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Mr. Fuzz
10-05-2011, 02:53 PM
I've been pulling in some extra cash this year and all the money has been giving to me in personal checks. I'm planning on spending as much of the money as I can on business related expences (computers, software, etc.) and then claiming the rest as a Sole Proprietorship. Ideally, I'd like to pay the minimum required taxes.

If I've been earning money as a sole proprietorship can I create a LLC next week and still claim everything under that? Yada, yada....can someone give me some advice? I'd like to discuss the transition from a sole proprietorship to a llc & taxes/expenses in this thread.

Mr. Dylanja
10-05-2011, 02:55 PM
Did you finally start your own porn company?

HunterGather
10-05-2011, 02:56 PM
http://static8.businessinsider.com/image/4b6c968f0000000000c71162/bronald-oil-cashmoney.jpg

daxton
10-05-2011, 02:59 PM
At first I definitely thought this was for the New Orleans rap label.

J~$$$$
10-05-2011, 03:00 PM
Are you going bankrupt? or growing to a point of not wanting so much personal liability?

J~$$$$
10-05-2011, 03:01 PM
Are you being sued by one of the "actors"?

Mr. Fuzz
10-05-2011, 03:10 PM
Well, I'm growing to a point of not wanting so much personal liability and I'm on track to make more cash on the side than from my full time job this year.

Mr. Fuzz
10-05-2011, 03:12 PM
Did you finally start your own porn company?

haha...i wish. I've also been watching way too much porn this year.

Mr. Fuzz
10-05-2011, 03:16 PM
Should I make an LLC as soon as possible and have my clients pay the LLC? Will I still be able to write of business expences that were purchased before the LLC was formed but in the same year? Being sued is a possibility but only for not finishing work. Nothing that I'm doing affects the health or life safety of the public.

J~$$$$
10-05-2011, 03:17 PM
Just go through one of the many online companies that have all the forms and transfer it over. It costs anywhere from $125-300. Its pretty easy to do.

Also look into http://www.irs.gov/businesses/small/article/0,,id=98277,00.html for any questions.

Legal Zoom.com is a pretty straight forward website.

Mr. Fuzz
10-05-2011, 03:18 PM
Thanks, dogg!

Mr. Fuzz
10-05-2011, 03:20 PM
From my understanding...Whatever I buy that is a business expense gets deducted from my taxable income, right?

J~$$$$
10-05-2011, 03:22 PM
Should I make an LLC as soon as possible and have my clients pay the LLC? Will I still be able to write of business expences that were purchased before the LLC was formed but in the same year? Being sued is a possibility but only for not finishing work. Nothing that I'm doing affects the health or life safety of the public.

I would advise you to talk with an accountant. Im sure there are accountants that are on here that can answer this better than I could. You will probably want to hire one if you are forming an LLC.

Mr. Fuzz
10-05-2011, 03:24 PM
Isn't Tom an accountant? Is he on vacation?

J~$$$$
10-05-2011, 03:25 PM
From my understanding...Whatever I buy that is a business expense gets deducted from my taxable income, right?

What are you qualifying as a business expense?

jackstraw94086
10-05-2011, 03:26 PM
Are you going bankrupt? or growing to a point of not wanting so much personal liability?

no fuck that. I don't care how big his company gets. If someone who advises him fucks up I want the shirts of his childrens' backs.

Mr. Fuzz
10-05-2011, 03:28 PM
Computer's, software, gas milage (to and from meetings), my home office and power bill, paper, and pretty much anything and everything that I can. I do 3d Visualization so anything computer related.

J~$$$$
10-05-2011, 03:28 PM
no fuck that. I don't care how big his company gets. If someone who advises him fucks up I want the shirts of his childrens' backs.

IM OUT!

fatbastard
10-05-2011, 03:30 PM
http://www.swcasinoproductions.com/images/casino-equipment-rentals/lighted-casino-tables/lighted-craps-table-felt.jpg

J~$$$$
10-05-2011, 03:30 PM
Computer's, software, gas milage (to and from meetings), my home office and power bill, paper, and pretty much anything and everything that I can. I do 3d Visualization so anything computer related.

