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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Filing taxes, would I get a better tax break for an LLC filing

Resolved Question:

Filing taxes, would I get a better tax break for an LLC filing or Sole Prop filing on my personal taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

 

Hi,

 

Both are what's called pass-through entities, meaning that (if you're a single person LLC or a sole proprietor) the profit OR loss from your business will flow from your schedule C to line 12 of your personal tax return.

 

 

... effectively no difference.

 

 

And, you would need to form the LLC with your state.

 

 

One reason for forming the LLC is to separate your personal assets for your business assets, for lawsuit and creditor protection.

 

 

 

 

Hope this helps

 

Lane

 

Positive feedback (or an “accept”) is highly appreciated. That’s the only way we’re paid. BUT, if you need CLARIFICATION, COME BACK here. Also, feel free to bookmark this page to come back for reference.

 

 

 

Customer: replied 1 year ago.

I previously had a C corp and closed it due to the new restrictions with the IRS and I do not comply with what a real C corp is, being the only owner basically.


My thought was to file as a sole prop this year but I did form an LLC in my state, CA for the liability reason but still on the fence on how to file.


I thought self employment tax would be more than just straight tax through an LLC?

Expert:  Lane replied 1 year ago.


Nope, as either a sole proprietor OR an LLC OR a partner in a partnership, you'll pay the same thing there.

As either a sole proprietor OR a partner OR an LLC member, you're not considered to be an employee ,.. the IRS calls it "disregarded entity.

...where you're taxed as a sole proprietorship, for self employment taxes, either way

Once (and if you ever plan to) you have some employees, setting up as an S-corp could help on the self-employment piece



Sorry to be the bearer of bad news, but hopefully having all the facts'll help you see around some corners.'

Lane

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4173
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 8 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.


As a follow-up, here's an excellent article:

http://www.smbiz.com/sbfaq006.html




Hope this helps

Lane

Positive feedback (or an “accept”) is highly appreciated. That’s the only way we’re paid. BUT, if you need CLARIFICATION, COME BACK here. Also, feel free to bookmark this page to come back for reference.
Expert:  Lane replied 1 year ago.


Thank you!


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