LLC and Taxes

[shah269 0]

LLC and Taxes

I've recently partnered up and started an LLC for a consultation on various projects. Other than the usual protection from liability and other legal protections offered by an LLC, what on average are the tax benefits? I'm going to be calling my accountant shortly but was just looking for a 30k ft view.
Thank you
Shah

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[DiverMike 5]

If your corporation is a Subchapter S corporation, (which it probably will be) your earnings (or loss) flows through to your 1040. At 30,000 view: if you are 'losing' money your loss will flow to your 1040 on a Schedule K. If you have appropriate income (like from rental properties) you can offset your income with your business loss. Conversely, if you have rental loss you can offset business income from your K1.

This tax benefit only applies if you can offset business income with a business loss. You can't offset earned wages with business losses.

I am not an accountant, but I filed my own 1120S for 10 years.

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[LouDiamond 1]

Not knowing the ins and outs of your situation, it'd be best to talk to your CPA about what is open to you. Depending on what you "have" your CPA might be able to figure in depreciation, sales tax, etc so that it works to your benefit, such as a pass through. Another nice thing about having an LLC that is business related is that you can use it to your advantage when looking at purchasing firearms that fall under NFA regulations instead of doing a trust, but thats a different line of conversation.

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[DrewEckhardt 0]

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LLC and Taxes

I've recently partnered up and started an LLC for a consultation on various projects. Other than the usual protection from liability and other legal protections offered by an LLC, what on average are the tax benefits?

You, LLC can provide certain benefits to you, your employee with pre-tax dollars. Health insurance was a big one before it became an above-the-line deduction for self employed people.

And assuming you opt to be taxed as an S-corp:

You, LLC pay you, personally a fair market salary which is subject to FICA/Medicare but can take profits beyond that as distributions which are only subject to ordinary income taxes.

Talk to your accountant about what's reasonable.

[headoverheels 334]

If you were here in California, you would have the "honor" of paying the minimum $800 corporation taxes each year, even if the corporation shows no income.