LLC Tax Write Offs
LLC tax write offs make your LLC (Limited Liability Company) your best tax “shelter.” Congress has designed laws to offer LLC tax write offs to any person who is willing to start and run their own business. As a result, an LLC owner has many more opportunities to lower their taxes than a W2 employee has.
LLC tax write offs include such things as business supplies, car mileage, and travel. The trick is to run as many of your expenses through your company as possible, and to keep track of them.
So starting this year, go to your association convention and take the family. A lot of the trip can be LLC tax write offs. Buy computers for your use as a professional at home. When you buy paper, pens, pencils, or other supplies they can be write offs for your LLC, if they go to the office.
Keep track of car mileage and do everything you can to run money through your company. Find all the possible ways you can charge off business expenses to your own LLC, and make them LLC tax write offs! It isn’t how much money you make. It is how well you live and how secure you are.
If you structured your business as a type of corporate taxing entity (an LLC taxed as an S corporation or a C corporation), you have more LLC tax write offs than you would get if you were just running your LLC as a company taxed as a sole proprietorship or partnership. Take a look at the following article for information on tax elections.
For instance, if you have an LLC taxed as a C corporation you can use benefit plans such as an HRA (Health Retirment Savings Account) as LLC tax write offs. In fact, under certain circumstances you can have one company in which you pay all of your employees and have a second company where you get benefits. You can provide yourself lots of benefits with an HSA or HRA. It’s all deductible to your little business.
Note that you can “put a lot more money away” with an HRA than you can with an HSA. However, if you are using an HRA, your LLC has to be taxed as a C Corporation to let you get the HRA benefits under new law.
It may be worth having a C corporation status for your LLC to get the HRA benefits if nothing else. You can easily take $20,000 a year off the top of your taxes, if you contribute to a fund for current “health related expenses.” The best part is that you can store what’s left each year.
You can deduct retirement plan contributions. The problem with retirement plans is the obligation to provide benefits for your other employees. The rules are a lot more complicated for retirement plans than they are benefit plans, so you are going to have to get help from your CPA, before you try to set up a retirement plan in your LLC, especially if your have more than one company with employees. The Accumulation and Preservation of Wealth has a complete discussion on retirement plans.
The IRS really is your major impediment to financial success. You’ve got to pay attention to the laws. Business men routinely go to their “advisors” and tell them they want to be “set up” with tax shelters and asset protection. Unfortunately, they get “set up.”
Don’t buy into the expensive “great deal” tax shelter plans. Use your LLC tax write offs to the max, and you’ll be able to control your taxes a lot better than you might think..
Unfortunately, all of the LLC tax write off tips are things your lawyer and CPA often don’t tell you about. Oh, they know the tricks (tax laws) and take advantage of them, but you won’t get told about the “good stuff,” because your lawyer and CPA are not willing to take the liability risk of telling you about the good tax laws.
Why get involved? It just increases my liability.” That’s their attitude. You’ve got to at least learn enough to know when you are getting the set up or getting good help. Never blindly trust an advisor. Learn the law and get the most out of your LLC structures.
