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Old 03-31-2011, 05:45 PM   #1
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Default First Commercial Project. Taxes?

I am bidding my first commercial project. The building owner will be claiming the work for the full amount at the end of the year, as will I. The job is roughly 10k in materials and labor. I have no idea what percentage of that 10k I will be paying in income taxes at the end of the year. I would like to plan ahead and keep whatever I will be paying in taxes in my savings. Any help is greatly appreciated.
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Old 03-31-2011, 06:06 PM   #2
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Quote:
Originally Posted by Phillip Benson View Post
I am bidding my first commercial project. The building owner will be claiming the work for the full amount at the end of the year, as will I. The job is roughly 10k in materials and labor. I have no idea what percentage of that 10k I will be paying in income taxes at the end of the year. I would like to plan ahead and keep whatever I will be paying in taxes in my savings. Any help is greatly appreciated.
You should be already paying estimated taxes quarterly. The amount of the job has really nothing to do with your income taxes. The amount of profit from the job is what you will owe taxes on. Make sure you keep accurate business records of all your costs-you should have an accountant if you are running a business. Don't rely on the Paint forum for tax and legal advice. Remember you have to allow for federal and state and any local income taxes that my apply in your area. If you are not sure, put 35% of the profit aside until next year tax time, that should keep you out of jail.
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Old 03-31-2011, 06:12 PM   #3
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Earnings Before Interest & Tax - EBIT

An indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT is also referred to as "operating earnings", "operating profit" and "operating income", as you can re-arrange the formula to be calculated as follows:

EBIT = Revenue - Operating Expenses

Also known as Profit Before Interest & Taxes (PBIT), and equals Net Income with interest and taxes added back to it.

In other words, EBIT is all profits before taking into account interest payments and income taxes.

---
For example:

If you were to fall into a 25% tax bracket and you earned, for example, $100,000, you would total all revenues earned in the year [$100K], less all operating expenses, overhead and interest [let's say 70K]. Multiply the resultant number [30K] by your rate [25%] and you have the amount you will be paying in tax [$7500].
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Old 03-31-2011, 07:05 PM   #4
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This is the kind of BS that's bringing California down. How bout get legit before you take on a job that size. You know, lic, bond, GL, WC. Your GC a piece of work too. Cheap azz is what he is. Skirting the law to get cheap azz labor which is what you are too him, nothing more and nothing less. Your GC bud takes a bid from a legit PC like myself, adds his percentage on. Then call his laborer (you) and get him to do it for half the cost. You and your GC is what gives contractors a black eye and drives up my cost to be legit. If anything bid it like you have all your insurance, bond and lic in place. Even though that's just as low at least your GC bud will be paying what he should.
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Old 03-31-2011, 07:11 PM   #5
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Oh, just caught it is not a GC but a Owner/Builder. So is any one actually lic to perform a contracting service? Does it get any more FU than this sh!t?
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Old 04-01-2011, 12:39 AM   #6
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Phillip,

I was going to slap Ewing's wrist for being so harsh, but then I searched your posts. On Monday you posted this:

Quote:
I've been painting in California for about seven years and I'm now looking into getting my own license. I bought a computer program and have been using that to study, but it doesn't seem like the most effective way. Are those weekend classes the "golden ticket" to passing the test? I mean do they fill you in on what questions are more likely to be on the test or anything like that? This computer program just runs you through 100s of questions over and over until they are burned in my brain.
I can now understand Gabe's fury.

Get legal before you start submarining legit painters. Calif has very definitive laws about licensing and being a legitimate contractor. You are f-ing over your soon to be brothers in arms when you do what you are about to do.



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Old 04-01-2011, 01:12 AM   #7
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Quote:
Originally Posted by Phillip Benson View Post
I am bidding my first commercial project. The building owner will be claiming the work for the full amount at the end of the year, as will I. The job is roughly 10k in materials and labor. I have no idea what percentage of that 10k I will be paying in income taxes at the end of the year. I would like to plan ahead and keep whatever I will be paying in taxes in my savings. Any help is greatly appreciated.
You also might want to take a class in operating a business. What you are asking makes no sense.

-Hal
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Old 04-02-2011, 12:57 AM   #8
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Ouch, Thanks for taking the time to respond to my question and look even further to see my other posts. I do have a licensed partner in this project. My father is a licensed, insured, and bonded contractor. I will be operating as an employee of his company on this project. I'm going to be dealing with the customer directly, writing the quote, and overseeing all aspects of the job so I wanted to make sure I had all angles covered.
I have heard my father's way of doing things forever and I'm beginning to question them. Since I found this resource I have been posting my questions here to get outsiders perspectives. I really don't wish to be blacklisted here.
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Old 04-02-2011, 02:25 AM   #9
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There's a blacklist?

I know a guy (ex employee) that pays a PC 10% of the job to use his lic. Not saying you are doing that, but your story does sound familiar.

Hope you show up on your job and be there when you say you will.
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Old 04-02-2011, 09:26 AM   #10
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to origional question: depends on how honest you are on your taxes, and how much money you make,write offs you have ect. i was at about 30%. after i filled taxes the first year, the IRS sent me coupons and insisted i pay quarterly.
if you are just an employee, all your taxes will come out of your paycheck.
I would say get that licence, because if you dont have one:
you cannot legaly print buissiness cards or advertise
you cannot legaly enter or sign a written contract (people dont have to pay you)
the cslb is now arresting people in california.
your competition WILL turn you in.
FYI you cannot use someones licence like that, they will loose it if cslb finds out.
they can put you on their licence as a partner if they are the qualifier.
Good luck in Biz, Hope you make alot of money.
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Old 04-03-2011, 02:58 AM   #11
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Thanks again. For the record my quote was around $300 less than the other quote this building owner got. I am not out there underbidding every job I can. If a customer doesn't accept my price because it is too high I wish them luck on their project and move on.
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