I'm thinking about making my side hustle legal. Not sure what to do with existing equipment as far book keeping. Like my splitter, truck, saw, trailer etc.. Once I go LLC everything but the truck and trailer will be exclusively for business and 95% of the trailer use will be business. But its all been used for personal/side hustle for at least three years now. Is it all immediately written off?
The way I remember it, exclusive of inventory, you can consider equipment already own as start up costs. Pretty sure you have to start with current replacement value and a max of $5k. If there's more than 5K then the over can be amortized ( quarterly ?) for X number of years. KEEP RECORDS. Don't get sloppy about this. I thought I was pretty good with records but I didn't know I needed a tax exempt certificate - up to date - for every single tax empt customer - even though ALL my customers were tax exempt. Auditors can be really anal. I used my own truck for work and kept a log book of mileage . I had to hire someone to do taxes because not only are taxes complicated here, they keep changing the game. I didn't have the time nor the patience to pore over the rules and changes.
besides the state - fed and local taxes come into play as well. local will be personal property tax, independant from home property tax. you also will get clipped with tax for SS/ unemployment
For me, 22% + 12.7%. Would not sell firewood with that high of declaration rate. Would be working hard and dangerous for less than $10 an hour.
