Can I Deduct Business Expenses for an LLC?

Yes, you can and should deduct business expenses for an LLC.  The Internal Revenue Code Section 162 allows for a tax deduction of all ordinary and necessary business expenses. This includes such things as wages, business related travel and office expenses.

If your business is to invest in, buy and sell, or buy and hold property, you can deduct business expenses for an LLC set up to do so.  Wages, travel and office expenses relating to this LLC should be listed against the income on your 1040 from.

Deducting wages through a LLC is a great way to lower the amount you owe in taxes. For example, if you have an LLC taxed as an S-Corporation you can pay yourself a reasonable wage for running the business. You determine what that wage is by looking at what others doing the business you are in get paid. “Reasonable wages” for yourself and other employees are deductible, even if those employees are related to you.  After paying your reasonable wage, you will not be required to pay any social taxes on the amount that your LLC makes above that wage.   Your S-Corp then deducts that wage as a business expense, and you can take any profits made in your S-Corp above that wage without paying the social taxes (the FICA, FUTA etc.) on the money. This can sometimes amount to quite a tax savings.

With an LLC you can also deduct “ordinary and necessary” travel expenses for your business.  Travel to and from the office does not count here, but you can deduct all necessary expenses when you are away from home for the “pursuit of a trade or business.”  These travel expenses include the amounts you spend for meals and hotels.  Note that “lavish or extravagant” travel expenses are not allowed. The government defines the amount you can take in any area for food and lodging in their per diem expenses listed on their website.  You can’t deduct your vacation to Florida either, unless you are looking at property there for your business. If you do travel to Florida for business, be certain you document what you do.  Get the real estate agent’s card and take pictures of the property.  Even if you decide not to purchase the property, you will be able to deduct the days you spent looking and the airfare.

You can also deduct all of the ordinary and necessary business supplies you get for your business.  This deduction can include simple things such as pens, paper and envelopes. It can also include larger items such as computers, file cabinets, trucks and tools.   Whatever business supplies you need to conduct your business can be deducted as business expenses for an LLC.

Monies spent to rent an office or other equipment required to run your business can also be deducted as business expenses for an LLC.

The truth is that running your business in the form of an LLC, whether it is taxed as a sole proprietorship, partnership or corporation, makes good tax sense.  Taxes are one of the major impediments to gaining wealth.  When you can deduct all of the above items as business expenses for an LLC, it will increase your bottom line.