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Thu Jun 27, 2013 4:48 pm by MichaelG

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Sat Feb 04, 2012 11:39 pm by MichaelG

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» Closing TY2011
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How To Protect What You Have Gained

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How To Protect What You Have Gained

Post by MichaelG on Sat Oct 29, 2011 11:45 pm

How can you protect your capital and assets from others that may want what you have? The best way is to separate your assets from yourself by giving it to someone, but maintaining 100% control of that someone. No, I am not talking about a relative, but instead of a Limited Liability Company. You can do the same thing with a Corporation, but then you have double taxation on the same dollar. No

The difference is; Corporations pay taxes on what they profit each year. That profit is dispersed to the shareholders of the Corporation. The shareholders then pay taxes on the disbursements they received based on their shares. That is double taxation. With an LLC, the profit of the company is passed on to the members, and they pay the taxes on that same profit once if it is an “undesignated LLC”. This is referred to as “pass-through taxation” as defined by the IRS. Arrow

There are two types of LLC that you can form. One is a Single-Member and the other is a Multi-Member formation. With a SM LLC there is only one owner that has control of the company and is the easiest to form as well as the simplest taxation. With a MM LLC there are more than one owner, partners, and is more involved in formation and taxation. NOTE: If you want to include your spouse in a SM LLC, just list them as a personal assistant in the minutes and it becomes a “joint venture”. The formation and taxation are still simple. Also remember one important thing, “NO EMPLOYEES”. Employees can bring lawsuits. affraid

When the LLC is formed, you will receive an Employer Identification Number (EIN) that is like your SSN. That is how the government and the law see the LLC as an individual, separate from you. If a lawsuit is filed against you, the assets that belong to the LLC cannot be included in the lawsuit. That is how those assets are protected and you still maintain 100% control of them. cheers

What will keep someone from going after the LLC? Simple, the LLC does nothing for the public. It will show a profit every year from interest earned on the asset investments. If you want to take some deductions on taxes for the gains, you must have some expenses to claim. Question

This can be done simply also by registering your LLC activity as something you will do for yourself but not the public. When the service is performed for yourself, you pay your LLC, so you’re really paying yourself. Write a check out of your personal bank account and deposit it into your company bank account. Here is an example. Shocked

Register your LLC with the activity such as a Landscaping Service, SIC Code 561730. You will use this code when you do your taxes. Get everything set up both federal and state as far as registration and designations are concerned. Once you are ready to start doing business, get your startup cost out of the way (deductions) and buy a new lawnmower, weed-eater, and fuel cans. When you mow your lawn, the gas is bought by your LLC. When you have completed the job, pay yourself (write a personal check and deposit in LLC account.) Save all your receipts to file with your taxes. Rolling Eyes

Pay your quarterly taxes if they are due. At the end of the year when filing your taxes, you will show revenue and expenses on your tax return. The IRS recognizes and activity as a business if you have profit at least 3 years out of a 5 year period. Otherwise, they will class it as a hobby. The great thing about your lawn service. You are protecting your assets, paying yourself, and taking a tax deduction, at the same time doing something that you would have to do anyway. There are other activities you can register under that can be affected similarly. It is all a matter of personal preference. Cool

Each person’s situation is unique and will differ, but I think you get the idea. The specifics will be different for everyone, but the basic legal and tax implications will be the same. For a list of all the IRS recognized activities and their SIC Codes, visit the IRS website and look at pages C-9 through C-11 on the Schedule C Instructions. study

Living to serve Him,

Posts : 44
Join date : 2011-08-13
Age : 51
Location : Texarkana AR


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