So yes, this would be "deducted" from income. Depreciation in the first few years is a wonderful thing.

Mr. Fuzz
10-05-2011, 03:42 PM
Is the income that my LLC makes seperate from my personal income? Is that a way to seperate my income so that I don't get pushed into a higher tax bracket? Because if I understand correctly a sole propietership is added to your personal income...

Mr. Fuzz
10-05-2011, 03:43 PM
Also, what if I pay consultants? Can I write that off as a business expense and will I have to 1099 them?

marooko
10-05-2011, 03:54 PM
I like this, keep asking questions.

Mr. Fuzz
10-05-2011, 04:09 PM
What are some things that I should buy to help get my business started? I'm thinking office furniture (desk chair, fire proof safe, file cabniets books shelves), desk top computer, laptop and ipad, cameras, what else...printers, ink. All office supplies. I'm thinking that I should get a credit card in the LLC name so I can track all my expenses. Will that suffice as a receipt?

Mr. Fuzz
10-05-2011, 04:13 PM
no fuck that. I don't care how big his company gets. If someone who advises him fucks up I want the shirts of his childrens' backs.

I heard that they can't put a lean against your house if it is your primary residence. Unless it is a contractor that has done work on your home and hasn't been paid. Also, I got my house homestead (I think that is what it's called). But, the housing market is such a joke...I don't even have any equity in it. It's upside down.

amyzzz
10-05-2011, 04:17 PM
lien

marooko
10-05-2011, 04:18 PM
Why you lien zzz?

amyzzz
10-05-2011, 04:28 PM
Spelling skills are pretty much all I can contribute to this thread.

Wheres the beef?
10-05-2011, 04:37 PM
Maybe you should ask a fucking accountant, lawyer, or tax specialist.

Mr. Fuzz
10-05-2011, 04:38 PM
Fuck, if I've only misspelled one word then I'm doing good!

Mr. Fuzz
10-05-2011, 04:38 PM
Maybe you should ask a fucking accountant, lawyer, or tax specialist.

excuse me. there might be some on the board. fuck you very much!

PlayaDelWes
10-05-2011, 04:48 PM
What are some things that I should buy?

um, only things that you need

Mr. Fuzz
10-05-2011, 04:58 PM
I need a plush office. New floors, fresh paint, framed artwork, a ceiling mounted chandilier would be dope and a 42" flat screen on the wall. Maybe a cow hide rug and some designer guest chairs. Ipads are a necessity, right? I already purchased a new desktop but I think that I need a lap top too for when I travel. I'm thinking

PlayaDelWes
10-05-2011, 05:11 PM
Inspirations, here.
http://www.entertainment720.com/our-office/

J~$$$$
10-05-2011, 05:14 PM
IPADS FOR EVERYONE!

insbordnat
10-06-2011, 05:05 AM
Hey, insbordnat here, resident CPA. Now what the fuck you trying to do dog?

If you want to create an LLC to avoid taxation or to take "additional deductions", forget it. Single member LLCs are diregarded entities, meaning whatever is the LLCs really appears on your tax return as if it were a sole proprietorship. It'd be thrown in one large bucket with other business ventures. Your "business" also has to be making profit, otherwise it's considered a hobby and thus a schedule A deduction. 50% limitation on meals and entertainment, and each expense needs a necessary business purpose. Basically, if you have a "business" that is a single owner, anything you'd report in in LLC would be computed on Schedule C (sole proprietor). You don't gain from the formation of the entity (although if you form a C-Corp, you'll lose through double taxation).

Also, if you form an LLC in a state like California, you'll be subject to additional taxation in the form of a "franchise fee" based on sales. Other states have similar provisions. There are also limitations on what you can/cannot do with an LLC legally. An LLC also must be governed by an operating agreement which is filed with the department of corporations/secretary of state, although someone setting it up can help you draft that.

