I need a good low cost dependable 4x4 pickup for using in the woods to check on getting wood for business. Where do I find the accurate information to use for calculations ? What is the Total Cost of ownership for your pickups and how did you calculate that please ?
Off the top of my head
Direct and indirect costs of the truck.
Measured against return on investment if the money was invested elsewhere
Compared against other opportunities for use of the capital.
If going in the woods to get lumber provides a sales opportunity, what is the value of that opportunity and how do you acquire the material if you don't use that opportunity?
How many days/trips a week, month, year do you use the truck for the sales opportunity?
What is the rental cost to rent a truck just when you need it? ( including the hours to pick up and drop off)
What are the taxes benefits of ownership, is the GVW over the limit for single year depreciation?
If you don't have the truck what happens to sales, if you do what happens to sales?
If the GVW allows a single year write off and you are in a 35% tax bracket you are spending .65 on the dollar to acquire the truck IF you wouldn't use the capital elsewhere in the business (.65 to the truck, .35 to the government).
What the cost of an operating lease vs purchase?
Lots of information needs to be gathered to make a decision.
I am no tax pro and definately appreciate the info. Some great tips. You folks are really helping out !
Mr. Alan, Can you please help me understand a little better your "If the GVW allows a single year write off and you are in a 35% tax bracket you are spending .65 on the dollar to acquire the truck IF you wouldn't use the capital elsewhere in the business (.65 to the truck, .35 to the government). " ?
The TCO link is helping out also.
Hey Cabinetmaker, good ideas on the ATV. I need a truck to haul one in the bed or to pull a trailer to carry a ATV to the woods to use on the trails that are to small and rough and slick for a truck. I need a truck for protection though because of the lightning storms that pop up in 15 minutes. Also, sometimes the ATV's get stuck in the main logging road ( miles from the pavement ) and I need a truck to pull it out !
I cannot find anybody to rent a 4x4 truck from and if they did rent one, it would cost way to much and would get scratched up by the brush and mud !
I would like to find for lease ( short term about 2 weeks to a month), a small harvester to mount on a skid steer to do a first pine plantation thinning.
>>Mr. Alan, Can you please help me understand a little better your "If the GVW allows a single year write off and you are in a 35% tax bracket you are spending .65 on the dollar to acquire the truck IF you wouldn't use the capital elsewhere in the business (.65 to the truck, .35 to the government). " ? <<
A vehicle with over (I think 6500 GVW) can be deprecated in one year using rule 179. Lets assume you made a 100,000 dollar profit and owed 35,000 dollars in taxes on the profit
Instead you buy a 60k truck and write it off in 1 year, now your tax liability is based on 40,000 k, so you owe the gov 14k in taxes, and you finance the truck.
So instead of coming up with 35k to give the government you give the truck dealer 12k (or 21k or 12k dealer and 9k you keep), you give the government 14k and you write off the truck payments over the next 5 years, each year paying in dollars that are worth less than the year before. Basically you are moving dollars you would pay the government to dollars you give to a vendor and you get an asset.
So I am applying the 21k that you were going to give the government to the 60k you owe on the truck and giving the government 14k, you still come up with or borrow 35k, you just spend it differently
Thanks for explanation. I see what you are saying now. I appreciate very much your knowledge and wisdom. Sounds like you have a good tax person to help you or you are an accountant or just a very smart person that is diligent in business. I wish I could find the best books or websites to explain to me all the pros and cons of how to figure out all the tax stuff and the best way to make decisions on small business topics like tax issues and form of business, such as S corp, LLC or sole Proprietor. Any thoughts on a tax prep software like turbo tax for small business or do you recommend using a computer spreadsheet and reading the tax forms and figuring out those complicated and poorly explained things and doing it yourself or find a "competent and honest" CPA that actually knows something about small business and properly supervises their staff doing the tax returns ?
You need a CPA that is both a good accountant and can help with business.
Maybe someone that can help you with payroll and accounting software. You need to learn to focus on what you know and when to hire someone to do what you don't know.
One of the keys to success is understanding the limited resources you have (time, energy and money) and how to best use those resources.
Saving money trying to do your own books when there are so many viable options just means that you would be spending time doing something you don't excel at instead of doing something that will generate income.
You need to be able to understand financial statements and be able to read them so you can focus on the items that need your attention.
You need to understand cash flow and what it means and how to manage it, this is the lifeline of your business.
A business can have a positive cash flow and be making money, losing money or breaking even.
I have good CPA that is both a good accountant and helps with our business.
The form of you business depends on where you are located and what your risks are, a LLC or sub chapter-s corp can provide legal protections that you need.
If you own your building that should be outside the business and the business should pay the building owners market rent.
I have been working for a long time in the construction industry and have a lot of experience, but I started out as a carpenter.
Mr. Alan, Sounds like you are a good businessman and have found a good tax pro that knows how to advise in business and you are a good student of business ! I hope you prosper and I truly appreciate the good advice. I took some business courses in college and they did not give much in the way of real world usefulness. I wish I had saved my money and time and found a better school of business. One on small business if they make such a thing. A good online program would be great for the country and the world if some wealthy and good benefactor could make the courses available for free or at least low cost to the whole world. If folks everywhere could learn good capitalism, there would be less poverty and more peace.
Getting back to trucks.
I found a good site about MPG. www.fueleconomy.gov
also the JDpower site had some good info.
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