Should the small lawn care business owners pay taxes?

I am sure there are quite a few new start up lawn care business owners who just don’t want to concern themselves with any extraneous issues other than mowing lawns and collecting their money. When it comes to being licensed, insured, and complying with tax laws, some business owners just don’t feel those rules, regulations, and laws apply to them. Let’s take a look at such a discussion from the Gopher Lawn Care Business Forum and see some different perspectives on this topic.

One lawn care business owner wrote “why is it so important for the little guys that average around 40-50 lawn care account’s to pay taxes? Maybe it’s just me but I see a lot of business owners have this mentality how important it is to pay taxes on your income. Granted the bigger companies have to. I understand that. In this economy and the way the government is set up nowadays, why would you want to?

Do you think the IRS is going to find out? Everybody likes making a few bucks perhaps, that’s what keeps us moving out there. I just want to know what peoples’ opinions are about claiming income that the IRS or whoever will probably never find out about. Is it the legal aspects? The honest aspects? What’s the view out there in everybody’s minds? Is it to credit yourself with your client’s to prove you are legal in all shapes and forms? Or is it to be one step above from the next person who isn’t?

My next question is this, how many of you have paid taxes on cash received? It’s still income, however, nobody will know about the cash. And besides the neighborhood clients, do you think they really care?

The reason I ask this question this is because I had a meeting with one of those members from S.C.O.R.E a few weeks back and this question came up. The money you make and the money you don’t make are two different questions with answers. Everybody has the knowledge or ideas to hide money. You can write everything off to the point where it looks like you’re broke even for the year. However, if you’re doing this on the side and working a full time job, are you required to pay taxes on the money you made in the spring summer and fall winter?

Here was his answer and he said he wasn’t a lawyer. Between the amount of $10-12k, you’re safe. Nobody is going to be looking. They don’t look at people making that amount. Anything over and now your doing commercial work you have to. I’ve always paid my dues. But, talking to a few other people in my area who just strictly do residential lawns said they haven’t. But, they work full time jobs as well. I don’t know. I know once the IRS catches up to you it’s not going to be pleasant or fun for anyone. So, again its just one of those questions that hangs in the air. It’s really none of my business if you do or don’t. But, if everybody stops paying taxes then what happens?”

A second lawn care business owner said “in my opinion, I would be too afraid that the IRS would somehow find out that I didn’t pay them taxes. If I could keep all the money I make and not have to pay taxes or insurance, that would be wonderful! I would have a lot more equipment. I would be constantly looking over my shoulder though wondering if they knew. I guess I would have too much of a guilty conscience hanging over me to do that. To me, that would be like ripping off a customer, even though they’re not a customer. I wouldn’t be able to sleep at night knowing and wondering if the next knock at the door was them or get something in the mail. The IRS seems to rip us off anyway, but still. I would just have too much of a guilty conscience.

For those starting out, let me tell you this story:

This year I went to get my taxes done, and since I didn’t make enough money ($15,000), I couldn’t write off ANYTHING! I was so upset. I felt like puking on the lady’s desk that was doing my taxes. All the money I put out to buy new equipment, office supplies, truck expenses - nothing could be written off. The reason I didn’t make enough was because during my work, my spouse got hurt at her job and I spent a lot of my time running to doctor’s appointments, hospital visits, therapy, etc. So I couldn’t take on any more people at the time. That really hurt us this year, because we were looking forward to buying a dump truck and expanding.

As far as the tax thing - yes, it sucks that we have to give the IRS our hard earned money for them to give these big companies bail out money to help others and they’re wasting it. It should be our choice. But I choose to follow the rules of the game and feel better because of it.”

A third added “I’ve been running my lawn care business for 4 years. Obviously 4 years ago, I wasn’t mowing very many accounts. My first year I peaked out at 16 weekly mowing customers. Since then though, my business has taken off.

Now when you ask, ‘do you think the IRS is going to find out? Everybody likes making a few bucks perhaps, that’s what keeps us moving out there.’ When you say that, it makes you personally look like you’re in the business of scamming people. The thing is, there is a concept called ‘BUSINESS ETHICS!!’ I don’t know what your goals are for your business, but cutting corners and breaking the law doesn’t look like a good way to go about things.

I would love to know what your customers would have to say if they knew you avoided taxes. If I was a customer, the first thing I would be asking myself is, ‘is he ripping me off too?’ Apparently you don’t mind ripping the government off and breaking the law in doing so, so what is keeping you from ripping off a loyal customer?

Not a very smart way to handle yourself or your business if you ask me, but it’s your business, not mine.”

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