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You have already received the check (made out to you personally, rather than to the LLC or C-Corp)?
Yes, and deposited.
Because an LLC and a sole proprietor, are pass-through entities, the amount (after deducting business expanses, as you mention) will end up on line 12 of your personal income tax return (business income or loss)
Th, from a tax standpoint is probably the best, XXXXX XXXXX two reasons:
(1) the C-Corp (paying it's own taxes at corporate rates) may be at a higher bracked than you, individually ... AND ...
(2) After the C-corp pays it's own taxes, any dividends you pull for yourself will be taxed again at your individual level (this is the double taxation you hear about, with regard to C-Corps)
It really depends on an analysis of YOUR personal marginal tax rate for the year, as compared to the c.corps rate
Should I just pay the consultant through my personal account that the check was deposited in, or transfer to the LLC and pay from there?
Hoevenr, if the check wasn't made out TO the c-Corp, thismay be a non-issue anyway, (unless you can have the maker, stop payment and re-issue to the C-Corp)
Too late for that, plus it took 6 months to finally get payment....
Either way works, again because the net profit will be taxed at your personal level from either the LLC or the sole prop ... from a liability standpoint, it WOULD be better to run everything through the C-Corp
I need transfer some of those funds to the C-Corp to cover some expenses. How should that be classified?
on the C-corp books'
Understand, but yes ... I would do it all through the LLC, you'll just file a schedule C with for the LLC as an attachment to your 1040 and you will have that expenses (and any other business expenses of the LLC_ deducted before carrying it to the 1040
This doesn't touch the C-Corps books at all
IF it was made to you personally, the C-Corp did not do this businessa
but because the tax effect (and ownership) is effectively the same for the Sole PRop and the LLC (both disregarded entities by IRS) just deposit it to the LLC account and report it there
Yes, I know. I just need money in the C-Corp account to pay other expenses.....should this be a loan to the corp from the LLC or categorized as some sort of equity investment
Sure, you can just contribute the money to the C-corp as a capital investment (it will increase your basis in the C-Corp, should you ever sell it) BUT you'll still need to report the INCOME (or rather the profit left after taking business expenses) on your tax return (again BEST done through the LLC)
Got it...So I record it as a Capital Investment in the C-Corp books. thanks
debit cash, credit owners capital ... BUT that's t the taxable event... the profit from the business is
sorry for the typo (trying to say, investing in the C. Corp) is "N"T" the taxable event
geez, is NOT
but yes, you have it
Back to your original question? It's being sure that you use all of the ordinary and necessary business expenses you can (including the contractor) on the schedule C for the LLC on your taxes for this year that will get that tax bill down.
Hope this has helped
yes it has. So no taxable event from the LLC providing owners capital to the C-corp.
exactly, its just taking your after tax dollars and investing in your C-Corp (the tax benefit of that will come when you sell your C-Corp and have a lower capital gain because of it)
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I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)
Please let me know if you have any questions at all ...