It doesn't sound like you have a legitimate purpose for forming the LLC. It really should be done if you want to limit liability or contain a business in a structure for financial reporting. But to set it up for tax avoidance won't work.

TomAz
10-06-2011, 06:09 AM
Isn't Tom an accountant? Is he on vacation?

no, and no.

but you definitely should be asking questions about taxation of your business with a professional, and not an internet message board

PlayaDelWes
10-06-2011, 06:18 AM
ITT
http://26.media.tumblr.com/tumblr_lsbbbld4Ao1qk9jsgo1_500.gif

Mr. Fuzz
10-06-2011, 10:06 AM
Hey, insbordnat here, resident CPA. Now what the fuck you trying to do dog?

If you want to create an LLC to avoid taxation or to take "additional deductions", forget it. Single member LLCs are diregarded entities, meaning whatever is the LLCs really appears on your tax return as if it were a sole proprietorship. It'd be thrown in one large bucket with other business ventures. Your "business" also has to be making profit, otherwise it's considered a hobby and thus a schedule A deduction. 50% limitation on meals and entertainment, and each expense needs a necessary business purpose. Basically, if you have a "business" that is a single owner, anything you'd report in in LLC would be computed on Schedule C (sole proprietor). You don't gain from the formation of the entity (although if you form a C-Corp, you'll lose through double taxation).

Also, if you form an LLC in a state like California, you'll be subject to additional taxation in the form of a "franchise fee" based on sales. Other states have similar provisions. There are also limitations on what you can/cannot do with an LLC legally. An LLC also must be governed by an operating agreement which is filed with the department of corporations/secretary of state, although someone setting it up can help you draft that.

It doesn't sound like you have a legitimate purpose for forming the LLC. It really should be done if you want to limit liability or contain a business in a structure for financial reporting. But to set it up for tax avoidance won't work.

This helps, thanks dogg!

amyzzz
10-06-2011, 10:08 AM
lolz at the gif which is very appropriate.

Mr. Fuzz
10-06-2011, 10:09 AM
no, and no.

but you definitely should be asking questions about taxation of your business with a professional, and not an internet message board

guys, of course I am going to seek professional advice but I had some free time and wanted to shoot the shit with some peeps on the internet. you never know.

But, what type of an accountant should I be seeking out advice from? I don't want to be giving them too much chesse but I the flip side I need someone who is good. I think that I'm over going to H&R block.

WhyTheLongFace
10-06-2011, 10:37 AM
ITT
http://26.media.tumblr.com/tumblr_lsbbbld4Ao1qk9jsgo1_500.gif

So much win!

insbordnat
10-06-2011, 05:07 PM
guys, of course I am going to seek professional advice but I had some free time and wanted to shoot the shit with some peeps on the internet. you never know.

But, what type of an accountant should I be seeking out advice from? I don't want to be giving them too much chesse but I the flip side I need someone who is good. I think that I'm over going to H&R block.

Yeah.

H&R Block aren't accountants, they are tax preparers, enrolled agents, etc. I wouldn't trust those guys to scrub my taint. Well, they will do a bang up job on a 1040EZ.

There is an adage, pay now or pay later. I'd go for some small shop, like a one or two person firm. Less overhead and the questions you are asking are pretty straightforward. It's not like you are trying to repatriate dollars from Croatia and want some tax scheme to reduce your taxation. You may be paying somewhere in the vicinity of $100 - $150 per hour or so to get someone to set it up for you and make sure the taxation is sound before you go buying that XBox and trying to write it off. $150 an hour may seem like a lot, but it's cheap compared to penalties and interest due to an audit assessment. For comparison, the partners at my firm are typically $500-$700 per hour. I'm $300.

But like I said, you certainly don't need too much expertise for this type of business setup. You may find cheaper. Find somebody that has some gray hair and see what his/her specialty is. You'd be looking for individual taxation, since you really aren't in the realm of business taxation issues until you are looking for other shareholders and have more complex issues.