It’s been said that the IRS Tax code is about ten times bigger than the Bible but the difference is that the Tax Code doesn’t contain any good news. In the Bible, Jesus said, “Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, ‘This fellow began to build and was not able to finish.” Many people dream of owning their own business but do not really have a plan for determining if that business is going to be viable. In looking at a starting a virtual tour business, it’s important to look at long range profitability as well as short term viability.
If you are considering starting a 360 tour business, look not only at the long term profitability but also the short term expenses involved in start up. One of the big downfalls for small businesses is not being prepared for taxes at the end of the year. Because we are self employed, we knew what our end of year income was on 12/31 and because Greg does such a great job as the CFO of our virtual tour business, I also knew exactly what our expenses were for the year. Last week, I gathered all the information for our taxes and did a preliminary estimate of what our tax situation will be.
2011 was our first full year in the virtual tour business so we had no idea what we would owe in taxes therefore we did not send in quarterly estimated payments. With much anticipation and a little apprehension, I calculated our taxes and realized that we are going to end up writing a pretty good check to Uncle Sam. At first I was unhappy that we didn’t have enough write offs to offset more of the taxes but in retrospect, I am pretty excited.
Owing taxes means that we made a significant profit in our first full year running a virtual tour business. We shot 350 virtual tours in 31 states last year so we have almost 39,000 BUSINESS miles that we can write off for the year. At 51 or 55 cents a mile, that is a significant write off. We are able to write off our phones, internet, meals, uniforms, advertising, supplies…if you own your own virtual tour business, you know that the list goes on. Even after all of the deductions, we still owed a good bit. As hard as it is to write a big check to the IRS, our hope is that we owe twice that much next year because as small business owners, we only pay taxes on our PROFIT!