Run my life as a corporation for tax benefits?

[summit]

Hi everyone! I've read all the popular posts on this forum and this community seems amazing. So here goes my first post.

I have a startup LLC that I own and also a personal LLC. my personal LLC has no income, it just... exists.

I have heard of wealthy families setting up their family as a corporation and all finances being run as that corporation (so all cars and houses would be under that corporations name I'd assume). This is for tax breaks and I'm sure there are other incentives I don't know about that Id love to learn.

1. How can I do that? is there a guide? what phrases could I search on google that would teach me more about it?
2. Could I leverage my personal LLC to solely get tax benefits? It would really serve no other purpose than for me to write of my miles on my car (tax deductible) for "work" purposes. I could also use it to buy products for "work" which could be tax free or deductible. I would then, of course, use it for my personal life.
3. What else could I use my personal LLC for that could save me money?

please feel free to comment on any or all parts of the above list.

thank you


Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

 

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[Trivium iz rC]

Let me ask you this,

Do you have a business that is producing major profits (after paying yourself a decent salary), Stocks paying dividends, bonds paying interest, Real estate producing cash flow, Selling assets for Capital gains ect. I think many people get too ahead of themselves with "Asset protection" before they have any valuable assets. It's mental masturbation "I better create myself a tax shelter because thats what the Walton's do"

^ Now my apologies, maybe your really starting to develop some serious cash & assets that you want to protect from taxes and people suing.

I have heard of wealthy families setting up their family as a corporation and all finances being run as that corporation (so all cars and houses would be under that corporations name I'd assume). This is for tax breaks and I'm sure there are other incentives I don't know about that Id love to learn.

^ Get your business to that point and then start worrying about major tax breaks & asset protection. When the time comes you will know and your accountant or lawyer will tell you it's time for a shelter. If your really interested in some major news that went through for major investor's. Check out Puerto Rico (Act 20 & 22)

 

[Kak]

Yeah... You should probably call a CPA because you are going to get yourself in trouble. If you don't pay more than 30 or so grand a year in taxes I wouldn't even pick up the phone.

Also there I no such thing as a "personal LLC" Even though it is an LLC it is still an independent entity. If these thing you want the LLC to own are not for business purposes you can't call them expenses.

 

[summit]

okay, I don't make nearly enough yet to need that kind of protection.

I didn't think it was just mental masturbation though. my thought is, if a penny saved in a penny earned, then why not save as much as I can?

for example, claiming 20k miles for business can give you back several hundred in tax returns (compared to without the miles).

I thought it would be worth it even for a few hundred a year..


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

 

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[Raleighwood]

okay, I don't make nearly enough yet to need that kind of protection.

I didn't think it was just mental masturbation though. my thought is, if a penny saved in a penny earned, then why not save as much as I can?

for example, claiming 20k miles for business can give you back several hundred in tax returns (compared to without the miles).

I thought it would be worth it even for a few hundred a year..


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

Just my opinion: Wasting mental energy worrying about pennies (a few $100 bucks on taxes) might be holding you back from greater success.

It's a bad habit that I have to deal with in my businesses.

 

[summit]

not really. i have a car iPod touch for music so whenever I drive somewhere long distance for business meetings and such, I just take a picture of the speedometer. quite easy really, and can tally it up in April.

> It's a bad habit that I have to deal with in my businesses.

what habit exactly?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

 

[Trivium iz rC]

if a penny saved in a penny earned, then why not save as much as I can?

for example, claiming 20k miles for business can give you back several hundred in tax returns (compared to without the miles).

I thought it would be worth it even for a few hundred a year..

^I agree with "A penny saved, is a penny earned" and i'm all for taking as many tax deductions that my business can take. I guess i'm just not understanding why you have a personal LLC. If you travel 20k miles for business, i'm hoping your business owns the vehicle so you can write off repairs, miles, gas, maintenance & write off the depreciation of the vehicle over the years.

 

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[summit]

okay, let me try to make it clear using example friend Bob.

Bob is a normal guy like you and me. Except Bob is trying to save money in taxes. so he set up a corporation BobsCorp (his personal LLC).

Now whenever he lives his life, like going to friends houses, going to fancy restaurants, buying nice electronics like iPhones and laptops, he claims those as work related for BobsCorp. that way, when he files for taxes, he gets nice tax breaks on all the "business meeting" meals, car mileages, and electronic purchases for his "business".

Is this a wise thing for Bob to do? what else could Bob do with this method?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

 

[Mrs. BRKb]

okay, let me try to make it clear using example friend Bob.

Bob is a normal guy like you and me. Except Bob is trying to save money in taxes. so he set up a corporation BobsCorp (his personal LLC).

Now whenever he lives his life, like going to friends houses, going to fancy restaurants, buying nice electronics like iPhones and laptops, he claims those as work related for BobsCorp. that way, when he files for taxes, he gets nice tax breaks on all the "business meeting" meals, car mileages, and electronic purchases for his "business".

Is this a wise thing for Bob to do? what else could Bob do with this method?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

You need a valid business purpose and your expenses need to serve that business purpose in a way one could defend to the IRS.

