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12:31 pm
August 8, 2012
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KyleAAA
| | Atlanta, GA | |
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Post edited 12:32 pm – August 8, 2012 by KyleAAA
Sole proprietors have all the tax benefits LLCs do. There are no tax benefits to incorporating. There is ONE exception, and that is if you elect to be taxed as an S-Corp you can save some money on self-employment tax. Then again, that's only useful if you are making a decent amount of money. If you're making $200 a month it's not worth the trouble or expense. Anything an LLC can write off, an individual can write off as well. An individual can write off their home office, part of their utilities, HOA dues, internet, etc. You can even do revenue sharing with staff writers. You don't need to be an LLC to do all that. Things might be different in Canadia.
The real reasond to form an LLC are for asset and liability protection, not taxes.
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2:05 pm
August 8, 2012
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Tom Drake
| | Canada | |
| Member | posts 148 |
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Invest It Wisely said:
Interesting thread! I'll likely confirm with an accountant before I sent anything in, but while I'm not going to try to deduct my mortgage payments or anything like that, my internet usage is primarily related to business, as are my cell phone expenses. In the end these items are not big huge-writeoffs, but it does help out. I get the most savings from paying myself less salary, since payroll taxes are 30% at anything higher than minimum wage, while business tax is 19%.
As a Canadian corporation, you can likely claim up to 20% of your mortgage interest for a dedicated home office. For internet, using the majority for business could easily make 75% of it deductible. The benefit to you personally is that you can take the equivalent of this business expense out of the company without paying tax, since you technically created a shareholder loan when you paid for it with your personal money.
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4:50 pm
August 8, 2012
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Ted Jenkin @ YourSmartMoneyMoves
| | Gen X & Y Finance | |
| Member | posts 212 |
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Hopefully this article I wrote will answer most questions.. if your kids are of a certain age, this is also a great way to income shift and potentially do a college savings plan at the same time. I know because I actually have a 1,500 person client base that I practice with every day and own an accounting firm!
I’m a Freelancer . . . Should I Set Up a Corporation?
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6:23 pm
August 8, 2012
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Lance at Money Life and More
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I have an attorney/CPA friend that knows this stuff a lot better than I do even though I have my CPA license. Unless I make more money than I can find expenses for I'm not too worried about becoming an LLC. It is pretty easy to find expenses though. In Florida there is a yearly annual report fee that is a little over $100 for LLCs so I'd have to save that much in self employment taxes in order to do it. I can file the tax returns myself it is the law side that I'm more iffy on.
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7:02 pm
August 8, 2012
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Ted Jenkin @ YourSmartMoneyMoves
| | Gen X & Y Finance | |
| Member | posts 212 |
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if anyone has questions feel free to stop by and ask @ oXYGen Financial – Just leave a note c/o Ted Jenkin
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7:17 pm
August 8, 2012
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Invest It Wisely
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Tom @ Canadian Finance Blog said:
Invest It Wisely said:
Interesting thread! I'll likely confirm with an accountant before I sent anything in, but while I'm not going to try to deduct my mortgage payments or anything like that, my internet usage is primarily related to business, as are my cell phone expenses. In the end these items are not big huge-writeoffs, but it does help out. I get the most savings from paying myself less salary, since payroll taxes are 30% at anything higher than minimum wage, while business tax is 19%.
As a Canadian corporation, you can likely claim up to 20% of your mortgage interest for a dedicated home office. For internet, using the majority for business could easily make 75% of it deductible. The benefit to you personally is that you can take the equivalent of this business expense out of the company without paying tax, since you technically created a shareholder loan when you paid for it with your personal money.
Hi Tom,
What are the implications of deducting the mortgage interest? Does the corporation need to pay rent, and how does it affect taxation when selling the property later on? It's the latter that had me worried, but to be honest I haven't yet spoken to an accountant about it and I don't pay corp taxes until next year, so nothing's set in stone.
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7:26 pm
August 8, 2012
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Invest It Wisely
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Hi Tom,
Re: "The benefit to you personally is that you can take the equivalent of this business expense out of the company without paying tax, since you technically created a shareholder loan when you paid for it with your personal money."
That sounds like what I've been doing when I pay for something with the personal CC, and then transfer the money from a business account and deduct that against a "liability" to myself rather than paying it out as salary.
You're probably much more experienced here than I; should we take this to an email thread?
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8:09 pm
August 8, 2012
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OneCentAtatime
| | Florida, USA | |
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I am planning to sell shares pretty soon. Waiting to fix underwriters and bookrunners
Ok, jokes apart, this is serious topic and every blogger should read the thread. Looking for Andrea's post on the process.
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8:26 pm
August 8, 2012
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Edward Antrobus
| | Fort Collins, CO | |
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MoneyIsTheRoot said:
Internet service is right there as well! Not to mention any and all utility payments. Just as you stated the percentage of square footage, the same applies to all of your bills. Now, I wouldnt buy new windows for the house and then write that off, but then again, the office does have two windows in it… so im curious, maybe im missing out on something like that and it can be claimed…id luv to hear from a tax expert here that would know?
Thanks for clarifying that. Basically, the way I see it in terms of internet service, few non-full time bloggers are going to have significant percentage of their internet bill applied towards their business. My ISP charges me $42/month regardless of how much or how little time I actually spend using the internet. That works out to roughly 6 cents per hour. If I devoted 10 hours per week to my online endeavours, I could claim only about $30 worth of expense.
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8:59 pm
August 8, 2012
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Tom Drake
| | Canada | |
| Member | posts 148 |
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Invest It Wisely said:
You're probably much more experienced here than I; should we take this to an email thread?
Yeah shoot me an email, I'm no expert, but I know what my accountant lets me do at least ;)
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