Limos.com Limo-Forum Limo Forum - Limousine Industry Discussion, News, Business GENERAL LIMOUSINE TOPICS General Limousine Industry Topics Gas v/s Business
Limo-Forum Limo Forum - Limousine Industry Discussion, News, Business GENERAL LIMOUSINE TOPICS General Limousine Industry Topics Gas v/s Business|
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Participant Location: Dc Metro
Registered: March 02, 2008
Posts: 42
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Posted
I am looking to get into the business in the next few months and am trying to get a feel of what the market is looking like on the east coast.
With the gas expected to be between 4-5 bucks, how is the limo business effected. I can simply take it as a positive..but what are the consumers and business owners saying.? |
Limo Protege Location: Crown Point, Indiana
Registered: May 02, 2008
Posts: 102
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Posted
When fuel costs double in one year-everyone/everything is effected. I drive a dump truck during the day-just delivered a load of bad wheat Friday night for a farmer. He didn't say what he was using it for, but I'd imagine it was feed for hogs. They can't even afford good feed because of ethanol. Can't wait to see what happens when our healthcare is socialized. Time to drill.
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Limo God Location: Lupton mich USA
Registered: May 30, 2002
Posts: 2256
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Posted
Getting back to the orginal question, The cost of Fuel is just the cost of doing business. If you are not regulated by any state or local government as to what you can charge (like the Taxi industry) you just figure it into your base rate. It would be the same as if your insurance went from $5.000.00 a year to $10.000.00 a year, you just pass it on to the Customer. Some companies may have a lot less overhead than you do and have that advantage to under cut you but that too is the risk you take when you go into business.
Some runs require a lot of fuel, (airports for example) while others require very little, (weddings for example) so sometimes you eat the Bear and some times the Bear eats you. It all evens out in the end. David E. Merrill |
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Limo Protege Location: Crown Point, Indiana
Registered: May 02, 2008
Posts: 102
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Posted
Wasn't there a post on this site with a link about some operators in Pittsburgh suing the IRS and winning?
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Limo Protege Location: Kalispell, Montana USA
Registered: October 29, 2003
Posts: 167
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Posted
Sadly, "Right" and "Legal" are two VERY different things.
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Limo God Location: Lupton mich USA
Registered: May 30, 2002
Posts: 2256
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Posted
Wade: I think I remember something about this a while back. Like I said, they qualify under the "Safe Harbor" provision of the Independent Contractor rules. Too bad we can't apply this rule to everything in life. Like if evey one stopped paying their property taxes, maybe the Government would just say well that's OK because every one is doing it so no more property taxes. What a wonderful thing, our Government. LOL
David E. Merrill |
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Limo God Location: Baton Rouge, LA USA
Registered: October 16, 2000
Posts: 1674
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Posted
Dave some very big Chicago operators won a huge case against the IRS years ago about this. It is standard practice in Chicago.
Wade Randolph |
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Limo God Location: Lupton mich USA
Registered: May 30, 2002
Posts: 2256
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Posted
Mr. Frugality: I hear what you are saying and like I said because everyone is doing it, you would probably be able to hide in the safe harbor provision of the rules. So yes what you are doing is in fact legal I was in the Taxi business for several years, I went through the SS 8 process. ( I filed my own just to see if what I was doing was correct) While working for a Limo service in the Detroit area I filed one on a company just to see if what he was telling me was true. Turned out the IRS came back with a ruling aganist that company even though that company was paying my LLC and not me personally for my service. Because they did not lease the vehicle to me and they were paying me hourly and they where telling me what to do and how to do it, because I was not free to use their vehicle to do runs for other companies, the IRS said I was an Employee and that company was responsible to pay all back taxes and workers comp.
