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Start an LLC or keep paying the tax man

Discussion in 'Business Fundamentals' started by papaMoose, Jan 1, 2011.

  1. papaMoose

    papaMoose Junior Member
    Messages: 11

    This is my first year plowing with my own truck. I'm sub-contracting for a company, since I have a full time job and cant get out at the first flake. I also dont have the customer base built up to go out on my own.

    Its too late for 2010, but I was considering the pros and cons of starting an LLC and writing off my truck and other expenses as business expense. I am not the most up to date on tax law, but I know I'll have to file a 1099 for the money I've made. Will I come out ahead by creating my own "Business" and registering my LLC?

    Thanks for any input!
    Dan
     
  2. PowersTree

    PowersTree Senior Member
    Messages: 586

    Your truck is still an expense. You can still write it off. Talk to your tax person.
     
  3. hammerstein

    hammerstein Senior Member
    Messages: 318

    Truck payments are not an expense and you cannot take the write off for them only vehicle maintenance/repairs. You would have to pay income tax on the payment but you could then depreciate them over 5 years. In an LLC any money you take is subject to self employment tax (15.3%) to the IRS (plus state and local) and also any profit at the end of the year. Even with an LLC you would still need to receive W9 from any incorporated company you do work for - new for 2011.
     
  4. NicholasMWhite

    NicholasMWhite Senior Member
    Messages: 175

    woah waoh... Starting an LLC will not change the way you are taxed at all. There will be no benefit for taxation. Also It doesn't matter if you have an LLC or not, you can't write off any truck related expenses (payments, maintenance, repairs, parts, nothing.) If that truck is still being used as a personal vehicle the only deduction you are legal allowed to take is a mileage deduction. For 2010 that would be 50 cents per mile driven for business use.

    The government created the LLC so that small businesses could have the legal protection of a corporation without having the double taxation of other corporation structures. LLC's are still generally taxed as a sole proprietor and I see no benefit for a sub to file for an LLC.

    read the following to learn more: http://en.wikipedia.org/wiki/Limited_liability_company
     
    Last edited: Jan 2, 2011
  5. IHC-2674

    IHC-2674 Junior Member
    Messages: 7

    Go with LLC.
     
  6. IHC-2674

    IHC-2674 Junior Member
    Messages: 7

    Yes you can! Just do this smart, not whole expense some portion. Or you can lease and write it off.

    If you make money (some think like $6K or more) you will subjected any way.

    Thumbs Up

    50cents is not only one way. Can write off all your expenses related to business activity. But you need to have a solid proof about this is for business.
    For example: if you bend frame during plowing - sure this repairs are business expense.
    Always start plowing with full tank. After finishing fill it up. Keep receipt. Sure it's business expense.
    No meter what, if you are using trUck for your personal use and business you REALY need to trAck your business mileage. Take a notepad write day, time, miles start and miles finished, business task notes (e.g. plowing for ABC, co.)

    Thumbs Up Thumbs Up

    Talk to a commercial accountant. Make sure he/she knows legal ways to work thinks for your benefits. Also ask accountant who service company/job provider.
    Be careful to buy /lease vehicles for LLC and use it for personal use. It's needs to be disclosed in return. Other think LLC vehicle insurance will be much pricey then personal.
    Good luck
     
    Last edited: Jan 11, 2011
  7. Jerryjks

    Jerryjks Junior Member
    Messages: 14

    The best reason to do a LLC is liability. If you get sued they can only go after business assets. You should be able to claim your income and write-offs on your personal tax returns. If you re doing more than residential stuff you really should check into a sole-proprietorship or LLC.

    Make sure you do your homework! Check with your accountant and lawyer.
     
  8. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    Truck expenses are deductible. % of use. Need to keep track of mileage from Jan1-Dec31 Keep track of business miles and all expenses, gas, oil, insur, truck parts-all are added up and multiplied by the % use.


    Or you can take mileage deduction (and use Straight line depreciation).