Thinking about a chartering business

[jmschmidt]

Nice presentation, pretty much covered it. But you forgot the new requirement for a physical and drug testing ever two years now rather than upon license expiration (still five years).

Also, you will be granted a tonnage on your MMC based on your documented sea time on various boats. Over 5grt you will get a 25grt ticket, over 25grt you get a 50grt ticket, over 50 you will get a 100 ton. I've been told that any tonnage on your MMC will allow you to run a 6-passenger only operation (essentially a six-pack) on a vessel up to a 100grt.

Too bad you can't download the Documentation certificates anymore from the NMC. In the past always attached these to my renewals with the boat owners' signatures. Now I can only attach those form my own boats since they cut us off from the public. So one is using sea time acquired on other peoples boats get them to give you a copy of their Docs.

[sail4evr]

Originally Posted by CSY Man

Got pretty much the same idea, I speak a few languages and cater to foreign tourist, they are a lot easier to deal with than Americans.

Are you kidding? Did you ever get a tip from a European, South American or Puerto Rican.
It's not their way of life. Where they come from gratuities are included in their bill. Since they have already prepaid their charter bill it is like getting blood from a rock. And if you try to get them to pre pay the gratuity in advance with the charter agreement, they say oh no! that's not the way it is done in America.
Americans and Canadians are our bread and butter. We speak the same language. We love them.
we charter in the BVI...See us on AirBnB Sea Of Love catamaran charters 8 persons all inclusive or send me a message for more details

Originally Posted by Medved

Hi all, looking for advice.... Alex.

and by the way Alex, IRS will consider your charter business a part time business as you have already conceded (they are not dummies). They will take all your losses and call them passive losses and allow you to deduct them against passive gains such as rental property income, not ordinary income, which is what they will classify your charter business, a rental property. Trust me, been there, tried to do that, didn't work out. That was my first boat. Then I got serious.
Capt. Joe
Sea Of Love
Lagoon 440 BVI

[JoePilot]

Hello CSY Man, I am looking into doing this with my boat as well (need a tax write off and it seems like the way to go). I live in FL and keep the boat in Marathon now. I'll buy the drinks if I could pick your brain on the topic sometime. I'm in Ft Lauderdale a lot of the time as my girlfriend lives there and I work out of there quite often. Let me know.
Cheers.

[Medved]

Originally Posted by sail4evr

Are you kidding? Did you ever get a tip from a European, South American or Puerto Rican.
It's not their way of life. Where they come from gratuities are included in their bill. Since they have already prepaid their charter bill it is like getting blood from a rock. And if you try to get them to pre pay the gratuity in advance with the charter agreement, they say oh no! that's not the way it is done in America.
Americans and Canadians are our bread and butter. We speak the same language. We love them.
we charter in the BVI...See us on AirBnB Sea Of Love catamaran charters 8 persons all inclusive or send me a message for more details


and by the way Alex, IRS will consider your charter business a part time business as you have already conceded (they are not dummies). They will take all your losses and call them passive losses and allow you to deduct them against passive gains such as rental property income, not ordinary income, which is what they will classify your charter business, a rental property. Trust me, been there, tried to do that, didn't work out. That was my first boat. Then I got serious.
Capt. Joe
Sea Of Love
Lagoon 440 BVI

I think when I initially started this thread I was thinking part-time, but half way through I realized that to make this profitable it will have to be full-time operation. I am looking to hire licensed captains to run my boat if I am not available myself, however continue to work on it myself. My understanding that IRS requires 100 hours of proven active work from the owner not to consider it passive. Can you provide more details as to what issues you saw with IRS.

[windcastle1]

I believe because of the Jones act that in addition to all of the licensing, insurance etc.as previously mentioned, the keel of the boat must be laid up/built in the US in order to charter. This means basically only US built boats can be chartered in US waters.

[Medved]

Originally Posted by windcastle1

I believe because of the Jones act that in addition to all of the licensing, insurance etc.as previously mentioned, the keel of the boat must be laid up/built in the US in order to charter. This means basically only US built boats can be chartered in US waters.

Many of these boats were not built in US, and yet you can charter them no problem: https://cruise-annapolis.com/

[jmschmidt]

Thanks Capt. Joe, for attempting to set the record straight for these daydreamers who buy into this idea that owning and running a charter boat will give them big tax write-offs, positive cash flow and unlimited personal use of their boat for life.

