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    7 Replies Latest reply on Dec 15, 2008 6:51 AM by Retiring_09

    Wisest financial use of my LLC for my home business

    xrishix Newbie
      I am the sole owner of an LLC and I'm about to start my home business.
      I would appreciate some initial financial tips to minimize my taxes and maximize my options for the future.

      For instance, I am thinking of expanding the space in my house and use one floor for my business. I will have to purchase equipment, etc. Of course, the utility bills will increase and still will be coming on my name. How should I handle that, in terms of taxes, accounting, etc.

      I will buy a car for almost the exclusive use of my business.

      I know I will have to discuss all this extensively with an accountant, but I wonder if some of you can give me some basic/general tips and/or experiences.


      Thanks for reading this post.
        • Re: Wisest financial use of my LLC for my home business
          Lighthouse24 Ranger

          The IRS publication Business Use of Your Home is a good starting point relative to that question:

          You might want to look into leasing a vehicle rather than buying if it is really going to be used almost exclusively for business. The business can deduct the cost of leasing and maintaining the vehicle, plus you'd pay sales tax only on the lease payments rather than the full purchase price. In addition, the lessee effectively pays only for depreciation during the lease term, plus an interest equivalent. So if you expect the vehicle to hold a high percentage of its value through the full term of the lease, leasing can be a really good deal. Just something to consider.

          Welcome to the community and good luck with your new enterprise!
          1 of 1 people found this helpful
          • Re: Wisest financial use of my LLC for my home business
            Bridge Navigator
            If you are the sole owner of an LLC, the IRS will tax you as a sole proprietorship. To reduce tax and give you greater flexibility, you might want to think about changing your tax (not legal) status to that of an S corp. The IRS doe not really recognize LLC status so they automatically reclassify you - in your case to a sole prop.

            Look into:

            1) Form 8832 - election to be taxed as a corp. and then file
            2) Form 2553 0 election to be taxed as a S corp.

            This will allow you to pay yourself a wage but also pass through some of the income to you personally as "profit" avoiding payroll taxes. Work with a good accountant to help you address these issues.

            I have a home office and personally I find the "home office" write-off not worth the extra record keeping and audit rick. Beside, when you sell the house you give it back as a "tax recapture".

            That being said, absolutely write off all equipment for your business. Talk to an account to see if an automobile purchase or lease would be more beneficial for you. If you buy the car in your company name, you deoreciate an amount monthly. If you lease it, you get to write-off the full lease amount monthly, generating greater tax savings.

            Ask your accountant about using Sec. 179 write-off for all capital expenditures (I'm not sure you could do this with an automible)

            Remember, write-offs are only good to offset taxes; i.e. income.
            1 of 1 people found this helpful
            • Re: Wisest financial use of my LLC for my home business
              LUCKIEST Guide
              Wisest financial use of my LLC for my home business

              How soon will you be starting this business?? Have you developed a Business Plan??

              Every person in business should have an Accountant, A Lawyer and
              maybe an Insurance Agent.


              Do you know about SCORE?? SCORE is FREE and can help you succeed.

              • Re: Wisest financial use of my LLC for my home business
                Allie2002 Newbie
                Hi! Congrats on expanding your business! I notice that you are in the healthcare field. I actually specialize in the healthcare profession as a CPA. Depending on what you plan to do and your specific field, there are alot of tax, home office and build-out options. If you would like to email me specific questions, you may do so at
                • Re: Wisest financial use of my LLC for my home business
                  work4home Newbie
                  You received a lot of good advice. One thing that many people overlook is listing business inventory as separate from personal inventory. Examples could be a computer, which does not mean going out and buying a new one; office furniture, a separate phone line, etc.

                  I understand that the more that a sole owner of an LLC separates the business from the personal accounts and so forth, the less likely the irs will preceive it as a sole proprietorship. It could be as simple as literally printing or writing out a business check to yourself as salary or commission although I'd definitely suggest talking to a business attorney or CPA first. I had to switch to a CPA who solely owns several small businesses who caught a number of mistakes that I made. He specializes in small, one owner (or couples if filing jointly) businesses.

                  If you want to contact me, then simply look at my profile. I'm based in Oklahoma.
                  • Re: Wisest financial use of my LLC for my home business
                    Retiring_09 Wayfarer
                    I think your moving way toooooo fast..I think you need to see if your business will serve and start there
                    first then once it begin to grow, THEN you can grow with it. Many persons lose and file bankrupt because they grew but the business suffered and eventually was smothered. I got a LLC for my business to protect me and its going well. I may even leave me job to do this Full lets talk!