Owning a LLC, benefits and disadvantages.

[gnohs]

What is the name of your state (only U.S. law)? New York

I work full time as a IT Director of a Company. I also however have just a handful of personal clients. I bill them under a Company name but checks are made out to me personally.

Should I create a LLC? From what I understand creating the LLC will provide me more opportunities to deduct more from my tax returns.

Is there any minimum requirements for having a LLC? Any yearly commitments on how much business is done with your LLC? Can anyone file to be a LLC? I know there are state charges for applying. If I choose a company to register the LLC for me, do I have to re register at all?

What are the requirements after becoming an LLC? Extra tax forms each year? Anything else I would be required to do?

Should I see an attorney, business consultant or a accountant for advise on tax prep and owning a LLC?

 

[LdiJ]

What is the name of your state (only U.S. law)? New York

I work full time as a IT Director of a Company. I also however have just a handful of personal clients. I bill them under a Company name but checks are made out to me personally.

Should I create a LLC? From what I understand creating the LLC will provide me more opportunities to deduct more from my tax returns.

Is there any minimum requirements for having a LLC? Any yearly commitments on how much business is done with your LLC? Can anyone file to be a LLC? I know there are state charges for applying. If I choose a company to register the LLC for me, do I have to re register at all?

What are the requirements after becoming an LLC? Extra tax forms each year? Anything else I would be required to do?

Should I see an attorney, business consultant or a accountant for advise on tax prep and owning a LLC?

An LLC absolutely WOULD NOT give you any more opportunity to deduct expenses from your taxes than you currently have now. Any business, no matter what kind of entity they are may deduct valid and necessary expenses from their tax return.

In addition, a single member LLC defaults to a sole proprietor on your tax return therefore even as an LLC you would be filing the exact same Schedule C as you are filing now, on your personal return.

Yes, you should consult at least a tax professional, and probably a business attorney as well.

 

[gnohs]

An LLC absolutely WOULD NOT give you any more opportunity to deduct expenses from your taxes than you currently have now. Any business, no matter what kind of entity they are may deduct valid and necessary expenses from their tax return.

In addition, a single member LLC defaults to a sole proprietor on your tax return therefore even as an LLC you would be filing the exact same Schedule C as you are filing now, on your personal return.

Yes, you should consult at least a tax professional, and probably a business attorney as well.

Wouldn't I be able to deduct business expenses? Mileage, dinners for meetings, equipment, rent and other business owned expenses that I cannot deduct being a non business owner?

Thanks for you input. I will try to get a consultation with one or both of what you suggested.

 

[FlyingRon]

Wouldn't I be able to deduct business expenses? Mileage, dinners for meetings, equipment, rent and other business owned expenses that I cannot deduct being a non business owner?

Thanks for you input. I will try to get a consultation with one or both of what you suggested.

If you are in a business with a profit motive, you can deduct any expenses right off the top on your personal Schedule C before it gets taxed (both income and Self-Employment tax). Look at IRS PUB 535 for what's allowable, here's last years but it hasn't changed much: https://www.irs.gov/pub/irs-pdf/p535.pdf

As pointed out, making an LLC doesn't make things less or more deductible.

 

[LdiJ]

Wouldn't I be able to deduct business expenses? Mileage, dinners for meetings, equipment, rent and other business owned expenses that I cannot deduct being a non business owner?

Thanks for you input. I will try to get a consultation with one or both of what you suggested.

Is this all completely new to you? When someone is operating as a sole proprietorship (they have not formed a separate business entity) or when they are an LLC with a single member, that income and the related expenses are reported on Schedule C. Schedule C is part of their personal tax return.

Go to irs.gov and under Forms and Pubs, click on the more link at the bottom, and then pull a Schedule C and look at it. You will see very clearly that it has boxes for both income and individual expenses.

You are probably going to want to use a tax professional this year.

 

[gnohs]

If you are in a business with a profit motive, you can deduct any expenses right off the top on your personal Schedule C before it gets taxed (both income and Self-Employment tax). Look at IRS PUB 535 for what's allowable, here's last years but it hasn't changed much: https://www.irs.gov/pub/irs-pdf/p535.pdf

As pointed out, making an LLC doesn't make things less or more deductible.

Thank you. I will take a look into it.

 

[gnohs]

Is this all completely new to you? When someone is operating as a sole proprietorship (they have not formed a separate business entity) or when they are an LLC with a single member, that income and the related expenses are reported on Schedule C. Schedule C is part of their personal tax return.

Go to irs.gov and under Forms and Pubs, click on the more link at the bottom, and then pull a Schedule C and look at it. You will see very clearly that it has boxes for both income and individual expenses.

You are probably going to want to use a tax professional this year.

Yes completely new. I thought that was clearly evident. So you are saying even without becoming a LLC I can deduct all business expenses with a Schedule C? So I dont have to prove I own a business or provide services outside my normal 9-5 job? As long as I have that additional taxable income listed?

I will consult a tax professional. Thanks for you time.

 

[LdiJ]

Yes completely new. I thought that was clearly evident. So you are saying even without becoming a LLC I can deduct all business expenses with a Schedule C? So I dont have to prove I own a business or provide services outside my normal 9-5 job? As long as I have that additional taxable income listed?

I will consult a tax professional. Thanks for you time.

Yes, I am a tax professional and everybody can deduct business expenses.

 

[dgslaw]

LLC Advantages and Disadvantages!!

In my opinion, LLCs give you a great combination of flexibility and protection. Here are some advantages and disadvantages of LLC:-

Advantages :-

1. Tax Flexibility
2. Less Paperwork
3. Limited Liability

Disadvantages:-

1. Self-Employment Taxes
2. Confusion About Roles
3. Limited Life

You should also consult with business lawyer.
Thanks!!

 

[FlyingRon]

There is a whole IRS pub on what is deductible with respect to mileage and other business expenses. As other people have pointed out, the LLC is a disregarded entity in the case you are envisioning. It makes no difference to your taxes.

Not all mileage is deductible. Not all meals are deductible. See IRS pub 463: https://www.irs.gov/pub/irs-pdf/p463.pdf