Basic Question about O/O Taxes......

You pay taxes on your profit. This is gross minus expenses and depreciation. Then depending on your tax bracket you will pay a percentage of your profit to taxes. Federal, state, local/city.

 

You're mostly correct on both assumptions:

• Yes, you only pay taxes on taxable income - essentially what's left over from gross after you deduct your business expenses. Depending on your personal tax situation outside of business (married, single, kids/no kids, rent/own home, etc), your tax rate on this NET income may be 20% - 30%+
• OR, you can use 10% of GROSS to get reasonably close to the 20%-30% of NET.

Both are ballpark numbers. Your tax preparer should be able to give you much closer estimates based on the rest of your personal situation.

 

Correct, a new(er) truck, with likely a larger payment, would increase your expenses, and therefore decrease your taxable income.

It will also decrease the amount of cash in your pocket at the end of every week.

It's never made sense to me to spend $1.00 to save $0.30. If you need a new truck, then get one, and write off as much of it as you can (lease vs purchase...deducted differently), but don't simply spend your profits to get a deduction.

In other words, don't let the tail (taxes) wag the rest of the dog.

 

Form an llc and elect to be treated as an S corporation tax wise,pay yourself biweekly or monthly a reasonable salary and take a profit distribution when you do your taxes.
Put some of your salary into a 401k pretax and the company is allowed to match your deposit to a certain amount,you will save A lot of money.

 

What's up bro you out of miami who you run for? Taxes suck good thing my plan is rack up 50k in taxes owed and use my dual citizenship with no extrradution to escape mwwhahaha just kidding

 

Another twilight zone thread.

You depreciate the truck, you don't write off the payments.

You pay taxes on your net earnings.

It is fair because you get to deduct all the wonderful things like fuel and parts and fixens at the dealer.

If you own a truck, get someone to do your taxes, a cpa or an ea and have them show you how to save on taxes.

 

Lesson one: taxes are irrelevant in almost EVERY situation. Make the best business decisions you can, make as much money as you can, and send the government their fair share.

You are NEVER better off spending $1.00 to keep from sending the government $0.30.

Lesson two: take an accounting class, and hire a good tax accountant. You have to know your numbers before you can make good business decisions.