Setting the tone w/friends at the beginning

[EmptyNest]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

No you cannot deduct that as advertising. You have to charge your friends and relatives something...no freebies.

 

[Gingerbread Latte]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

CPA for B&B's? If not I can guarantee he will not know. You will know more than he knows from asking questions here. Good luck.
A discount is not advertising.
Stick with the internet. Don't waste your money elsewhere. Of if you do, come back and cry on our shoulders...we have all been there and regret wasting hard earned $ on any other advertising.

.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.

 

[egoodell]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

CPA for B&B's? If not I can guarantee he will not know. You will know more than he knows from asking questions here. Good luck.
A discount is not advertising.
Stick with the internet. Don't waste your money elsewhere. Of if you do, come back and cry on our shoulders...we have all been there and regret wasting hard earned $ on any other advertising.

.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.
.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.

I would never attempt to do my own taxes for my B&B. There are many things you can write off but it has to be done correctly. I use a CPA and I would not use one that has no B&B experience. I don't want to pay extra, and I don't want to get audited. B&B taxes are not for the regular tax accountant. I found my CPA by asking B&Bs in my area who they were using.
RIki

 

[EmptyNest]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

CPA for B&B's? If not I can guarantee he will not know. You will know more than he knows from asking questions here. Good luck.
A discount is not advertising.
Stick with the internet. Don't waste your money elsewhere. Of if you do, come back and cry on our shoulders...we have all been there and regret wasting hard earned $ on any other advertising.

.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.
.

GO to the zoning office in the city where the B & B is located to get all the right rules and regulations. If you do a search on the IRS site, you can find information on what they use for B & B audits. It used to be free but it is a for sale pub now. I found a copy I had and gave it to a friend recently.

 

[agoodman]

I think it just hit me wrong. I was sharing my excitement about the possibility of this business and one girl said, "Give me a free night and I'll tell all my friends to stay there." I wanted to say, "Have all your friends mention your name and then I'll give you a free night." Another wanted to bring her 2 horrid kids on a peak weekend b/c she didn't want to stay with family while in town.
As you said, it's probably all talk, I just wanted to be prepared if and when someone point blank asks me..

"Give me a free night and I'll tell all my friends to stay there."
Darn! You lost a great marketing chance and you had it in your mind but did not use it! You DID have the right answer just did not finish it. "Of course I will give you a free night. I will have a card with your name on it and every time one of your friends tell me you sent them, I will make a punch in that card. 10 punches and you get a free night!"
.

"Give me a free night and I'll tell all my friends to stay there."
Darn! You lost a great marketing chance and you had it in your mind but did not use it! You DID have the right answer just did not finish it. "Of course I will give you a free night. I will have a card with your name on it and every time one of your friends tell me you sent them, I will make a punch in that card. 10 punches and you get a free night!"

and you can get loyalty cards on vistaprint.com for almost nothing ...

 

[agoodman]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

it really depends, if you declare it as revenue then you need to pay the sales tax on it, and you would write if off to advertising. Or you can comp the room and do a G/L entry as advertising. This is YOUR house, the IRS is not going to say oh was this a friend? a relative? I mean if you are writing off thousands per month, or showing occupancy with no revenue then YES that may be a red flag but it is not illegal, I hate that new Innkeepers think that the IRS is sitting "looking" for all these things, like any business you need to use common sense

 

[egoodell]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

it really depends, if you declare it as revenue then you need to pay the sales tax on it, and you would write if off to advertising. Or you can comp the room and do a G/L entry as advertising. This is YOUR house, the IRS is not going to say oh was this a friend? a relative? I mean if you are writing off thousands per month, or showing occupancy with no revenue then YES that may be a red flag but it is not illegal, I hate that new Innkeepers think that the IRS is sitting "looking" for all these things, like any business you need to use common sense
.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

it really depends, if you declare it as revenue then you need to pay the sales tax on it, and you would writeif off to advertising. Or you can comp the room and do a G/L entry as advertising. This is YOUR house, the IRS is notgoing to say oh was this a friend? a relative? I mean if you are writing off thousands per month, or showing occupancywith no revenue then YES that may be a red flag but it is not illegal, I hate that new Innkeepers think that the IRSis sitting "looking" for all these things, like any business you need to use common sense

