to immortality is first living a life worth remembering. Bruce Lee
Members Shooter McGavin Posted November 18, 2011 Author Members Report Posted November 18, 2011 Thanks all! I could have just rang the accountant but I always appreciate the insight of the LW.net family. Quote Zlogonje Gunleathers
Members husker Posted November 18, 2011 Members Report Posted November 18, 2011 (edited) I'm conviced but do you think you could all tell my wife that I need all those guns for the business. Edited November 18, 2011 by husker Quote
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