CHICAGO — Some of you no doubt are still recovering from the holiday season, and want to lay low. Wanting to spend a little quality time on the couch is understandable.
While preparing your taxes may be low on your priority list at the moment, a little planning can go a long way in ensuring a smooth tax-prep process. Formulating the proper questions today can save you from plenty of headaches tomorrow. Maybe there are some tax considerations that you have never pondered.
Larry Larsen and Roy Herbert, both experienced in dealing with Laundromat tax issues, offer some tax-related thoughts that may cause you to rethink some of your planning methods.
STAY INVOLVED
When it comes to tax prep, laundry owners must be a key part of the process, says Herbert, an accountant with nearly 30 years of laundry-related tax experience.
“Owners need to be involved in all aspects of the business,” Herbert says. “Be knowledgeable of all your transactions — what goes on each day. Be careful how you maintain records and record deposits.” More specifically, he advises owners to focus on depreciation, amortization, cost of utilities, cost of labor, and rent parameters.
Herbert also realizes that busy owners like to delegate, but warns them about the practice. “It’s difficult to delegate as an owner, especially with monetary issues. I don’t like delegation when it comes to keeping records or depositing receipts.” If you plan on delegating any financial tasks, you need to go that extra mile to find honest people, he adds.
Herbert knows that recordkeeping for a cash business is challenging. However, with cash businesses, the government requires extra steps of recordkeeping to prove and justify correct entries, he adds.
One way to deal with this challenge is to seek professional help. “With the complexity of IRS regulations, an operator who handles the bookkeeping, accounting and reporting functions himself is not only hurting himself, but is perhaps leaving himself open to a series of tax issues. There is no substitute for good professional advice, be it accounting, legal, etc.”
Working with professionals has its advantages, such as gaining the ability to maximize potential deductions. “The qualified accountant will shed light on things and help an owner get everything he is legally entitled to. Optimize your benefits by using experienced help.”
As society moves forward in the electronic age, “the government is becoming more stringent about proper recordkeeping.” The good news, he believes, is that operators are becoming more sophisticated when it comes to keeping records, due to factors such as tracking rising expenses. “With expenses going up, one has to be careful how he spends and allocates funds.”
Store technology will also impact the future. “Modern things, like card systems, are a positive way to keep track of a laundry’s business. [Card systems] can make the job of filing returns more accurate. Things might not get easier, but you will at least be able to gather records more efficiently.”If you have any questions about this article, contact Roy Herbert, Steiner, Herbert & Co., at 631-493-4700.American Coin-Op urges operators to consult their accountant with specific tax questions.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].