How are you billed for non-residential electricity?

[skipperbrown]

How is the property zoned? If it's ag, maybe you qualify for an exemption? Something to check out.

 

[dnw64]

When I had my shop built, I inquired with the electrical company about putting a second meter for running my business out of there. Electrician came out, assessed it all, and just shook his head and told me to just run a sub panel so I went along with his suggestion. My accountant said it was smart to do because I can have the business pay for electrical for BOTH residential & business since it cannot be accurately calculated. Same goes for internet, gas, & trash.

I would suggest you get a new accountant. I can guarantee that if you get audited that the IRS will say that you should be reimbursing the business for a reasonable and customary amount.

Similar to that, our business is exempt from sales tax on any energy used in manufacturing. This includes propane, fuel oil and electricity. There is no way to measure it accurately - I just guess and claim it.

 

[ustmd]

We are on Bluebonnet in Travis County and get charged the same rate for both meters on the property (one for the house/one for the shop/barn).

 

[Jchonline]

The properties that the barn and house are on, are separate properties. Taxed separately, different addresses. It's not a 2nd meter on the same property. The only thing they have in common is the owner (me). If I'm the piece of their convoluted puzzle that qualifies this as a justifiable rape, then I'll remove myself from the equation and put the workshop lot in my wife's name. But I don't see how I could be the cause. What if I owned a vacation house down the road near the ocean? Or a rent house in town? Does owning two houses automatically qualify me for a beatdown?

Sorry, I'm sure my frustration is showing and it's not directed at you; I hope it doesn't seem that way.

I may yet run that 400ft trench. I wonder if I'll be billed the $200 early termination fee that I agreed to in writing, or if they'll go ahead and violate me with a hot poker to the tune of 10x that amount since I'm incontestably a commercial business.

And on that note, so what if I was a business? What if I was a retired man on a fixed income and I used that shop for woodworking, turning pens and making hand-carved plaques for sale at the county fair via an LLC which operates at a net loss and I'm barely able to feed my cat? Does the mere fact that I'm engaged in an entrepreneurial venture earn me the ravaging of an electrical distribution monopoly? What about being a business makes it cost more for anyone but me? Unless I'm demanding 3 phase power and consuming megawatts of it at a bad power factor I don't understand the distinction. I mean, my shop, whether used for business purposes or not, draws less power from the grid than probably any/every residential home on this road.

If it is a business (which is a great idea in TX by the way, because you dont pay taxes on the first million or so of revenue a year) it all turns to an expense. A business has income, and it has expenses. At the end of the year it is simple all income minus all expenses and that is what you pay taxes on (or get refunds on if negative). As a LLC, the taxes pass directly to your personal 1040.

These are general statements, it does get more complex. See a good small business accountant and see if it makes sense for you. However regarding the electricity...that would be a business expense. So if you earned $1000 a year selling sheep and spent $1000 a year on electricity...your net income is 0 and you would pay no taxes (in this simple example).

 

[Aquamoose]

I would suggest you get a new accountant. I can guarantee that if you get audited that the IRS will say that you should be reimbursing the business for a reasonable and customary amount.

My accountant reassured me that it’s legal. She used to work for them.

 

[dnw64]

My accountant reassured me that it’s legal. She used to work for them.

Yeah, well I bet if you ask 10 IRS agents a question, you get 12 different answers.

It's your life. Ultimately, whatever you do is on your shoulders. Your lawyer/accountant/advisor has no obligation to the IRS.

 

[Aquamoose]

Your lawyer/accountant/advisor has no obligation to the IRS.

Not true if proper paperwork is filed, complete with a legitimate EIN. Liability falls on them if an error is made. Happened once with an old accountant and the IRS came after him so he had to fix the error & pay the fines. Not a penny from me.

 

[GLyford]

It seems, the furnace, due to "peak demand" had doubled the electric bill for the business that month,,
This was a business with 2,400 employees,, and a LOT of other machinery,,,

After that,, the furnace could only be powered up certain hours of the day,,, :confused2:

I have heard of corporations that would hold orders for 6 months or so, then run all the orders in that one month because once the furnace (or whatever) was on, that was the rate for the month so it made sense to run flat out until the next billing cycle.

 

[mikester]

I'll try to keep the story short... I had a 30'x30' workshop built on the lot next to my house. It is 60ft from a transformer pole so I opted to install a meter can on it and let the power company worry about getting power to it because to feed it from my house service would require 400ft worth trenching and burying 4/0 cable.

It was 6 months ago I had power put to it and my bills have been about $45/mo. $30 of that has been usage and the other $15 has been TDU charges. This month's bill reflected the same amount of usage charge, but TDU charges went up to $109.

I called my provider (TXU Energy) to ask what was up and they said that the TDU (Centerpoint) reclassified my account from a residential account to a business account. I had to get someone from centerpoint to come inspect and verify there was no business operating at the address. The tech who came agreed that what had happened was silly and would be resolved.

I called just now to follow up and was told that the tech had gone out and verified that it was a business. After much back and forth and mixing of ambiguous terms, apparently they don't (or won't in my case) make any distinction between a "non-residential" installation and a "commercial" installation. Because my building doesn't have a bathroom and a kitchen, I must now pay 3x for electricity.

My question is: is this normal? Has anyone here had similar problems/experience? If so, how did you navigate the issue? If you have a 2nd meter for an uninhabited building, how is it billed? As a business or what? Should I shove a toilet, camp stove, and a cot in there and call it a residence?

Around here you are billed commercial based on the size of your transformer. If you have less than 200A you are considered residential. It's the size of your spigot that counts ;-)

 

[dnw64]

Around here you are billed commercial based on the size of your transformer. If you have less than 200A you are considered residential. It's the size of your spigot that counts ;-)

200A and the voltage doesn't matter? Ramp it up!