 

[jon.a]

okay, let me try to make it clear using example friend Bob.

Bob is a normal guy like you and me. Except Bob is trying to save money in taxes. so he set up a corporation BobsCorp (his personal LLC).

Now whenever he lives his life, like going to friends houses, going to fancy restaurants, buying nice electronics like iPhones and laptops, he claims those as work related for BobsCorp. that way, when he files for taxes, he gets nice tax breaks on all the "business meeting" meals, car mileages, and electronic purchases for his "business".

Is this a wise thing for Bob to do? what else could Bob do with this method?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

That's called having a business. An LLC is just the type of business ownership for taxes and legal purposes. Just like corporations, LP's, partnerships and sole-proprietorships. It doesn't matter all that much.

Don't worry about taxes until you have business income.
This conversation is silly.

 

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[summit]

You need a valid business purpose and your expenses need to serve that business purpose in a way one could defend to the IRS.

couldn't you just say something like "tech consultant" and claim that you just haven't gotten any customers yet?

but I guess it's getting besides the point. I was more so just curious if it would be useful to set up corps like wealthy families do, and the answers here seems to be "when you are wealthy".


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

 

[Mrs. BRKb]

couldn't you just say something like "tech consultant" and claim that you just haven't gotten any customers yet?

One of your most important assets is your ethical conduct. If you have no actual business, that'd be called tax fraud.

but I guess it's getting besides the point. I was more so just curious if it would be useful to set up corps like wealthy families do, and the answers here seems to be "when you are wealthy".

There's no harm in learning. (If more Lotto winners knew Finance when they won, they'd probably still have their money.)

 

[ZCP]

You have to have business income to write the expenses off against. Otherwise your business will be declared a hobby and the expenses will be personal.........

Get a couple of 1040's / etc. and work through the tax forms and see how income and expenses transfer from one to the other. Don't just rely on your accountant.

OR...... Get a business going, make a bunch of money and then hire the best accountants to tell you what to do......seems like more time should be spent on this than the minutia of business expenses for a business with no income......

 

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[Kak]

Hi everyone! I've read all the popular posts on this forum and this community seems amazing. So here goes my first post.

I have a startup LLC that I own and also a personal LLC. my personal LLC has no income, it just... exists.

I have heard of wealthy families setting up their family as a corporation and all finances being run as that corporation (so all cars and houses would be under that corporations name I'd assume). This is for tax breaks and I'm sure there are other incentives I don't know about that Id love to learn.

1. How can I do that? is there a guide? what phrases could I search on google that would teach me more about it?
2. Could I leverage my personal LLC to solely get tax benefits? It would really serve no other purpose than for me to write of my miles on my car (tax deductible) for "work" purposes. I could also use it to buy products for "work" which could be tax free or deductible. I would then, of course, use it for my personal life.
3. What else could I use my personal LLC for that could save me money?

please feel free to comment on any or all parts of the above list.

thank you


Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

okay, let me try to make it clear using example friend Bob.

Bob is a normal guy like you and me. Except Bob is trying to save money in taxes. so he set up a corporation BobsCorp (his personal LLC).

Now whenever he lives his life, like going to friends houses, going to fancy restaurants, buying nice electronics like iPhones and laptops, he claims those as work related for BobsCorp. that way, when he files for taxes, he gets nice tax breaks on all the "business meeting" meals, car mileages, and electronic purchases for his "business".

Is this a wise thing for Bob to do? what else could Bob do with this method?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

couldn't you just say something like "tech consultant" and claim that you just haven't gotten any customers yet?

but I guess it's getting besides the point. I was more so just curious if it would be useful to set up corps like wealthy families do, and the answers here seems to be "when you are wealthy".


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

My three strikes ignore list in one thread. Well played. Also for the sake of people who are going to continue reading your posts cut the disclaimer shit.

My advice before you no longer have my attention. Do things the right way in business, minimize taxes legally, cover your own a$$ from scrutiny. Make your money honestly. It is the best long term decision you can make.

 

[Joe Cassandra]

I work as a tax accountant for wealthy people, first you would need to file a Schedule C and right when you do that your risk to be audited skyrockets.

You need to actually be creating revenue and have intention to. .cash....and with minimal revenue you wont get much in tax breaks anyway.

If you say your paycheck is revenue. ..then you get taxed on your paycheck and have to pay taxes through your corporation. Double tax.

Any money taken out gets taxed and since you were taxed on your paycheck you get taxed.

Everything you purchase has to relate to building the business not fancy dinners with your family..no value is created.

Waltons can do it because they have a collection of assets their family generates income..but they arent writing off their baby milk purchases.

If you are driving 20k miles unreimbursed, you can deduct that anyway if you itemize. If you are reimbursed by your company, you cant.

The IRS sucks but arent dumb (entirely at least)


Sent from my SM-N900V using Tapatalk

 

[Silverhawk851]

@MyronGainz How do you feel about this

 

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[evanwebb]

If you want to continue the thought exercise search "starving the monkeys"
Read his articles and if you want more info order the book.

 

[MyronGainz]

@MyronGainz How do you feel about this

Thanks for the tag.

