Accounting practices for build-it-yourself boats

Discussion in 'Boatbuilding' started by marshmat, Nov 28, 2012.

  1. Petros
    Joined: Oct 2007
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    Location: Arlington, WA-USA

    Petros Senior Member

    I suspect the OP tax situation is different than in other coutries, or even state to state in the USA. they may have a personal property tax in Ontario, that taxes the value of cars, boats, RVs, etc based on purchase price, or in someplaced based on "book value" that they determine. Sales tax is a different issue, and that too varies: in my state if you build the boat and sell it, the next guy has to pay a sales tax, unless it can be proved that the sales tax on all of the materials were paid when it was built (the idea is the "end user" pays sales tax, the builder could have purchased the materails sales tax free if he has a resale account number, but the next owner would have to pay it).

    In many places a boat you build yourself for your own use is not subject to any tax, just a registration fee. In other places they charge you a "use tax" or a sales tax, unless you can prove that sales tax was already paid. the rules vary all over the place, depending on the what the local officials deem what is the best way to get money out of our pocket.

    You need to get local advice for your situation. For me, if I build a boat from all "found" materials that I mill myself, salvage and pick from trash piles, when I go to register it the state will figure I owe them something since I now have a boat, and that means they should be able to collect a tax on it. I knew a guy who built a flat bed trailer from scrap metal and only spent about $75 on lights and a hitch, they would not believe him and figured he owed a tax for a $2000 trailer.
     
  2. Frosty

    Frosty Previous Member

    What are you talking about tax for. Is there some way you can not pay it.

    If USA has GST or VAT then tax would be paid on purchase.

    If your worried about tax then forget building a boat --you cant afford it.
     
  3. marshmat
    Joined: Apr 2005
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    Location: Ontario

    marshmat Senior Member

    For a pro yard, absolutely, you need to be realistic about where you can make a decent margin. Otherwise, you go broke.

    For the present purposes, I'm more interested in the "build it yourself at home" crowd.

    Undoubtedly, some government agency will eventually ask how much you spent on the boat and whether the taxes have been covered. (The last time this happened to me, I sent a polite letter to the Ministry of Finance saying "I built it myself, I have the receipts, I paid $X*0.13 in taxes on $X of materials and equipment for it, and I'd be happy to host your auditor for lunch if he'd like to drop by to verify the numbers". Haven't heard from them in 10 years since.) So keeping track of what's spent is pretty much a given.

    What I'm not so clear on is how people record the value of the boat they just built. If you have spent $50,000 and five years building a pretty little yacht, that $50,000 is not gone- you have a yacht at the end of it, which has some monetary value. Just as my car counts towards my net worth (albeit not for much, given the state of my car), so should my boat. But the boat isn't worth much for the five years when it's a pile of money-sucking stuff in the shop; then, all of a sudden, it gets launched and has measurable value as a fixed asset that could be sold for cash if desired.

    I am curious how other home builders figure this out- if they do at all.

    The former. I would presume anyone thinking of doing this as a business would track down professional tax and accounting help. But I think it would be useful for many of us home-builders to see how others are doing it.
    I'm not quite *that* obsessive about it, but we do track all our expenses (GNUcash is very good at learning the difference between food, gas and utilities in the QFX files our banks give us, so it doesn't actually take much time to do the data input) and ensure that everything balances out properly every few months.
     
  4. Ad Hoc
    Joined: Oct 2008
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    Ad Hoc Naval Architect

    Unless one is running a business, to make money and not a personal private project, that's how it should be.

    My own little fishing boat I had, just the same...cost, here today gone tomorrow. So what?

    That's where the Asians set up corner shops in the UK..opening from 6am until 11pm, not closing early and for lunch like the established ones..became wide spread and successful. And now China as a country, rather than a corner shopkeeper, has done the same. You want to charge for the roll -fine, they'll charge for the sheet. Who gets the business?

    The consumer is voting with their feet...blaming others falls on deaf ears.
     
    1 person likes this.

  5. 805gregg
    Joined: Apr 2010
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    Location: Ojai, Ca

    805gregg Junior Member

    I threw them in a paper grocery sack and never looked at them again.
     
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