Not everyone can be entrepreneurial and for those families, a paycheck is what they live on and that’s it. If you do not want to do all of this yourself, there are services like LegalZoom and Clerky but they cost nearly twice what it would cost to do it yourself. This takes about 10 minutes on your state’s website. You submit a business filing with your state and then apply for an Employer Identification Number (EIN) with the IRS. What if my family business doesn’t make money?Ī loss is a good thing on a tax return! You can apply that loss to other taxes that you would have otherwise had to pay as the owner of the LLC. But let’s stick to the spirit of entrepreneurship here: You eventually want to make money in your corporation! If you don’t, you raise suspicion with the IRS and could eventually lose your corporate status. If you have not read my post about paying the children for administrative work through the LLC, which qualifies them for an IRA, please read it! This alone is another reason to consider incorporating in your house. Gimmicks get you in deep doodoo with the IRS.Īlso, we employ our children in our LLC. We’ve made really big breakthroughs on these retreats! We recently figured out how to pay off a rental property so that it is free-and-clear based on one of these times away. We’ve even planned family corporate retreats where we strategize next steps. We can’t talk business in a house with a 3 and 5 year-old interrupting every half sentence. This may sound unromantic, but even some of our date nights are write-offs because we legitimately talk about growing our business every time we go out. I learned this from Wheelwright! The guy is genius! We can make a legitimate case for these expenses as business-related. We do not eye-wink the IRS and try to sneak past expenses. What are the other benefits of having an LLC?īecause we are small business owners, and because my husband and I are in business together, much of what we do is a legitimate business expense. We want to be able to deduct all expenses related to those properties and only pay tax on what we net. We also don’t want to pay tax on the entire rental income.This is a safety measure as well as a tax strategy. We cannot lose any more than what the LLC owns. Limited liability: If something were to happen to those properties that the insurance did not cover, we are not personally responsible.Our rentals are owned by the LLC for two reasons: We also have a real estate investing LLC where we own rental properties.This is the speed reading app my husband designed, for sale now on iTunes. So I get paid in the LLC and pay fewer taxes on what I make. If I ask my gigs to pay me, Natali Morris the lady, not only do I miss the chance to deduct expenses, I also have to pay an extra self-employment tax of 15% of what I make. I am a freelance broadcaster, speaker, and host. Your business could be anything: selling crocheted socks on Etsy, dog walking, hair cutting, art selling, consulting, babysitting, music lessons, lap dancing… What? It’s legal. Any legal entrepreneurial corporation qualifies you for the tax rules above. This is super easy and I’ll discuss below. I mean that you submit a business filing with your state as an LLC, S-Corp, C-Corp, or whichever suits your needs. What do you mean by incorporating my family? Why this disparity? The government wants businesses reinvesting money to grow our economy. The government taxes the corporation on the remaining $500.
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