I'm not sure how it works in the U.S., but in Canda tax laws have pretty much eliminated any real use of holding companies for tax purposes. The only real way you can use a holding company for tax purposes is to DEFER taxes (not eliminate it).

For example, if you own a company with multiple shareholders, and it pays out dividends...but say don't need the money immediately aka you don't want to pay tax on the dividends YET.... you roll the shares into a holding company (tax free transfer of dividends from between Canadian corps)

 

[MyronGainz]

Thanks for the tag.

I'm not sure how it works in the U.S., but in Canda tax laws have pretty much eliminated any real use of holding companies for tax purposes. The only real way you can use a holding company for tax purposes is to DEFER taxes (not eliminate it).

For example, if you own a company with multiple shareholders, and it pays out dividends...but say don't need the money immediately aka you don't want to pay tax on the dividends YET.... you roll the shares into a holding company (tax free transfer of dividends from between Canadian corps)

Also to add... people will say you can funnel money here or there, avoiding taxes through offshore trusts and whatnot... but eventually the CRA will come after you using something called "GAAR".

Before you decide to not pay taxes, you better get 1)a damn good lawyer, 2)a damn good trustee and 3)a damn good accountant

 

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[Bowden]

You even make money bro?

 

[summit]

yes, my startup makes money and I have a 6 figure tech job. haven't started so don't know how much will be after taxes. I'm just trying to learn as much as I can and you guys have been helpful.

I just can't risk getting audited or anything cause it'd hurt my startups reputation . its in the education industry too so that maters.

I'm just gonna finish reading RDPD and the millionaire book and put my current thread questions on hold. it's getting bad feedback and seems I'm wasting my time. I did get a feel for just how much I don't know though, so that's good. it's a motivator to burn though more finance books.

 

[Raleighwood]

not really. i have a car iPod touch for music so whenever I drive somewhere long distance for business meetings and such, I just take a picture of the speedometer. quite easy really, and can tally it up in April.

> It's a bad habit that I have to deal with in my businesses.

what habit exactly?


__________

Disclaimer: everything I say is hypothetical and does not necessarily mean I partake in or perform any actions I claim or mention.

Wasting time and energy sweating small things, rather than focusing on the activities that produce the biggest results. Boiled down: Focusing on the 80/20 principle.

 

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[DeletedUser397]

If you work as a corp-to-corp contractor (you have to make sure your employer agency allows this), you can sign up for a S-Corp (not a LLC), and then you can deduct a lot of things. Essentially, your employer will hire the S-Corp (not you), and you will work for that S-Corp. So if you've already signed your employment contracts it may be too late. Your name shouldn't be on the contracts it should be that of your S-Corp, and your income should be coming through on a 1099 MISC.

Also, your use of rent, car, etc. that you are deducting has to be more than 50% for your work/business. Of course this is more of an honesty policy, but if you get audited you need to have logs, otherwise you can get screwed. As someone else mentioned, you definitely need to create an itemized log of all your expenses, it's not a cakewalk. Although IMO, everyone should be doing that anyway.

I have a friend that does this, and he deducts a portion of his rent and utilities, his car lease payments entirely, and all restaurants, travels, etc.

There's also some tricks that he's told me about. For example, let's say you are out at a restaurant with a group of 'friends' or business partners. Everyone is going to cover their own tab, but you tell everyone that you will pay for them all and they can pay you back later. So essentially, you pay a $200 tab with your business credit card. They pay you back in cash. So you get to deduct $200 from your taxes and you didn't spend anything extra.

He also gives away lots of 'gifts' to charity and there's tons of other loopholes and 'honesty' policy loopholes you can take advantage of.

 

[summit]

If you work as a corp-to-corp contractor (you have to make sure your employer agency allows this), you can sign up for a S-Corp (not a LLC), and then you can deduct a lot of things. Essentially, your employer will hire the S-Corp (not you), and you will work for that S-Corp. So if you've already signed your employment contracts it may be too late. Your name shouldn't be on the contracts it should be that of your S-Corp, and your income should be coming through on a 1099 MISC.

Also, your use of rent, car, etc. that you are deducting has to be more than 50% for your work/business. Of course this is more of an honesty policy, but if you get audited you need to have logs, otherwise you can get screwed. As someone else mentioned, you definitely need to create an itemized log of all your expenses, it's not a cakewalk. Although IMO, everyone should be doing that anyway.

I have a friend that does this, and he deducts a portion of his rent and utilities, his car lease payments entirely, and all restaurants, travels, etc.

There's also some tricks that he's told me about. For example, let's say you are out at a restaurant with a group of 'friends' or business partners. Everyone is going to cover their own tab, but you tell everyone that you will pay for them all and they can pay you back later. So essentially, you pay a $200 tab with your business credit card. They pay you back in cash. So you get to deduct $200 from your taxes and you didn't spend anything extra.

He also gives away lots of 'gifts' to charity and there's tons of other loopholes and 'honesty' policy loopholes you can take advantage of.

that's really cool. I wonder if there are any books that specify tricks such as these for the average middle class person.

 

[IAmTheJeff]

?

 

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