One point that you didn't cover is the myth that doing so will provide absolutely bullet-proof personal liability protection from law suits by simply setting up an LLC or corporation to own the boat.

For starters a single-member LLC or a closely held corporation (like you and your wife) is considered a disallowed entity by the IRS. This has morphed into the court system taking the same tack and allowing plaintiffs go directly after, not only these entities, but the people owning the LLC or the corporation as well.

If you have several members and an independent manager for an LLC or several officers, shareholders and directors for a corporation you are certainly much better protected but with this law-suit happy country you can never have too much insurance and even that you can't rely on completely.
Capt. Jack

[Medved]

Originally Posted by jmschmidt

Thanks Capt. Joe, for attempting to set the record straight for these daydreamers who buy into this idea that owning and running a charter boat will give them big tax write-offs, positive cash flow and unlimited personal use of their boat for life.

One point that you didn't cover is the myth that doing so will provide absolutely bullet-proof personal liability protection from law suits by simply setting up an LLC or corporation to own the boat.

For starters a single-member LLC or a closely held corporation (like you and your wife) is considered a disallowed entity by the IRS. This has morphed into the court system taking the same tack and allowing plaintiffs go directly after, not only these entities, but the people owning the LLC or the corporation as well.

If you have several members and an independent manager for an LLC or several officers, shareholders and directors for a corporation you are certainly much better protected but with this law-suit happy country you can never have too much insurance and even that you can't rely on completely.
Capt. Jack

I have setup a consultation with SBA and will be able to confirm or deny many of the statements made by the "experts"

[jmschmidt]

Never heard that one. Was 50% US built or supplied (engines, electronics, labor, etc.) components didn't need a waiver. 500 bucks and a demonstrated "need" gets you a waiver.

[witzgall]

If the boat is foreign-made, then you can only run max of 6 paid person charterers, as it the vessel cannot be certified(inspected) to carry passengers.

http://wow.uscgaux.info/Uploads_wowI...GuideChart.pdf

Chris

Originally Posted by Medved

Hi all, looking for advice. I live within an hour driving distance from Chesapeake bay and thinking about starting "owner/operator" charter business that I can run on weekends and vacations. So the idea would be to purchase something like Jeanneau 440 and take people sailing in either Chesapeake or Delaware bays or coastal crusing around that area. Looking for anyone who has experience in this space. I have a well paying job, which can help me to offset some of the risks, meaning I will not be solely relying on this as income. Any thoughts and feedback is greatly appreciated. Alex.

[redneckrob]

Originally Posted by Medved

Many of these boats were not built in US, and yet you can charter them no problem: https://cruise-annapolis.com/

The key is Skippered Charters vs bareboat. You can't charter them as skippered charters, unless they have MARAD waiver which you'd have to ask them about.

[cygnus]

Hello Medved, You will need to acquire a USCG Captains License, Charter boat Ins, Permission from the Marina , If their are National Parks where you will be taking customers in their waters you might need to contact them to get a license to conduct a business. Provision the vessel with what you are offering, Preparing the vessel for and after the Charter. Check Sailo.com for competition in your area. Have a plan for cancellations and refunds. These are some of the basics, hope this helped a little. Capt. Lawrence

[CSY Man]

Originally Posted by JoePilot

Hello CSY Man, I am looking into doing this with my boat as well (need a tax write off and it seems like the way to go). I live in FL and keep the boat in Marathon now. I'll buy the drinks if I could pick your brain on the topic sometime. I'm in Ft Lauderdale a lot of the time as my girlfriend lives there and I work out of there quite often. Let me know.
Cheers.

Sure, you can buy me drinks.
Contact info on my website: OdinCharters| WireFrame Home

[CSY Man]

. Are you kidding? Did you ever get a tip from a European, South American or Puerto Rican.
It's not their way of life. Where they come from gratuities are included in their bill. Since they have already prepaid their charter bill it is like getting blood from a rock. And if you try to get them to pre pay the gratuity in advance with the charter agreement, they say oh no! that's not the way it is done in America.

Yeah, I have gotten more tips from US Customers, but not really counting on tip, nice if it happens, but not expected.

[secrabtree]

I'm glad that you stated that you weren't looking at chartering as a way to earn a living. There is an old saying that "the way to earn a million in the boat business is to start with two."