1 reply to this topic

[kjack]

I purchased a route with 2 machines for $1000 ($500 a piece). I was referred to this Guy i purchased them from thru a reputable friend.  When i asked for financial statements,rental agreements with locations,or tax records He did not provide. I thought I would at least take a look at the routes and machines. I met up with Him to do this and we saw three machines at three locations. The first was an apartment complex laundramat and this was the ONLY machine there. I was impressed with the fact that it was almost empty so we had product and refilled it. Then He took out $120.00 from the machine. Then He introduced Me to the Apt Manager. She was nice and the first thing She asked Me was " How often will You be filling the machines?" So i could see that even though no paperwork was in place there was a great repoir between the mgr and the guy who i was purchasing the route from. The warehouse where the other machine was was the same way but even more traffic 120 employees and again the only machine there!!! This location was over $300 in the machine... So i said to hell with it and purchased them both... i created an agreement and got them notarized but i do have questions still.  Would i need an LLC for these two locations and how will i set this up on taxes? Is this common place in this industry for routes to be sold or attempt to be sold with no paper work? It appears to Me that the guy i purchased them from got the locations from a previous location machine vendor and set up these accounts and did a great job maintaining them and the guy who i purchased them from did the same thing....My question to the group is also should i even set this up to get taxed because i do not have any agreement other than what i have and i dont have any agreement on paper with the locations...

[AZVendor]

You're worrying about little things.  The government isn't out looking for you so don't panic.  It's very common for people in vending to not have records as most people in vending aren't very sophisticated.  They just want to pull money out and spend it without a plan as to how they should restock the machine.  Just to clarify this, you didn't purchase a route, you purchased two machines.  You can say you have two locations but you don't have a route yet.  Sorry, it's just my vendor-speak.

 

It's good that you met the seller and the location management but you might have been misled and you didn't pick up on the red flag that he hadn't bothered to restock the machines for a long time.  What you saw in money collected and product restocked doesn't tell you anything about how long it had been since it was last serviced.  He doesn't have records, remember, so there's no proof of anything you have been told.  You also didn't say what type of machines these are.  You may have just bought crappy imported machines with no support from a factory.  Don't believe what you have been told until you can verify it, no matter what it was.  The only machines that make sense to operate as single machines is soda machines - whether cans or bottles.  Combo machines require too frequent service to make appreciable profit and snack-only machines, and only two of them, will eat you up in stales so you won't make a profit. 

 

One other thing that can throw it all out the window is whether you have good (for you) prices in the machines and whether you're required to pay any commission to the locations you have.  I can tell you that it's the rare apartment complex that doesn't expect a commission from vending.  I'll bet the seller didn't say anything about that, did he?  If the subject wasn't brought up then you don't want to be the first to bring it up either in case the locations aren't receiving any commission.  No need to start something that is not needed and that will drain your profits. 

 

Until you decide that you want to be a serious vendor, don't bother with any sales tax reporting or LLC crap.  Work the machines for a few months and see if you make any money - that's PROFIT, money left over after all expenses are covered.  Until then you need to consider this a hobby so don't try to expense anything on your taxes or depreciate your investment.  Just keep your sales records and record the models and serial numbers of the machines.  Once you decide that vending is what you want to do then you can decide what kind of taxing entity you want to use, you can buy liability-only insurance and get any local sales tax licenses that are required. 

 

If you want to know what you've just bought then post the models of your machines and I can tell you what you have.