I know I will probably never work in the Detroit area again because I am too honest (I even reported all my tips to one employer (the legal way)and he was so pissed that he had to pay taxes on my tips that he just stopped calling me and was telling his colleagues I was an Spy for the IRS). When I was in the Limo business, I paid all my people as Employees and I agree I would have loved to not have to pay an additional 20 plus % in unnecessary taxes but I did and now that I am no longer in the business (Michigan economy helped kill it) I don't have to worry about anyone coming knocking saying I owe them money. Had an MRI a few years back for Headaches, turned out every thing was fine in my Head, just a lot of stress. Learned how to just relax and go along with the program and the Head Aches went away. Perhaps you should send a copy of how you operation works to the NLA so that they can post it on their web site as a way that other operators can do it and not have the IRS, not to mention various State agencies knocking on their door and costing them several thousands of dollars in unnecessary taxes they are currently paying to the Goverment. Michael Birmingham, do you have an opinion on this? David E. Merrill |
Limo Protege Location: Chicagoland Suburbs
Registered: May 19, 2008
Posts: 133
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Posted
There is nothing illegal going on. We don't force the driver to sign the lease agreement, the agreement clearly states that the driver is responsible for repoting all income earned from us. The car's are maintained/registered/insured to us, not driver, driver is added to insurance policy, driver is insured, legal. It's a basic lease agreement similiar to the one's cab companies around here give to their driver's when leasing out the cab. It's one page, front/back, includes all the legal goodies. Another lease agreement (higher commision, up to 70%) we offer is for driver's with their own car/insurance. Chicago run's on IC's...from trucker's (the union's were hit hardest from IC trucker's), to the city "privatizing" contracts to loacl construction firm's whose worker's are IC's, taxi (city cabbies pay about $60-70/day/+gas to lease the cab), limo, newspaper delivery, pizza delivery (popular family owned rest. with 14 rest. around here can hire 100 driver's without spending a penny by having them sign an IC agreement/giving them the delivery charge+tip, all legal. Most companies like us write up a draft, find attorney that specializes in Corporate Contract's, have the firm-attorney include/exclude/finalize/approve/notorize, around here it's no problem to find a firm-attorney to write one up for the specific line of work one is in.
I am not one to cheat anyone, nor do I need to be accused of it here, I have no gypsy in my blood. And David Merrill, I would like to see the result's of a brain MRI if it were done to you. If you have the nerve, have one done on yourself, see what the result's have to say about your operation...touche' A true leader seeks the leader in others |
Limo Protege Location: Sunny Florida
Registered: June 19, 2004
Posts: 117
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Posted
LMAO......  |
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Limo God Location: Lupton mich USA
Registered: May 30, 2002
Posts: 2256
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Posted
Mr. frugality: I would sure like to see the results of an SS 8 if it were filed on you. Even better, if you have the nerve, file one on yourself to see what the IRS has to say about your operation. You are probably able to pull it off under "safe Harbor" just because everyone else is doing it but on its own, I am sure the IRS would come a knocking if you did have a disgruntled Employee er' Independent Contractor (yeah right)
David E. Merrill |
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Limo Protege Location: Hanover, PA
Registered: May 25, 2007
Posts: 150
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Posted
These are the costs associated with running a business. You should probably think about the practices and maybe change your price structuring before the IRS comes a-knockin... They just cracked down on Maryland limousine companies last year.. If you lease the vehicles to the drivers, then who actually foots the bill for the insurance, you or the driver? If I was leasing a car from a company, and my name being on it (titling for leasing), I would be responsible for any insurance, correct? Plus responsiblity lies with whoever drives it/leases it if something happens to the client, right? The limousine industry is a tough market, and it is harder now than ever (rising fuel costs, greater insurance rates, etc.), but trying to cut overhead and skirting responsibility for employees/IC's for taxes, workers comp, etc. is just plain wrong.. Nicole Paris An Occasion To Remember, Inc. |
Participant Location: Temecula, CA
Registered: January 18, 2008
Posts: 40
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Posted
I do my own driving so it hasn't been an issue for me yet, but I plan on having a regular employee come the new year and am going to do everything the right/legal way, but there are markets where about every company pays IC, which lets them price lower than companies that don't, so even companies that want to do things right may feel their hand is forced and go the IC route, it probably only takes a couple months of making little to no profit despite having work to make the IC option very attractive.
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Limo Protege Location: Kalispell, Montana USA
Registered: October 29, 2003
Posts: 167
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Posted
Yes, it is a challenge to make a profit while paying overhead, payroll, workman's compensation, state and federal taxes. However, this is the right thing to do for you, your employees and your community. If others are not following the rules then they should be called on it. If the rules should be changed, then get involved at the political level. Doing the wrong thing is NEVER right. Allowing things to continue to be wrong because it is easier is wrong, too. Too many people today are like water, choosing the easiest path to get somewhere. This methodology leads us all steadily downhill.
