Forum: HoseHeads Sprint Car General Forum (go)
Moderators: dirtonly  /  dmantx  /  hosehead

I'm looking for some advice as to the fiscal operation of a racing team. I own and drive an IMCA hobbystock (I know, I know.... Don't hate me. It's all I can afford for now. I have sprint car plans for the future.). I'm looking to seperate the racing finances from my personal finances, atleast on paper. I've considered creating a seperate checking account as well as an LLC. I figure I should put the car and trailer in the name of the LLC. I know there is also a seperate tax component to this, but I'm a little fuzzy as to how that would work. I'm also involved with safety crew work so I was hoping my LLC might give me some liability protection there as well. With a checking account and LLC, sponsors can write the check to the LLC as opposed to me. I would think that would be more appealing to a potential sponsor.

Obviously, my operation pales in comparison to many sprint car teams. But I'd still like to make this an organized endeavor. Anyone have any thoughts on this topic???

Ben T

"If you're gonna run the bottom, you might as well get 
a real job."

My best bet would to beg info from Mark Burch. 1m car. I know he is on FB and on here sometimes. You are asking for info that most people pay an accountant for, but he might help.

It seems like breaking the race team into a seperate entity like an LLC may be a beneficial idea but you'd probably be best off talking to a CPA about that, it may cost a few bucks but getting it done the right way in the end would be worth it.

As far as some liability coverage as a safety worker by starting a LLC for your race team, I really don't think thats going to accomplish what your thinking. But heres my thought on the breakdown of that. As far as your liability if your on a safety crew, if something did happen and someone was hurt, if they wanted to sue you personally they would need to prove that you were actually negligent in your actions, meaning if your out there doing what your trained to do, they couldn't prove that you were negligent. Now if you were in the infield of the track drunk and someones car started on fire and you went over and opened the cap on the fuel tank instead of trying to get the guy out or put out the fire, well thats negligence(I know its a pretty exaggerated ex.). I don't know if your on a volunteer safety crew or if your paid but if your paid the entity that pays you has liability insurance or should so that is who the other party would actually pursue. If you volunteer, I would say you would of had to do my example above for a judge or jury to actually find you responsible personally, as your volunteering to help with safety at a sporting event that the participants know is dangerous and they can be hurt. In a case of a driver suing for injuries they would be suing the track or the safety entity. If you do everything you can with the training you've been given your all good. And Kudo's for being on the safety crew.

Also, don't apologize for running a hobbystock, if you want to race and thats what you can afford right now, then great for you. Alot of guys get in over their heads in higher classes cause their doing it for the looks and don't realize their checkbook can't afford it. At the end of the night you've had just as much if not more fun than the guys in the late models and sprints and mods.

http://gph.is/XMLGff

I seperate my racing stuff on paper at end of year myself as a soul proprietership. Why in the world would u want to send the time and or money to setup an LLC for racing??? I dont think any track or other racer is gong to sue you. LOL. I have an LLC for a Bussiness I run outside of racing just so i dont get sued and loss any personal assets. Just use a good tax prepairer at years end. Wont cost much at all, and they will know what to do.

I would have to agree with Tom on this topic, I treat my racing as a hobbie , but, I was a bit displease when a tabulated amount of winnings went unreported to uncle sam , eventually I paid $200 in taxes to Uncle Sam on $1200 worth of winnings, Appauled by the taxation of (relief I call it) winningsaka earnings i contacted a fellow driver that is a CPA to see what the best avenue was for me to pursue so this didnt happen again, As a soul propieter a section is claimed as Loss with tallied fuel,mileage,fees ect , sponsorship dollars have to be carefully negotiated , again im no CPA by no means i simply handed my trouble to someone that races himself and does this line of work , I gess im just throwing my 2 cents in on this type of topic, frustrating but also interesting, racing is a buisness for some and difficult for the IRS to realize its still a hobby for me. dont be ashamed of the stock car indevor, keep your eye on the sprint car, hone your driving skills and be prepared for a whole different animal when you do step up , I personally, and three of my fellow drivers, came from a IMCA type car, mods and one hobby driver,, nothing wrong with that, dont worry about wins, stay competitive and try keeping your fenders and doors unscratched, youll be ready for open wheels in no time ..

Mark Burch is one of the 'good guys' in racing and I think he would at least help a fellow racer a little bit which could turn out to be quite a bit on your end. Scroll back through this forum and I am sure you could find him and send a message or send him a private one on Facebook. He's at the top of the class in both endeavours. Good luck with your aspirations, we all started somewhere.....

I hear that Mike started with a Kodak Box Brownie, right?

Actually started with a video camera, but since there already was a Greg Stephens and a Grove Hill and I'm not sure back then if there was a Jeff Christensen or Dean Mills but that pretty much covers the old dogs I remember....

For over 10 years we ran our 410 deal as a hobby & advertising for our main business. Several years ago we (on the advise of our atty & our CPA & our own intuition) opened an LLC (minimal cost) to run the racing. The expenditures for a good 410 team have become so substantial that it's hard to write them off as hobby or advertising. Even if you are buying used motors at $20-25,000 a hit, the cost of tires to run 2 nights a week are hitting at $30,000+ . A good CPA can assist with the taxes and if you are committed to weekly racing program this is probably the best way to go.

And, YES, there are liability issues that should be concerned about as a team owner. Don't let anyone tell you otherwise. In a sue happy society, your driver, team members, sponsors, friends, other teams, etc may not be so inclined to sue you, but their insurance carriers won't hesitate. Insurance premiums are minimal compared to what the results could be.

Be smart, talk to professionals. You can do what we did and start out as a hobby and make the necessary changes as your involvement grows.