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I am starting a consulting business and considering an LLC.

I am also an artist...
I am starting a consulting business and considering an LLC. I am also an artist. Can I combine the two businesses in one LLC so I can write off my studio rent and expenses legally?
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1/29/2018
Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 56,893
Experience: 32 years of experience practicing law and a businessman.
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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

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Good afternoon. Whether you operate them as two separate LLC's or combine them into one LLC, you are entitled to write off your business expenses. The income and deductions from your LLC will flow through to your Form 1040 whether from one LLC or two. One of the primary reasons for setting up an LLC is for limited liability so that your personal assets are not at risk for the debts and liabilities of the LLC. For this reason, it's a good idea to put each business in its own LLC so that a problem with one does not contaminate the other.

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

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Customer reply replied 4 months ago
What if I do not generate income as an artist this calendar year? Can I still write off those expenses?
Customer reply replied 4 months ago
Are you still there?

Yes, I'm typing your response. It will take a few minutes.

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Thank you for following up. Yes, you can as long as you satisfy the requirements of being an artist as a business rather than a hobby. There is no hard and fact/black and white determination. Rather, the IRS uses the following guidelines to guide you making a determinationwhether it's a business or a hobby:

In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

  • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.
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Customer reply replied 4 months ago
Is there a certain amount of time that I have to earn income as an artist to legitimize those deductions?
I will have more expenses as an artist, but more income as a consultant or independent contractor.
I am considering JMF LLC Consulting.
Do I have to have zero, one or two DBA's for the two types of business activities?

I'm typing your response; thanks for your patience. :)

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Customer reply replied 4 months ago
What I meant was:29 January 2018 03:11
I am considering "JMF LLC Consulting" as my LLC name
Customer reply replied 4 months ago
Thank YOU!!

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses." Note that the 3 out of 5 statement is a guideline, not a rule, and that all other factors must be taken into consideration. On a new business, the IRS expects a loss in the first couple of years and won't contest a business designation for losses in the first couple of years.

If you form one LLC and operate either of your businesses using a different name, you'll need to file a DBA for each of the other names. :)

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Customer reply replied 4 months ago
For a business named "JMF LLC consulting"
will I need a DBA for the consulting business AND the art business or just the art business?
Customer reply replied 4 months ago
Will I need to say "DBA Jeanne Freibert?" and Can I say that for both consulting and art?

If you operate the consulting firm under the exact name used in your Certificate of Formation, you don't need a DBA. Only if you operate either under a different name do you need to file a DBA.

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Customer reply replied 4 months ago
THANK YOU!

You're very welcome. It's been my honor and privilege to help you with this. If I can help you in any way in the future, I'll be happy to help. For easy access, my bookmark is: www.justanswer.com/law/expert-legalbeacon/ . Or, simply request “Richard only” in the first line of your question.

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Customer reply replied 4 months ago
One More:
Can I name my LLC "JMF LLC"
And use "DBA Jeanne Freibert" for both art activities and consulting activities?
Or do I need two separate DBA's since they are different types of business activities?
THANK YOU!

You do not need separate names; you can do exactly that if you wish. :)

Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 56,893
Experience: 32 years of experience practicing law and a businessman.
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Richard and 87 other Business Law Specialists are ready to help you
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Customer reply replied 4 months ago
That is awesome. Thank you, Richard!

My pleasure to help! Thank you so much for the 5-star rating! I know rating takes an additional step and I truly appreciate you taking the extra time!

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