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Limo Protege Location: Chicagoland Suburbs
Registered: May 19, 2008
Posts: 133
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Posted
Response to limonewbie:
We pay for insurance, not driver's. Driver's don't pay a lease, but sign a lease AGREEMENT. Basically we pay driver's 50% commision (which is 5-10% more than our competitor's pay out) plus tip's. Driver's are responsible for filing taxes on commision's they recieve from us. We pay taxes on the 50% commision that we make. Our insurance company does not require a driver to be an employee. All we do is call them with new driver name/license#, wait for call back (within a week as they check MVR), approving / adding driver on coverage. Main reason: majority of companies around here that do this is for SURVIVAL. A limo company will have a hard time making a profit with overhead cost's, payroll, workman's compensation, health insurance, state and fed taxes. A true leader seeks the leader in others |
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Limo Protege Location: Hanover, PA
Registered: May 25, 2007
Posts: 150
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Posted
So, seeing that you make your drivers pay fuel, and they are IC's, hmmmm... I suppose you lease the vehicles to them as well? They have to maintain the insurance? Not a lot of members like having their drivers' as IC's, it's a cheap-skate way out of having to pay taxes, as well as "dumping" on the drivers. No wonder there are such high turn-over rates up there. I wouldn't expect my drivers to pay for fuel, especially when that is the cost of doing business, for myself, not my employees! (er, in your case, IC's). Nicole Paris An Occasion To Remember, Inc. |
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Limo Protege Location: Chicagoland Suburbs
Registered: May 19, 2008
Posts: 133
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Posted
It effect's mainly the limo companies that focus on local/residential client's that take limo's to airport's when going on vacation/trip's. Well, people now are penny-pushing and taking less vacation's, etc... If the company has mainly corporate client's, the company doesn't really feel the effect's of gas prices rising, if driver's are independent contractor's. Well you can hire a driver as an independent contractor (that's what most limo companies around here do including us). Give the driver a full tank to start and require a full tank when returned. The driver pay's for the gas. Around here, driver's expect their tip from an airport run to go for gas. Since the majority of limo companies driver's around here are ind. contractor's, the driver's really don't have another company/choice to run too, unless companies that pay for the gas are hiring, which is unlikely since the turn-over rate is low.
I don't charge a "fuel surcharge", I just raised rate's with simple advertising techniques, example: "CURRENT RATES FOR SUMMER/FALL 2008" or one could use "LOCK-IN CURRENT RATE WITH RESERVATION BEFORE RATE'S INCREASE!!" or "NO FUEL-SURCHARGE HERE!!! RATES GUARANTEED FOR RESERVATION'S MADE BEFORE XX/XX/XXXX!!!" But I was prepared and took a gamble by raising all our rates 15-20% two month's ago when wall street forecaster's predicted this would happen. Yes, we lost a few regular bargain hunter's, and gained new client's respectively. The task of changing rates on ALL 90 suburban communities on our website we serve was tedius to say the least. And then making sure all ad's in circulation with old price's were removed was time consuming, but worth it. Our driver's are smiling again  To all owner's with driver's: One of the last thing's you want, if you hire a driver(s) (GET TO KNOW YOUR DRIVER'S!!! TAKE THE DRIVER THAT YOUR NOT SURE OF OUT FOR A BEER OR LUNCH!!!), is a disgruntled driver angry of rate's not being raised, they might not show up tomorrow or they might tear the car up, you know race the engine-aim for every pot-hole-slam on brakes, or a few sugar cubes in engine, etc... So point is it can cost one more in maintenance/repair's than if one raised rates and kept driver's happy. I mainly say this because there's more quantity than quality around here when it comes to driver's. I remember when starting, we had a sign out that said "now hiring". Wow, we must of had everyone under the sun come from the woodwork. Car's were missing, eventially retrieved via gps satellite. Car's would come back parked for next driver with dent's on side stretch panel's with nobody knowing what happened, oh and ticket's that driver's would rack-up on our plate's, that was time consuming mickey-mouse tedious paperwork forwarding a copy of the lease agreement back so driver would be responsible and we would be clear. Driver's not courteous. Filling up with cheap gas from no-name station's. Let's see, limo impounded because driver wanted to hustle OUR car downtown Chicago to solicit customer's at Navy Pier when empty during a wedding run, $750 to get limo out and a mickey mouse ticket that was dismissed (the city just want's the $$!!) driver bailed, of course. And the list goes on. Point: now we only hire from word of mouth/friend's/family. Lower turn-over rate, lower maintenance, more repeat customer's. A true leader seeks the leader in others |
Shake Master Location: LA,CA
Registered: May 31, 2001
Posts: 1429
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Posted
Cliff why are you not just raising your base hourly rate 5% and 10% respectively? |
"Provider of World Class Service and Luxury" Location: Portland, Oregon
Registered: May 05, 2006
Posts: 208
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Posted
Move to central Florida and open a service. I understand there isn't any competition down there to speak of.[/QUOTE]
Your not well informed. There are plenty of business's in central Florida. now there may be a few smaller citys which have few but over all Florida has its share along with it's share of regulations stricter than some other states. As to the earlier question Fuel now over $4.00 a gallon in most states or close is hurting companies across the board. Either pass the costs along with a fuel surcharge or errode the small profits as they are you only have two choices. i have been charging 5% fuel surcharge for over a year now and expect to go to 10% next week. Consumers understand and I have had no one really cry foul over the surcharge most understand it is simply a part of doing business with prices as high as they are. |
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Limo Protege Registered: September 22, 2007
Posts: 65
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Posted
Move to central Florida and open a service. I understand there isn't any competition down there to speak of. |
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