Question regarding income taxes

[gary_k]

How do you determine what percentage of your proceeds can be attributed to actual expense? For example, I just completed a job that the material was supplied to me. In the past, I have been told to charge $60/hour for my machining time - I have a Shopbot PRSalpha 60" x 120" with a 4 hp spindle along with ArtCam Pro. This particular job worked out to be $30/hour so I am not sure how to report my expenses/income. What is the actual cost to run the machine in a shop in my home garage?

[ken_rychlik]

You report the whole ammount, but you get to write off the electricity, and other expenses. It sounds like you need a good CPA. A good one will make you more than it cost you.

They will work out a percentage for your electrical use, insurance, intnet, phone, and lots of stuff you have not even thought of.

Kenneth

[gene]

The new tax forms are going to be very easy to follow. They only a few lines,
#1 Your Name
#2 Your ssn
#3 how much you made
SEND IT IN ________________:eek:

[bleeth]

You have several types of expenses for tax purposes. First is Fixed overhead. This is the costs associated with operating your premises such as utilities, rent or mortgage interest, insurance, equipment leases, bits and blades etc. Second is direct job related which would include materials (if there were any), vehicle expense for delivery, wages, etc.
How you figure costs for any particular job for yourself is by adding up the total of fixed and variable costs and subtracting it from the gross income for the job. There are many other factors, such as depreciation, credits for other taxes, and things like that that end up determining your Federal taxes. The advice given is correct. Even if you think you understand these things, you need an accountant. My brother was one and his favorite saying was a good accountant can earn you more money than a star salesman.
In short, your question relates to how you figure job profit. Taxes are done on an overall annual (or quarterly) basis and have different factors thrown in, also including how your business is organized (Sole proprietor, LLC, partnership or what not.

[djmcnutt]

Kenneth is right, get a good account and they will guide you and the best thing they should know what is the correct way and the best way. I consider my account as my CFO they make sure I do it right and stay out of trouble. In the long run they will make you money!

[gc3]

How do you determine what percentage of your proceeds can be attributed to actual expense? For example, I just completed a job that the material was supplied to me. In the past, I have been told to charge $60/hour for my machining time - I have a Shopbot PRSalpha 60" x 120" with a 4 hp spindle along with ArtCam Pro. This particular job worked out to be $30/hour so I am not sure how to report my expenses/income. What is the actual cost to run the machine in a shop in my home garage?


...as a loss :eek: a per hour cost should depend on location, location, location

GC