Employment/Tax Question

[Pipe Line]

I think I told you this in another thread but I highly suggest going the Walker route with all of your equipment. They have everything you need to run a year-round business using only one machine and several attachments, and they hold their value like none other.

In 10 years when you sell your business, if you take good care of your machines, you will have a fleet of Walker equipment that will be worth an extraordinary amount of money that you can leverage into an inflated business valuation.

It’s all expensive stuff, but if you play your cards right, that will be the difference between being able to sell your business for $30,000 versus $70,000.

Never even heard of them. Those mowers look WILD

 

[Pipe Line]

There’s lot of ways to cheat on your taxes and a lot of people do it opee. Get a dirty accountant

Not sure I've experienced enough life yet to be able to pull that off lol

 

[BIG TONE SOPRANO]

Not sure I've experienced enough life yet to be able to pull that off lol

Oh trust me landscapers can figure it out. So can you

 

[alt f4]

I have no knowledge on this and I'm probably going to ask multiple dumb questions in this thread. But, am considering the idea of self employment as a second income in 2024. I am going to talk to my tax guy soon to ask similar questions, but want to gather as much information as possible.


This would be a legal business with an LLC, but what are the tax laws in Nebraska surrounding second incomes, or combining incomes?

Full transparency, I'm 31 next month and never really paid much attention to taxes in my early adult life. I just know we have a tax guy at work and we use him for taxes and it just gets done. My wife had a second job for many years and she said she always got clobbered on her taxes because "she never made enough, but also made too much money". That's confusing, but that's what she told me last night when we talked about it.


I'm doing research, but, easier terminology would be helpful from anyone.


Is there a certain amount you need to make for a person with two incomes to not get clobbered or what's the minimum to make it worth it?

I've done it all in my professional career. Really the only thing an LLC does is protect your personal assets and seperates your business dealings from your personal life. Not that you can't mix, but if sued or sue someone you because of the business it's done through LLC not as an individual.

Main income as salaried employee-- taxes paid with paycheck
Main income as salaried employee with side income -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as a business owner only drawing off profits -- taxes paid quarterly estimated taxes
Main income as a business owner drawing off profits and side income (regular LLC with K1) -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as business owner getting paid as salaried employee and drawing off profits (s-corp LLC with K1) -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as business owner getting paid as salaried employee with little/no profits (s-corp LLC) -- taxes paid with paycheck

By far the best tax scenerio and easiest for us is the last where I'm getting a consistant monthly salary, which is taxed and I'm paying expenses through the business (phone, internet, vehicle, computers, tablets, desks, travel, printers, etc). Then I can still write-off purchases as unreimbursed business expenses if I forget to pay for it through the business.

Wife knows way more about than I do.

 

[Pipe Line]

I've done it all in my professional career. Really the only thing an LLC does is protect your personal assets and seperates your business dealings from your personal life. Not that you can't mix, but if sued or sue someone you because of the business it's done through LLC not as an individual.

Main income as salaried employee-- taxes paid with paycheck
Main income as salaried employee with side income -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as a business owner only drawing off profits -- taxes paid quarterly estimated taxes
Main income as a business owner drawing off profits and side income (regular LLC with K1) -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as business owner getting paid as salaried employee and drawing off profits (s-corp LLC with K1) -- taxes paid with paycheck and side income paying quarterly estimated taxes
Main income as business owner getting paid as salaried employee with little/no profits (s-corp LLC) -- taxes paid with paycheck

By far the best tax scenerio and easiest for us is the last where I'm getting a consistant monthly salary, which is taxed and I'm paying expenses through the business (phone, internet, vehicle, computers, tablets, desks, travel, printers, etc). Then I can still write-off purchases as unreimbursed business expenses if I forget to pay for it through the business.

Wife knows way more about than I do.

So in my case I'm option #2 then. But I don't know anything about paying quarterly taxes.....or does estimated mean you're not actually paying them quarterly?

 

[Pipe Line]

Oh trust me landscapers can figure it out. So can you

Wouldn't call myself a landscaper but I do enjoy it as I've gotten older

 

[alt f4]

So in my case I'm option #2 then. But I don't know anything about paying quarterly taxes.....or does estimated mean you're not actually paying them quarterly?

Estimated means we estimated what I was going to make that year and paid taxes on it each quarter. Example, we estimated that I'd make $50k, so each quarter I paid approximently 35% (or whatever that percentage was) of that $12,500 per quarter. The hard part was I'd make $20k one quarter and $6k the next so income wasn't consistant throughout the year. I think the form was 1040-ES (correct me if I'm wrong), mail that into IRS with a check each quarter. The one good side of this is I overpaid my estimated taxes one year and received a healthy refund. Drawback was the quarters where I didn't make as much I was nearly paying in my entire quarter's income. But it averaged out throughout the year.

I was making fairly decent money with the side business (which eventually became my main income source), but my full time job was still paying more. The side income would be comparable to an average salary in Nebraska.