I was told that an innkeeper was going through an audit and the fellow said, "Nice place here! Your family must visit all the time!" to which he knew to reply, "Oh not here in the B&B. We can't offer rooms to relatives". I'm not sure if you can't "officially" have family stay at all.
This is why I use an experienced CPA. I don't have the time to learn and relearn the tax laws year to year.
RIki

 

[EmptyNest]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

it really depends, if you declare it as revenue then you need to pay the sales tax on it, and you would write if off to advertising. Or you can comp the room and do a G/L entry as advertising. This is YOUR house, the IRS is not going to say oh was this a friend? a relative? I mean if you are writing off thousands per month, or showing occupancy with no revenue then YES that may be a red flag but it is not illegal, I hate that new Innkeepers think that the IRS is sitting "looking" for all these things, like any business you need to use common sense
.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

it really depends, if you declare it as revenue then you need to pay the sales tax on it, and you would writeif off to advertising. Or you can comp the room and do a G/L entry as advertising. This is YOUR house, the IRS is notgoing to say oh was this a friend? a relative? I mean if you are writing off thousands per month, or showing occupancywith no revenue then YES that may be a red flag but it is not illegal, I hate that new Innkeepers think that the IRSis sitting "looking" for all these things, like any business you need to use common sense

I was told that an innkeeper was going through an audit and the fellow said, "Nice place here! Your family must visit all the time!" to which he knew to reply, "Oh not here in the B&B. We can't offer rooms to relatives". I'm not sure if you can't "officially" have family stay at all.
This is why I use an experienced CPA. I don't have the time to learn and relearn the tax laws year to year.
RIki
.

Mine told us if you don't use the rooms 100% for guests, it can't be a full deduction. It would be like the percentage of use we took, for the kitchen, office, dining room etc etc. Everything was allotted a % for us and % for guest use.

 

[Paradise]

We said that IMMEDIATE family can stay with us in our house for free (we have a spare bedroom/bath). Also, any friends or other family members who have ever stayed with in our home before are "grandfathered" in. Everyone else is a paying guest.

 

[gillumhouse]

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

.

If you did that (I can't believe it would a be huge part of business) wouldn't it be considered advertising? Wouldn't it be the same as offering a discount to returning guests?
I'm meeting with my CPA this Friday, he'll bring me up to speed on what I can and can't do ~ obviously, I don't know too much.

CPA for B&B's? If not I can guarantee he will not know. You will know more than he knows from asking questions here. Good luck.
A discount is not advertising.
Stick with the internet. Don't waste your money elsewhere. Of if you do, come back and cry on our shoulders...we have all been there and regret wasting hard earned $ on any other advertising.

.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.
.

Where do you recommend I look for rules & reg on B&B accounting? He advises on my real estate, but I do my own taxes for that. It's not very complicated.
I mainly need advice on whether this should be my primary residence or not, since I own another home. My current business does not require licenses, so I need to get up to speed on that. Occupancy taxes, etc.

I would never attempt to do my own taxes for my B&B. There are many things you can write off but it has to be done correctly. I use a CPA and I would not use one that has no B&B experience. I don't want to pay extra, and I don't want to get audited. B&B taxes are not for the regular tax accountant. I found my CPA by asking B&Bs in my area who they were using.
RIki
.

