John Jensen on thu 11 apr 96
I'm wondering what a normal ratio between gross and net income is for folks with
small potteries. In other words: If you are doing a gross busines of 40,000
(for example) how much of that should you be keeping for youself to spend on
your non-business life....Would half (20,000) be a normal amount? This should be
a reasonable rough measure of the efficiency of a small business, I'd guess.
I'm not real sure what my own ratio is because I am involved in several
different kinds of income gathering activities, but on average I'd say I keep
about 60% of the gross.
John Jensen in Annapolis
ELCAB@delphi.com on thu 11 apr 96
We keep about half of what we take in , but my tax advisor
,business
partner and husband includes things like depreciation of
equipment but doesn't count my aching wrists as depreciating
equipment.! I have no idea what is normal for small businesses
but Im pkay with that ratio as long as I get to play in the
mud...Elca Branman elcab@delphi.com
Michael Henderson on fri 12 apr 96
At 10:37 PM 4/11/96 EDT, you wrote:
>----------------------------Original message----------------------------
>We keep about half of what we take in , but my tax advisor
>,business
>partner and husband includes things like depreciation of
>equipment but doesn't count my aching wrists as depreciating
>equipment.! I have no idea what is normal for small businesses
>but Im pkay with that ratio as long as I get to play in the
>mud...Elca Branman elcab@delphi.com
>
Morning..... Equipment depreciation, I think depends upon how much you made
in the year that you bought the equipment. I am sure others can elaborate
on this. You can elect to take the whole thing in the year you bought (Sec,
173 (something like that, if you had enough profit), otherwise you have to
deduct it over a period of years. My 2 kilns are in that category, but I
wondered about the electric and gas work to connect them, does anybody have
an idea on that one and also, how to deduct utilities without a separate
meter? Emily in Astoria OR, where it's still raining. :-(
Jean Lehman on sun 14 apr 96
Hi, Emily--
>I wondered about the electric and gas work to connect them, does anybody have
>an idea on that one
There is a formula for figuring how much electricity a kiln uses. If nobody
else posts it, let me know and I will find it. But basically I keep records
of when and how long I fire. Then I use the formula to figure how many
btu's it uses. In reality I think it ends up looking like more than it is,
because it figures all the hours at the same amount per hour. I start with
the lower element on low for several hours and that gets calculated at the
same amount as on high. For tax purposes I figure it doesn't matter and is
defendable because of the firing log. :-)
Maybe someone else knows about gas firing costs...
> how to deduct utilities without a separate meter?
This is easy. Take the square footage of your house (livable areas) and
figure what percent of that is the studio. Take that percentage of all your
utilities. My studio is 22% of my house. I deduct 22% of my utilities.
According to my accountant, this is the way to do it. Be sure to include
ALL utilities including trash pickup. And if you wash loads of studio
towels, I deduct $3.00 a load -- I forget where I read that amount was
fair. Again these are tax advantages you are entitled to. Oh yes, and in
calculating the percent of the electricity cost, be sure to deduct the
amount used for firing before figuring the amount used in the studio. That
firing cost can go into *cost of goods sold* because it is used up in the
process of creating the work that gets sold.
This is a bit late for THIS year's taxes!
Good luck
Jean Lehman in Lancaster PA where it is finally beautiful spring weather.
j_lehman@ACAD.FandM.EDU (that's an _underscore_ not a hyphen)
LBlos72758@aol.com on sun 14 apr 96
Emily,
I keep a record of kwh used in firings by taking readings before and after
and having readings for the same period when I am not firing, which I deduct.
The studio use other than kilns is based on the size of the studio and the
size of the total property. You figure the percentage and use that
percentage of the utility bills for the year, minus the firing costs. Then
write off both the percentage of usage and the firing usage.
Linda
Ithaca, NY
CaroleER@aol.com on tue 16 apr 96
Be careful when figuring what part of your liveable areas are business
related. If you claim a business office or business area as a deduction on
your income tax (I'm not talking about just taking utilities), you could be
liable for capital gains on that portion when you sell your house.
Carole Rishel
Bastrop,TX
CaroleER@aol.com
In a message dated 96-04-14 11:54:30 EDT, you write:
>This is easy. Take the square footage of your house (livable areas) and
>figure what percent of that is the studio. Take that percentage of all your
>utilities. My studio is 22% of my house. I deduct 22% of my utilities.
>According to my accountant, this is the way to do it. Be sure to include
>ALL utilities including trash pickup. And if you wash loads of studio
>towels, I deduct $3.00 a load -- I forget where I read that amount was
>fair. Again these are tax advantages you are entitled to. Oh yes, and in
>calculating the percent of the electricity cost, be sure to deduct the
>amount used for firing before figuring the amount used in the studio. That
>firing cost can go into *cost of goods sold* because it is used up in the
>process of creating the work that gets sold.
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