 

[Pipe Line]

Estimated means we estimated what I was going to make that year and paid taxes on it each quarter. Example, we estimated that I'd make $50k, so each quarter I paid approximently 35% (or whatever that percentage was) of that $12,500 per quarter. The hard part was I'd make $20k one quarter and $6k the next so income wasn't consistant throughout the year. I think the form was 1040-ES (correct me if I'm wrong), mail that into IRS with a check each quarter. The one good side of this is I overpaid my estimated taxes one year and received a healthy refund. Drawback was the quarters where I didn't make as much I was nearly paying in my entire quarter's income. But it averaged out throughout the year.

I was making fairly decent money with the side business (which eventually became my main income source), but my full time job was still paying more. The side income would be comparable to an average salary in Nebraska.

Some people I went to high school with, and my best friend does landscaping and/or mowing part time or full time and everyone that does it seems to do very well. So, I'm hoping I can too.

 

[Southendzonehusker]

The farmer in me says: “Make sure your side business is not profitable and hide your $ in business assets.”

That extra income sounds great, however if you play your cards right you can create generational income for your family.

Here’s how:

1. Start by having a garage sale in the spring, before you start your business. Sell everything that you can link to lawn care/snow removal. Collect cash only.

2. Use that cash to purchase a new mower. This new mower will be your first beautiful thing known as a “business expense.” Write that fucker off on your taxes.

3. Write all maintenance and gas off as a business expense and then some.

4. Make a logo. Have a sticker made. Put the sticker on your truck. Hook your mower trailer up to the truck. Take a picture.

5. Create Facebook page. Put picture of your truck, logo, and mower trailer on the Facebook page.

6. Hire your wife to be your social media manager for your business. You need to pay her $599 cash. Not a dollar more.

7. Write off as much of your mortgage payment as possible as a business expense (garage for storage, main living area as “office.” I’d say 55% of your mortgage. Shoot for the stars.

8. Make as much money cash as possible next summer. Put about 1/2 of it in the bank. Put the other half in a shoe box. Pop up a ceiling tile in your basement, place shoe box in ceiling.

9. With that cash that you put in the bank, don’t let it sit there for too long. Go buy a new mower or snowblower with it. Do not, under any circumstances, sell your old mower or snowblower.

10. With that cash you put in the shoe box, take your family on a nice vacation every year.

11. You will soon run out of space in your garage to store all of your mowers. Buy a storage unit and write that off too.

12. Repeat steps 3-9 every year. The most important thing is that you DO NOT MAKE A SIGNIFICANT AMOUNT OF MONEY EACH YEAR. Any money that touches the bank needs to be used to buy a new piece of equipment by the end of your fiscal year, every year.

After 8-9 years of doing this, you will have all of the following:
1. Customers
2. Visibility (Facebook page, sticker on truck, etc.)
3. No liquid assets.
4. $50,000-$60,000 worth of equipment (business assets)

That, my friend, is called a business. At this point, you will be 40 years old. You won’t feel like mowing and snow blowing anymore. Time to ride off into the sunset by doing the following:

1. Figure out what your “company” is worth. Should be in the $70,000 range. Exaggerate this number by a few thousand.

2. Sell 67% of the company to someone young and ambitious. Make sure this person has great work ethic and is someone you trust. You will receive about $50,000 straight cash at this point. Have fun with about $30,000 of it. Take the wife to Hawaii.

3. Maintain a 33% share in the company. Work it out with the new majority owner that he will be handling all of the labor and day to day operations, but you will be in charge of cooking the books. Take 33% of all profits to “pay yourself.”

4. “Hire” your kids to do basically nothing, but pay them the full 33% of your share each year. Open an IRA for each of your kids. Take all of that 33% of profit and split it between each kids IRA.

5. Continue this cycle for years to come. Educate your children. Teach them how to maximize their contributions to an IRA.

6. When your children retire, the will both have roughly $3.7 million dollars in an IRA and you will
Have created generational wealth by working a few hours a week.

Couldn’t agree with this more. My wife and I have been able to put up a Morton building, purchased numerous business assets (trucks, power washers, tools, etc.) and also “paid” our children $12K a year that’s gone directly into investments. We’ve never really paid ourselves but our net worth has increased significantly.

 

[kenyanfeline]

Never even heard of them. Those mowers look WILD

For what you want to do, their main value is in the attachments. Check out this page. All things you just replace the deck with and now you’re plowing snow, sweeping the street, blowing snow, spraying, spreading fertilizer, moving dirt, blowing off driveways, etc. You can even get a fancy heated cab and move snow in comfort.

Walker Implements

 

[Herbie]

Just remembered this thread.

Looking at buying a used tractor and round baler for around 135k. I have a cutter and a rake already.

Have some friends and family members they’d let me bale hay for them, around 1,500-2,000 acres.

Thinking around $20-30 per bale when I cut rake and bale it all. And hopefully 4.5 large round bales per acre.

Figure it won’t be to hard to show to money made the first couple years but what’s the best play long term to pay no taxes

 

[Jim14510]

Just remembered this thread.

