How Not to Run an RV Park
On two occasions here in Alaska we have been witness to exactly how NOT to run an RV Park if you want it to prosper. Or even stay in business. In the first in Anchorage the park was very close to d...
Forum Discussion
We have no idea the situation at the RV park being analyzed. There are many RV parks that have the capacity to hire multiple workampers and as compensation provide them with a free site. Since those workers are not paid and generally work much less than a 40 hour week, it is both necessary and financially prudent to hire extra staff. That staffing doesn't cost anything but the site and it is in the park's best interest to keep each individual's tasks to a minimum so they will enjoy their stay and consequently stay on for the season.
Other parks have more customers than sites, they turn people away. These parks need to keep as many sites as possible available for paying guests so they often hire fewer workers and pay them for longer hours and more work during those hours.
We have no idea what is involved in running the park in question. They may have cabins and need housekeeping staff. They may have a store needing staff. They may sell tours, rent ATVs, run in park activities and on and on. All those take labor. Heck, they may just want the park to look great and have a full time staff dedicated to flowers, mowing lawns, raking leaves, pruning bushes and keeping the grounds in top shape.
Perhaps the management has run that operation for many years and knows their client needs a bit better than someone who just drove in from who knows where. I know I have evolved my management practices over the years. I do things now I never would have thought of doing when I first got into the business. And, on the other hand, stopped doing things I thought were great ideas when I got started.
Maybe this park does succeed in spite of itself, but that is still succeeding and that counts for something.
As for IRS rulings on business vs hobby, the IRS requires a business be run with the intent to make a profit and requires a business to have made a profit in three of the last five years if the losses in that business are used to offset taxable gains from other activity. (you can't run a business continually at a loss to lower your tax obligation). If that business did not make a profit in three of the previous five years the IRS deems it a hobby and write offs become limited to the amount necessary to offset any income from that hobby . These rules do not apply to corporations other than subchapter S corps. Also horse breeding and racing is treated differently.
Other parks have more customers than sites, they turn people away. These parks need to keep as many sites as possible available for paying guests so they often hire fewer workers and pay them for longer hours and more work during those hours.
We have no idea what is involved in running the park in question. They may have cabins and need housekeeping staff. They may have a store needing staff. They may sell tours, rent ATVs, run in park activities and on and on. All those take labor. Heck, they may just want the park to look great and have a full time staff dedicated to flowers, mowing lawns, raking leaves, pruning bushes and keeping the grounds in top shape.
Perhaps the management has run that operation for many years and knows their client needs a bit better than someone who just drove in from who knows where. I know I have evolved my management practices over the years. I do things now I never would have thought of doing when I first got into the business. And, on the other hand, stopped doing things I thought were great ideas when I got started.
Maybe this park does succeed in spite of itself, but that is still succeeding and that counts for something.
As for IRS rulings on business vs hobby, the IRS requires a business be run with the intent to make a profit and requires a business to have made a profit in three of the last five years if the losses in that business are used to offset taxable gains from other activity. (you can't run a business continually at a loss to lower your tax obligation). If that business did not make a profit in three of the previous five years the IRS deems it a hobby and write offs become limited to the amount necessary to offset any income from that hobby . These rules do not apply to corporations other than subchapter S corps. Also horse breeding and racing is treated differently.
