charges for time, material. labor???

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emahler said:
Aline,

2 things, the $48k would be gross income.

2nd, of I am a 1 man working from home, then i really don't have any of that overhead. All I have is my phones and my vehicle.
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You think? Gross?
You mean Net.
Aline is correct.

LEARN SOMETHING EVERY DAY

gross income

Definition

Pre-tax net sales minus cost of sales. also called gross profit.
net income

Definition 1

In business, what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company?s revenues. Net income is sometimes called the bottom line. also called earnings or net profit.

Definition 2

For an individual, gross income minus taxes, allowances, and deductions. An individual's net income is used to determine how much income tax is owed.
 
77401 said:
So how did you learn business?
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from lots of mistakes, college and then finally paying for my education in the contracting and service business.

I'm relatively well educated (degree from Rutgers University) but most everything I know about the contracting industry (and service specifically) has come from memberships to organizations, reading lots and lots of industry magazines (most of them not electrical) and a general ability to pick the brains of those that are better at this than me.

but, personally, i'll teach anyone. I'd rather have a helper learn the right way, and become my competitor (i don't like the word competition, we should be friendly competitors - after all we are in this mess together) than to keep him in the dark and have him become my competition and really screw up the market.

That's what happening now. Guys who never learned how to spell P&L are getting their contractors licenses. They in turn are screwing the system up royally. Don't know what to charge, how to charge, etc.

there is a great line i remember reading (can't remember who said it - but it was a plumbing contractor) about training your employees. "I'd rather train them and risk having them leave, then not train them and risk having them stay."
 
emahler said:
Aline,

2 things, the $48k would be gross income.

2nd, of I am a 1 man working from home, then i really don't have any of that overhead. All I have is my phones and my vehicle.
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You don't advertise? What about liability insurance and licensing? Did you have to buy tools? I'm also a one-man show working out of my second bedroom, but my overhead runs about $950/month when you add it all up.

I don't have a lot of expenses that the larger shops have, mainly because I don't have employees, but I still have overhead.
 
emahler said:
then i really don't have any of that overhead.
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Really? What about these? I call this overhead, what do you call it?
Advertising Don't you advertise a little?
Auto & Truck Expenses You do have a truck?
Depreciation If its new
Home Office Business Expenses touchy subject but still a legal deduction/expense
Insurance I hope you have insurance
Meals & Entertainment You do pick up the tab on occasion don't you?
Office Expense Computer? paper clips, pencils? router? Your internet connection.
Retirement Plans SEP IRA
Rent - Equipment remember the ladder or jack hammer you rented
Taxes - Business & Payroll $2,370* 1.2%*
License fees- Continuing ED, annual fees
Other Expenses Buy your wife a gift for Christmas from home depot & write it off as materials...LOL
 
i don't know how to make a smiley face here, but aline is rolling on the floor.

007 - i believe you are correct, i mistook it for gross payroll. The listing aline posted only had $12k in payroll. Most single man operations will take the other $48k as payroll, but call it profit. So they still have to pay taxes on it one way or the other. Hence my mistaking it with NET Profit.

net profit
Definition

Often referred to as the bottom line, net profit is calculated by subtracting a company's total expenses from total revenue, thus showing what the company has earned (or lost) in a given period of time (usually one year). also called net income or net earnings.



BTW - I am glad to see both of your responses to my no overhead quip.
 
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it is. but a sole proprietor is not going to only work for $12/yr (hopefully)

so that remaining $48k is Net Income (EBIDTA) for the company, but is Gross Income for the individual according to the IRS.

You got a relative in California that goes by the name Romex Racer?
 
Gentlemen,

The P&L statement that I posted wasn't created by me. I copied it directly from the website listed below. It may have changed since I last visited the site but it's supposed to be the average for specialty contractors. I don't know how accurate it is. You can go to the website and enter any amount for revenue you would like and it's supposed to give you the average expenses and profit for companies bringing in the revenue you entered.

If you're truly treating your business as a business your salary should be factored in as overhead. Company net profit is not your salary but is what's left over after you pay all of your expenses including your salary.

I know as a sole proprieter for tax purposes it's all lumped together and taxable but when your deteriming your prices you should factor in a salary for yourself as part of overhead. Then add your desired company profit on top of that. The company is not you. You work for the company. You may be the owner or president but you still work for the company and as such should be paid. How much you get paid is up to you but the company should still generate a profit after you get paid.

Myself, as a one man shop, I factor in $30K per year for my salary and then pay myself hourly when out working on jobs just as if I were any other electrician working for the company. I actually print out two checks each month. One for my salary pay and one for my hourly pay. The company profit is not my pay but is for working capital and investments and maybe an occasional bonus. No profit. No Bonus. Right now my goal is to earn 60k per year in compensation for myself and have a company net profit on top of that of 10% to 20%. When I say net profit I mean profit after paying all expenses including my salary, wages and taxes on my salary and wages.
Of course this additional 10% to 20% profit would get taxed as well.

My future goal is to earn more than 100k per year in compensation while maintaining the same profit levels for the company.

Or you can just figure whatever is left over after paying all your expenses is your pay. If there is anything left over.

http://www.bizstats.com/

BizStats.com useful business statistics

Average profitability & expense percentages for U.S. small businesses specialty contractors.*
 
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aline said:
If you're truly treating your business as a business your salary should be factored in as overhead. Company net profit is not your salary but is what's left over after you pay all of your expenses including your salary.
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That being the case, my company would go bankrupt every year after paying my salary & benefits. But with my salary I can open another business to loan the Electrical Business what ever it needs to stay open.
Its a good thing I don't have stockholders to answer too.
Graduate of Enron School of Bidness, Houston TX
 
"I'm relatively well educated (degree from Rutgers University"

I had many nights, of fine dining, from the grease trucks !
 
satcom said:
I had many nights, of fine dining, from the grease trucks !
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i'm still paying the price, 10 yrs later. They warn you about the effects of drugs and alchohol, but they never tell you about the long term damage of a fat-kat:)
 
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