Looking at buying a used tractor and round baler for around 135k. I have a cutter and a rake already.

Have some friends and family members they’d let me bale hay for them, around 1,500-2,000 acres.

Thinking around $20-30 per bale when I cut rake and bale it all. And hopefully 4.5 large round bales per acre.

Figure it won’t be to hard to show to money made the first couple years but what’s the best play long term to pay no taxes

Pretty much everything in this thread applies.

Year 1 easy to not pay taxes if you write off the equipment the first year.

Year 2-5 pay taxes

Write off the equipment over 5 years and you're going to pay some tax every year but this activity in a bubble will pay less over the 5 years than the write off everything year 1 scenario above.

Assuming you already farm in which case you're already playing the deferring income/prepaying expenses game to reduce taxes. So this just becomes 100k+ additional income and 100k+ equipment purchases added to the equation.

 

[God is a Husker]

Just remembered this thread.

Looking at buying a used tractor and round baler for around 135k. I have a cutter and a rake already.

Have some friends and family members they’d let me bale hay for them, around 1,500-2,000 acres.

Thinking around $20-30 per bale when I cut rake and bale it all. And hopefully 4.5 large round bales per acre.

Figure it won’t be to hard to show to money made the first couple years but what’s the best play long term to pay no taxes

Can you depreciate the equipment still or is it all used up?

Unless something happens the TCJA will sunset and we will go back to 2015 depreciation schedule.

I'm having all of my clients who have income showing buy new equipment now and take the full depreciation all at once instead of the schedule bullshit we had always done but for 2016-2024.


Put that hay up while the tax cuts and jobs act is shining boys cuz the IRS has their Jack boots on and Wagner playing and they are gonna be looking to crack heads in 2025

 

[Adolph Coors]

Just remembered this thread.

Looking at buying a used tractor and round baler for around 135k. I have a cutter and a rake already.

Have some friends and family members they’d let me bale hay for them, around 1,500-2,000 acres.

Thinking around $20-30 per bale when I cut rake and bale it all. And hopefully 4.5 large round bales per acre.

Figure it won’t be to hard to show to money made the first couple years but what’s the best play long term to pay no taxes

what kind of tractor and baler?

 

[Herbie]

what kind of tractor and baler?

Thinking this

Used 2023 John Deere 6135E

<p>2023 JOHN DEERE 6135E W/ H310 LOADER, 4F/12R PR TRANS EH PTO 40K, GREENSTAR READY, LESS JDLINK, LESS SUBSCRIPTION, LESS RECEIVER, LESS DISPLAY, LESS APPLICATION, STANDARD CAB, AIR SUSPENSION SEAT, TRIPLE SCV DELUXE, STANDARD DUTY HITCH, TELESCOPIC DRAFT LINKS, STANDAR DRAWBAR, SWAY CHAIN...

www.pkequipment.com

Used 2021 John Deere 460M

<p>2021 460M with only 1307 Bales, 540 PTO, Twin and Wrap, Mega Wide, Big Tires. Call for more details 405-375-3111</p>

www.pkequipment.com

 

[Adolph Coors]

Thinking this

Used 2023 John Deere 6135E

<p>2023 JOHN DEERE 6135E W/ H310 LOADER, 4F/12R PR TRANS EH PTO 40K, GREENSTAR READY, LESS JDLINK, LESS SUBSCRIPTION, LESS RECEIVER, LESS DISPLAY, LESS APPLICATION, STANDARD CAB, AIR SUSPENSION SEAT, TRIPLE SCV DELUXE, STANDARD DUTY HITCH, TELESCOPIC DRAFT LINKS, STANDAR DRAWBAR, SWAY CHAIN...

www.pkequipment.com

Used 2021 John Deere 460M

<p>2021 460M with only 1307 Bales, 540 PTO, Twin and Wrap, Mega Wide, Big Tires. Call for more details 405-375-3111</p>

www.pkequipment.com

you won't be able to charge $20/bale making 4x5’s.

 

[Herbie]

you won't be able to charge $20/bale making 4x5’s.

Well shit dog this is what I need to know.

 

[Herbie]

A 561m and 5x6 work?

 

[Adolph Coors]

Well shit dog this is what I need to know.

i charge $20/acre to swath & $20/bale. my baler is a 2023 rb560 specialty crop +. i probably charge a buck or 2 more than most people but im also picky about my jobs. sounds like you have a great one lined up. tractor will be slightly undersized but looks really nice should get the job done

 

[Herbie]

i charge $20/acre to swath & $20/bale. my baler is a 2023 rb560 specialty crop +. i probably charge a buck or 2 more than most people but im also picky about my jobs. sounds like you have a great one lined up. tractor will be slightly undersized but looks really nice should get the job done

Oh nice you don’t include swath in the bale pricing?
Guys I’ve used in the past just charge a flat rate for all.

Could use a bigger tractor, but hard to justify a bigger tractor in Oklahoma.