I no longer use a CPA for my taxes. It IS VERY Important though to have a professional that KNOWS taxes. My tax person does taxes a lot more complicated than mine - oil & gas leases, stocks, etc. She went over my taxes that had been done by the CPA and then filed amended returns for me - she got me another $600 back. Wish I had used her the year I got my inheritance from my Mom - the CPA did them and I got soaked!
Ask questions - a lot of questions about taxes. Ask business people you trust. That is how I found the CPA I used - and he is a GOOD CPA, just did not understand small businesses like mine. Another thing that will impact the tax question is WHAT kind of business you will be - by that I mean sole prop? LLC? S-corp? I am a sole prop which also makes a difference tax-wise than other kinds.

 

[agoodman]

No one is "required" to do any amount of sales so if YOU want to use your rooms for your friends or family ABSOLUTELY you can do that, IF however you charge them then YES it needs to be declared ... (I was not saying you could deduct "friends" as advertising, I have done a room exchange for advertising with a company that has given me a "form" which shows exactly that in case I need it)
I first used a CPA and nearly had a heart attack after they did my 1st years taxes even though I had everything in QB. I now have a fantastic bookkeeper who is reasonable and who will do as much or as little as I need, and it cost me 1/3 in tax prep. I have gotomypc so she can sign directly onto my system to do what needs to be done, she is certified by the IRS as a representative so really consider what you need and what you don't need ..... a good book keeper can do just as well!

 

[Country Girl]

We let family stay for free, if we have availability. We also have a spare bedroom they can use if we are full. Family has always been great; respectful and helpful. Friends stay for free but they are a different story. Our friends expect to stay for free and then act like guests, wanting us to wait on them hand and foot. And no one has ever reciprocated. It would be nice just to be INVITED to their home for dinner, stay in a beautiful room, and be treated to an amazing breakfast the next day. Now my DH and I dread the phone call that starts with "Guess what, we're heading up your way for vacation...." We need to rethink the whole "friend" thing. If I were you, I'd offer them a discount but no freebies.

 

[gillumhouse]

No one is "required" to do any amount of sales so if YOU want to use your rooms for your friends or family ABSOLUTELY you can do that, IF however you charge them then YES it needs to be declared ... (I was not saying you could deduct "friends" as advertising, I have done a room exchange for advertising with a company that has given me a "form" which shows exactly that in case I need it)
I first used a CPA and nearly had a heart attack after they did my 1st years taxes even though I had everything in QB. I now have a fantastic bookkeeper who is reasonable and who will do as much or as little as I need, and it cost me 1/3 in tax prep. I have gotomypc so she can sign directly onto my system to do what needs to be done, she is certified by the IRS as a representative so really consider what you need and what you don't need ..... a good book keeper can do just as well!.

No one is "required" to do any amount of sales so if YOU want to use your rooms for your friends or family ABSOLUTELY you can do that, IF however you charge them then YES it needs to be declared ... (I was not saying you could deduct "friends" as advertising, I have done a room exchange for advertising with a company that has given me a "form" which shows exactly that in case I need it)
Yes, one can allow anyone they want to use a room free or not. No one was suggesting to not declare ALL revenue. However, I do not ever plan to have part of my revenue stream declared not part of my business because it was used free by friends or family nor able to be used for deduction purposes for that reason. I was not referring to friends or family when I refered to the advertising deductions allowable or not. I was referring to GC donations to organizations and charities.
I have stated what I was told by a very good CPA when I started business AND what was reitterated at a B & B Conference after an innkeeper challenged that ruling - AND LOST. It was part of a workshop on taxes I believe in 2007 (Catlady - wasn't that the year of the Beckley Conference of the Virginias?). I choose who I do battle with and I am not even a dust mite to the IRS. I am not taking them on - period.

 

[muirford]

No one is "required" to do any amount of sales so if YOU want to use your rooms for your friends or family ABSOLUTELY you can do that, IF however you charge them then YES it needs to be declared ... (I was not saying you could deduct "friends" as advertising, I have done a room exchange for advertising with a company that has given me a "form" which shows exactly that in case I need it)
I first used a CPA and nearly had a heart attack after they did my 1st years taxes even though I had everything in QB. I now have a fantastic bookkeeper who is reasonable and who will do as much or as little as I need, and it cost me 1/3 in tax prep. I have gotomypc so she can sign directly onto my system to do what needs to be done, she is certified by the IRS as a representative so really consider what you need and what you don't need ..... a good book keeper can do just as well!.

