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J.Hazelbaker
J.Hazelbaker, Attorney
Category: Business Law
Satisfied Customers: 4385
Experience:  Experienced and trained in the area of business law.
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Will I save money on my taxes if I form an LLC for my professional

Resolved Question:

Will I save money on my taxes if I form an LLC for my professional counseling business? I only make around 30k per year at this point.
Submitted: 4 years ago.
Category: Business Law
Expert:  J.Hazelbaker replied 4 years ago.

J.Hazelbaker :

Hello. Thank you for using JustAnswer.

J.Hazelbaker :

Forming an LLC will complicate your taxes, but may not save you any money.

J.Hazelbaker :

Operating your business under an LLC, rather than as a sole proprietorship, gives it the imprimatur of formality that makes it less likely that the IRS would question certain deductions. However, at your current rate of revenue, your deductions may not be significant enough for you to want to itemize rather than taking the standard deduction.

J.Hazelbaker :

If you get to the point where you have enough business expenses so that itemizing deductions makes sense as it gives you a greater deduction than the standard, then it would make sense to form the LLC at that point.

J.Hazelbaker :

In addition, if you are generating enough revenue that you won't need to take all of the excess income as a draw (i.e. paycheck), then you could save some money on taxes with an LLC at that point.

J.Hazelbaker :

At this point, I would guess that it is a toss-up, but that your taxes would be slightly less complicated at this point without the LLC.

J.Hazelbaker :

Please let me know what follow-up questions you have. If my above responses have been helpful, please click Accept so that I get credit for the time/effort. You may always restart the thread and ask follow-up questions at any time by clicking the “Reply” button at the bottom of the question/answer thread. You can access this thread later in your profile under the “My Questions” tab.

Customer:

I do have auto expenses as I must drive to client's homes or school and I drive 175-200 miles per week. also I buy kids lunches and take them out to movies at times. Plus continueing ed and insurance for practice and printer, computer, home office. I must take all money out every month to make ends meet. How much does it cost to have an attorney form an LLC?

J.Hazelbaker :

A local attorney will likely charge you several hundred dollars in addition to the filing fee, which is between $100 and $200. However, this is something you can do yourself without an attorney.

J.Hazelbaker :

What state will you be operating in?

Customer:

OK

J.Hazelbaker :

In many states, the "secretary of state" website contains the forms you need to file and the instructions. You can download them, fill them out, and mail them in with a check. They are pretty straight-forward.

J.Hazelbaker :

You can usually find the site by "googling" the name of your state and the phrase "limited liability filing form fee"

J.Hazelbaker :

Please let me know what follow-up questions you have. If my above responses have been helpful, please click Accept so that I get credit for the time/effort. You may always restart the thread and ask follow-up questions at any time by clicking the “Reply” button at the bottom of the question/answer thread. You can access this thread later in your profile under the “My Questions” tab.

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