How to determine c/s (self employed)

[getlucky]

What is the name of your state (only U.S. law)? TX

I have owned my own one man used car lot operation for 6 years now. I had some very difficult years 09, 10 not much income, my last c/s review was in 08 and was based on 07, 08 profits, although my income declined i did not pursue modification. I am now being taken to court to increase c/s amount its been three years. 2011 has been a much better year for me I applied for a finance lisc and began in house financing my question is will my c/s amount be based on total profit, accounts recievables, or actual monies recieved year to date?

 

[TheGeekess]

What is the name of your state (only U.S. law)? TX

I have owned my own one man used car lot operation for 6 years now. I had some very difficult years 09, 10 not much income, my last c/s review was in 08 and was based on 07, 08 profits, although my income declined i did not pursue modification. I am now being taken to court to increase c/s amount its been three years. 2011 has been a much better year for me I applied for a finance lisc and began in house financing my question is will my c/s amount be based on total profit, accounts recievables, or actual monies recieved year to date?

https://www.oag.state.tx.us/cs/parents/mod_guide.shtml

FAMILY CODE  CHAPTER 154. CHILD SUPPORT

 

[mistoffolees]

What is the name of your state (only U.S. law)? TX

I have owned my own one man used car lot operation for 6 years now. I had some very difficult years 09, 10 not much income, my last c/s review was in 08 and was based on 07, 08 profits, although my income declined i did not pursue modification. I am now being taken to court to increase c/s amount its been three years. 2011 has been a much better year for me I applied for a finance lisc and began in house financing my question is will my c/s amount be based on total profit, accounts recievables, or actual monies recieved year to date?

How is the business incorporated? Are you the sole owner? The answer to those will help to answer your specific question.

As to the year, most courts want to look at the most recent year. If I were you, though, I would explain to the court that your business is very cyclical and ask the court to consider a 2 or 3 year average.

 

[getlucky]

Sole prop, single owner and only employee. Although if business continues to grow i may have to look at different business structure options.

 

[getlucky]

Let me see if i can explain. ex: purchased a car for 2500.00 spent 500.00 in reconditioning and repairs. sell for 5000.00 I get 1000.00 down payment, my total profit is 2000.00 payment will be 150.00 a month. it will take approximately 13 months to recoup initial investment then actual profit begins for the remainder of the loan. So although the sale was done in 2011 for example i will not be making money until 2012. Am i making any sense?

 

[nextwife]

Let me see if i can explain. ex: purchased a car for 2500.00 spent 500.00 in reconditioning and repairs. sell for 5000.00 I get 1000.00 down payment, my total profit is 2000.00 payment will be 150.00 a month. it will take approximately 13 months to recoup initial investment then actual profit begins for the remainder of the loan. So although the sale was done in 2011 for example i will not be making money until 2012. Am i making any sense?

Recievables are relevant. Only income RECIEVED is counted Future income isn't income until you recieve it. Expenses also count.

 

[Proserpina]

Recievables are relevant. Only income RECIEVED is counted Future income isn't income until you recieve it. Expenses also count.

"Receive".

Sorry. Pet peeve.

 

[mistoffolees]

Recievables are relevant. Only income RECIEVED is counted Future income isn't income until you recieve it. Expenses also count.

Depends on the accounting system being used.

If they're operating on a cash basis, that's correct. OTOH, if they're operating on an accrual basis, then contracts for future income may affect current year earnings.

I would assume that they're operating on a cash basis, so it's probably not an issue.

However, since he's operating as a sole proprietor, it's easy. Whatever number your accountant puts down as 'net income' is your income for both tax purposes and child support purposes.