No one is "required" to do any amount of sales so if YOU want to use your rooms for your friends or family ABSOLUTELY you can do that, IF however you charge them then YES it needs to be declared ... (I was not saying you could deduct "friends" as advertising, I have done a room exchange for advertising with a company that has given me a "form" which shows exactly that in case I need it)
Yes, one can allow anyone they want to use a room free or not. No one was suggesting to not declare ALL revenue. However, I do not ever plan to have part of my revenue stream declared not part of my business because it was used free by friends or family nor able to be used for deduction purposes for that reason. I was not referring to friends or family when I refered to the advertising deductions allowable or not. I was referring to GC donations to organizations and charities.
I have stated what I was told by a very good CPA when I started business AND what was reitterated at a B & B Conference after an innkeeper challenged that ruling - AND LOST. It was part of a workshop on taxes I believe in 2007 (Catlady - wasn't that the year of the Beckley Conference of the Virginias?). I choose who I do battle with and I am not even a dust mite to the IRS. I am not taking them on - period.
.

I have stated what I was told by a very good CPA when I started business AND what was reitterated at a B & B Conference after an innkeeper challenged that ruling - AND LOST. It was part of a workshop on taxes I believe in 2007 (Catlady - wasn't that the year of the Beckley Conference of the Virginias?)

It was at that conference, and by an accountant whose firm specializes in B&B accounting. He said that the IRS ruled that guest rooms are like a home office. If you use it for ANY personal use, it is excluded as a business deduction. He is a well-respected CPA used by several B&B consulting firms in the northeast.

 

[Gingerbread Latte]

Thanks for the advice. I'm compiling my list of questions for tomorrow. I live in a small town with quite a few B&Bs. There's a good chance his firm does their accounting too. I will definitely ask.
How are comp'ed nights figured as far as occupancy tax goes? If you have no revenue, do you still pay the bed tax?

 

[gillumhouse]

Thanks for the advice. I'm compiling my list of questions for tomorrow. I live in a small town with quite a few B&Bs. There's a good chance his firm does their accounting too. I will definitely ask.
How are comp'ed nights figured as far as occupancy tax goes? If you have no revenue, do you still pay the bed tax?.

I cannot answer that as I do not have bedtax. However. logic says x% of nothing is nothing. Of couse, government and logic cannot be used in the same sentence.....

 

[Joey Camb]

Thanks for the advice. I'm compiling my list of questions for tomorrow. I live in a small town with quite a few B&Bs. There's a good chance his firm does their accounting too. I will definitely ask.
How are comp'ed nights figured as far as occupancy tax goes? If you have no revenue, do you still pay the bed tax?.

I think the main point here is real true friends don't mooch and ask sensible questions like when is it off peak etc or when are you quiet so I can visit and not interfear with your bookings and you will have more time for us. We have some friends of my mum's who visit now and again but when they come they do the vacuming bring evening meal with them for all of us and cook it. We have in our heads people who get a free stay (ie your mum) and people for whom they have to pay or for whom we are full. Some people have this attitude of "oh this is on we want to go to it and stay so we can stay with them" well duh if that event is on we want to have paying customers in! DUH.
I am a bit luckier as growing up and working in hotels most of my friends have been in the industry at some point or still are so they know the drill. All phone calls start with "are you busy?" and if I say yes they hang up and ring back later. In the UK we only pay one type of business tax called VAT (Value Added Tax) and you pay it on just about anything you buy except food. We can choose to pay it at 10% of turnover (ie dead easy to work out) or you have to add up the vat on everything you have bought for a quarter then claim it back and then pay another figure (i forget exactly) we work it out both ways each month to see if it is worth changing but with the 10% way it is easier and at the moment we are about $400 a month better off so we are sticking with it.

