Getting The Best Tax Situation Possible For Your Mowing Side Business

Posted on: 12 June 2017

Many people make a little extra money during the summer mowing lawns. While it is not likely a major source of income, it is one that can help out a lot. Those who are interested in starting this type of business need to understand how they can get the best possible tax return situation.

Mowing Is Likely Taxable

Those who start a small mowing business may think it qualifies as more of a hobby than a business. That may be true if the business falls under certain criteria. Generally, though, it will be considered a business if it meets the following guidelines:

  • Business is conducted professionally
  • Work is done to make it profitable
  • Income from the job helps with a person's livelihood
  • Losses in the business are beyond the person's control
  • The business owner adjusts the business to make it profitable
  • Profit was made from the business in the past

These are just a few of the criteria that a company needs to pass in order to be taxable. In most instances, a mowing company is likely to fall under taxable guidelines. This is especially true if a person does things like buy a riding mower to increase their mowing speed and, by extension, make more money.

The $600 Threshold Is A Myth

Many people with side gigs believe that they don't have to report income from it does not exceed $600. That myth is due to the fact that a person will not receive a Form 1099-MISC if they do not make $600 from a business. Unfortunately for people who believe this myth, they must report all gross income that is taxable.

So if a person's mowing company is considered a taxable business and not a hobby, they must pay taxes on that income. This is true even if they have made as little as $100. Obviously, they won't pay much in taxes, but it is important for them to claim this money anyway.

Deductibles Can Help Save Money

Those who made good money with their mowing side job may end up with a sizable tax bill in April. Thankfully, they can use various deductibles to help decrease the money paid. For example, they can claim expenses associated with their mower, such as the purchase price, repairs, fuel, and maintenance.

It is also possible to claim transportation costs, such as wear and tear on a vehicle and its fuel. However they can only claim a portion of these items if they are also used for personal needs. For example, a person who uses their truck or mower for personal needs must calculate the percentage of business use of these items.

By following these guidelines, people with a side mowing business can successfully manage their tax situation and avoid paying too much money. It's not a bad idea to talk to a professional about your mowing side business and get them to help streamline your tax needs.