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randy22556 02-07-2007 03:04 PM

Suggestions for starting a part time charter business?
I, in land locked and dry Colorado, have a C.G. Captains 6 pack license and various ASA certifications and am considering doing part time (I need a "real" paying job) charter sailing half day trips, like dinner cruises or such. It would be on a lake considered a joke by many as it is so small, but such is life here. I am also planning to donate funds from some charter trips to kid charities. Other than insurance and regulations at the lake, any suggestions? A sample contract would help and how to deal with no wind (ie refunds?) and unruly passengers. Recommendations as to charter insurance companies would also be nice, along with your good and bad stories. Thanks. Randy

tommyt 02-08-2007 11:09 AM


I see that you are not getting very many responses to your question. It is a perplexing one to most, even those that have a boat in charter.

I have a boat in a charter fleet (meaning that someone else does most of the work) in Lake Michigan. The main reason for the LLC that it is in is to protect me from liability, cover some of my expenses, and to have a slip to put the boat into for the season. Slips are harder to come by than boats in Northern Michigan! If I am not careful in blocking dates the boat is sometimes chartered more than I want it to be gone. Even with a fairly successful charter revenue stream the boat expenses still are not completely covered. In my case that is mortgage, insurance, slip fee, and maintenance. Like you, our season is short.

Liability will be your first issue to overcome. You should first talk to your insurance company and see if they would even consider insuring this business. You should also create a LLC to put the business/boat into for liability purposes if in fact you determine to go forward.

I am not certain if you are looking at this as a profit maker or if your main concern is to help local charities and offset some of your expenses. If it is profit, I can almost assure you that profits are hard to come by. If it is to help local charities I think a conversation with your accountant is in order. Actually, he/she could probably give you good information on both issues.

If this is a passive business (meaning that you have a life that pays the bills), and you don't have other passive businesses that make money, then your expenses over revenue will not be deductible. In any business like this you have to have a plan to actually make money over time to satisfy the tax man.

If you are most interested in the charitable angle, I would suggest that a personal charitable deduction would be deductible on your income tax. You and the accountant would have to determine what amount was fair in this case. A share of boat expenses based on usage, time, etc. You have not said how large the boat is and if you have a mortgage on it. If it qualifies as a second home, and those criteria are not hard to qualify for if the boat is of a certain size, then that mortgage interest is at least deductible as well.

No matter what you do, if you are taking strangers on the boat to be charitable and nice, make certain you are covered from a liability standpoint. Most of the time you will have no problems and everyone will be happy. However, all it takes is one problem with the wrong person and they can end up owning the boat and other possessions if you are not covered.

Sorry for the ramble, I have been handling a few other issues and keep coming back to this note.

Good Luck,

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