 

[Alibi Ike]

We let family stay for free, if we have availability. We also have a spare bedroom they can use if we are full. Family has always been great; respectful and helpful. Friends stay for free but they are a different story. Our friends expect to stay for free and then act like guests, wanting us to wait on them hand and foot. And no one has ever reciprocated. It would be nice just to be INVITED to their home for dinner, stay in a beautiful room, and be treated to an amazing breakfast the next day. Now my DH and I dread the phone call that starts with "Guess what, we're heading up your way for vacation...." We need to rethink the whole "friend" thing. If I were you, I'd offer them a discount but no freebies..

Friends stay for free but they are a different story. Our friends expect to stay for free and then act like guests, wanting us to wait on them hand and foot. And no one has ever reciprocated.
Have a friends and family plan. Give them a discount but not free stays. If they're on vacation and you're still working, they're not there to visit you. All of my friends pay to stay. And they don't get off lightly. They pay off season rates in season, which is when they all want to come anyway. That's about 20% off. Family can stay in my spare bedroom.

 

[agoodman]

if it is friends staying in the room then you would not have to pay occ tax, if it's a comped room (business purposes, exchange for advertising etc "technically" the bed is occupied and there is an "exchange" of goods and services so you probably should have to pay the hotel/bed tax but this would range from city to city / county so check with your local auth
I err on the side of caution with this but at the same time I am not going to overpay
In my county stays of 10 nights or longer are hotel tax exempt (no form needed) I just declare it as tax exempt when I pay my hotel tax

 

[Tom]

GL, good new innkeeper question. I asked the same when I started and got the usual diverse (polite term) responses here. What I decided, and what has worked out is ...
Family visits rarely, but generally stays in non-inn spaces, to leave open room sales. A house party of friends or family that we all invite is a strain on us, but fun. They recognize that and put money in for expenses, food, housekeeping.
Old friends who want to come by on a trip for a visit usually pay $40 for a night or two, covers direct expense. They are always glad to do it as it solves a problem of not wanting to be freeloaders. These are (discounted) sales and we pay the room tax.
Business acquaintances, neighbors, etc. I thought I might offer 20% off, but in truth, these folk are more demanding that regular guests, so now it is 10% off, the same as a block booking (with a deposit).
Then there are the freeloaders. Avoid them. There are "media" types - anyone with a blog is media nowadays - looking for comp rooms. Sometimes you will get a mention, rarely a customer. People want you to donate a room night for a charity auction. If you like the charity, fine, but no potential customers will see ever it.
Anyone who said "I am your friend, give me a free night and I will tell my friends" should be asked "If you are my friend, why wouldn't you want to tell all your friends anyway?"
You will also get callers you don't know complaining about paying full price. Steel your nerves. There are people who can't stand to pay full price for a valuable experience; let them go somewhere else.
Consider the logic: We had a customer call for a room when everything in town was booked. We had a cancellation: room is $165/night for two. She said her Hilton VIP card would get her a room for $100, but the Hilton was full, so would we match that price? (We know the rack rate at the Hilton for that weekend was $289, and no specials accepted). No, Our rate is $165, a good deal for a 420 s.f. king with fireplace. Too much. Later she calls back and now she is mad, "do you know I have spent over an hour on the internet and phone and I can't find a place cheaper than you!" She booked at the full rate; she came for two nights and grudgingly enjoyed the wine, appetizers, the full breakfast. We had only been open a few months then. Now, I am more inclined to tell guests who complain about the price that they should keep looking. Grumpy, cheap people are a drain on the spirit.
It is a mindset: hospitality is a business. B&B is a particularly personal busines, but it is still a business. You set fair rates, charge them fairly. You are not gouging people, you are offering them a choice thay can accept or decline. For them to insist that your B&B experience is not worth your rates is insulting you. You will get plenty of guests who understand this and will be your good customers.