how to keep income in LLC?

[MichaelCash]

Hi there!

I want to keep some income in LLC and get it in 3 years from now. How can I do this without paying taxes twice (corporate and when I get money myself)?

As far as I know, I can invest it into some assets that I can sell in 3 years later? It must be something related to the business, so I cannot buy Apple stock if I run art related business?
But I probably can buy some paintings, right?

Thank you

 

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[theag]

You will always pay taxes twice (corporate & personal income), with the only exception of incorporating in a country with no corporate tax (such as a Hong Kong Limited for all income outside HK) or living in a country with no income tax (if there are any).

But I'm no expert, there should be people more qualified here to answer that.

 

[H. Palmer]

Hi there!

I want to keep some income in LLC and get it in 3 years from now. How can I do this without paying taxes twice (corporate and when I get money myself)?

As far as I know, I can invest it into some assets that I can sell in 3 years later? It must be something related to the business, so I cannot buy Apple stock if I run art related business?
But I probably can buy some paintings, right?

Thank you

I don't think you have that option.

An LLC is an entity that gives you the choice of either use it as a pass through entity or to be taxed as a C corporation.

Pass through means that taxes are passed through to the members, meaning you. This can have many advantages.

Being taxed as a C corporation means the LLC is taxed on its profits after you file the tax return for the LLC at the end of the calendar year.

 

[Dreamon988]

Their is a bunch of countries with no income tax. The first one that comes to mind is UAE.

 

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[theag]

Their is a bunch of countries with no income tax.

Yeah, but the question is if you want to live there (or even have to possibility).

 

[MichaelCash]

Let me elaborate it a bit more...

the business is about buying/ordering art works from one place, restoring or making some modification and selling them at another place at higher price.

Can I invest my income into more inventory e.g. order more paintings (that I am literally going to store in my closet) so it will be a business related expanse? Later on, e.g. in 3 years I will sell them and pay personal taxes from this amount. Does it work?

 

[bflbob]

Oh boy. I don't get a warm feeling for what you are trying to do.

First, it sounds like you want to be a collector, and are trying to run the profits through a business. Collecting and the business of dealing in collectables aren't the same thing. If your only goal is to buy artwork, stick it into storage for several years, and then sell it, you don't need a business -- LLC or otherwise. See The Art of the Deal: Tax Consequences of Collecting

If your goal is to buy and sell artwork, then you need to do that on a regular basis, and can run that through a business. The biggest difference is that you can purchase items without paying sales tax, since you are buying them for resale. The other advantage is that you can write off some expenses that would normally not be deductible to individuals -- mileage, security systems, etc.

But it sounds like you are trying to be a collector (no intent to sell artwork on a daily basis) and a business (intent to sell daily). That doesn't work, at least for long.

My guess is that you are hoping the art purchases are expenses for a business. They aren't. The artwork you buy is basically inventory. If you buy it for $1k and sell it three years later for $1,500, you'll owe tax on the profit of $500.

There are some advantages to being an art dealer. You get to enjoy the artwork until it is sold. You get to write off interest as an expense if you borrow money to buy the artwork. You get to see far more artwork than you probably would as a collector.

In any case, it sounds like you need to have a far better understanding of business in general. An LLC can be owned by an individual, or a group of individuals (as a partnership). It can be a pass-thru entity, or it can be set up as a corporation. And it isn't just about whether you'll get taxed once or twice. It is about what your total tax will be. That's why you should always consult a tax adviser. See S and C Corporations Create Different Tax Consequences | BizFilings Toolkit

I hope this helps. If I'm just misunderstanding your level of understanding, I apologize.

 

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