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14 results for “LLC”
Articles
- Article
LLC vs. S Corp Taxes: Which Option Will Save You More Money?
Learn about the differences between an LLC vs. an S corp and how both classifications affect your 1099 taxes. One of them could help you save money!
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Best State to Form an LLC
This guide breaks down what state actually makes sense for your business from online businesses, foreign entrepreneurs, to real estate LLCs. We'll help you decide which state is the right call for your specific situation.
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Can You Change the State of Your LLC? Tax Advantages And How It Works
Yes, you can change your LLC's state through a process called domestication. Learn which states offer real tax advantages, how the process works, and when it's actually worth doing.
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Do LLCs Get 1099s?
A lot of freelancers and contractors want to know, do LLCs get 1099s? That depends on how they're taxed. One of our qualified tax accountants will go over what exactly forming an LLC means when it comes to 1099-MISC.
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How To Deduct Write-Offs Without an LLC
A sole proprietorship is the simplest type of business structure that enables freelancers to write off as many business expenses as an LLC (or S Corp).
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How to File Taxes as an LLC
Filing taxes as an LLC doesn't have to be confusing, but the stakes are higher if you get it wrong. Whether you're a solo freelancer who just formed an LLC or a multi-partner business, this guide breaks down exactly what you need to file, what most business owners miss, and how to use the tax code to your advantage this year.
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How to Pay Yourself with an LLC
Your LLC structure determines how you get paid, and the default method isn't always the smartest. Discover how owner's draws, S-Corp tax status, and the QBI deduction interact to impact your decision on which method to use to pay yourself.
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Should You Start an LLC as a Freelancer? Not Necessarily.
Many freelancers want to know if it makes sense to start an LLC for their independent contracting work. We'll walk you through the benefits and pitfalls of the limited liability company, from the tax implications to the legal issues. We'll also break down your other options and show you which path will give you the biggest tax savings, depending on your freelance income.
Ask an Accountant
- Ask an Accountant
1. You create your own bookkeeping LLC. 2. You provide bookkeeping services to your parents’ LLC. 3. You are studying accounting as an undergrad. 4. Your LLC pays for your accounting degree and deducts it as a business expense. Can I do this as a deductible tax expense as undergrad?
The short answer is no, this setup almost certainly does not work for deducting your undergraduate accounting degree. The core problem is that education expenses are only deductible as a business expense when the education maintains or improves skills in your current trade or business. An undergraduate degree that qualifies you for a new career or profession fails this test, even if the subject matter relates to your existing work. The IRS is explicit that education expenses are not deductible when they qualify you for a new trade or business, and courts have consistently applied this rule to degree programs. Here is why the LLC structure does not help you get around this. The LLC is just a pass-through entity, so the IRS looks at what the education is actually for, not who is technically paying for it. If you are an undergrad studying accounting, the degree is qualifying you for a profession, not maintaining skills you already use. The fact that you are providing bookkeeping services now does not change the nature of the degree itself. The IRS would likely disallow the deduction on audit. There is a narrow scenario where this could work differently. If you were already a credentialed accountant or CPA taking courses to maintain your license or sharpen existing skills, that education could be deductible. But a foundational undergraduate degree does not fit that mold. The American Opportunity Credit or Lifetime Learning Credit might give you some tax benefit for tuition on a personal return, which is worth exploring instead.
- Ask an Accountant
Do the assets my LLC owns affect my government financial aid for college ?
It depends on how your LLC is taxed and your role in it. For federal financial aid (FAFSA), the rules hinge on whether your LLC is considered a business you own vs. a passive investment: If you (or your parents) own and control the LLC, the business assets likely need to be reported on the FAFSA, but there's an exception: if the business has fewer than 100 employees, it may qualify as a "small business" exemption and the assets don't count against you. How the LLC is taxed matters too. If it's a single-member LLC (taxed as a sole proprietorship) or a flow-through entity (S-corp or partnership), the income flows to your personal return and will definitely affect your Expected Family Contribution (EFC). If it's taxed as a C-corp, the treatment can differ. What actually hurts you most on FAFSA is income, not assets — so if the LLC is profitable, that's the bigger concern regardless of what assets it holds. A few things to clarify when you chat with a CPA: - Are you the student, or are you a parent asking about your child's aid? - How is the LLC taxed (sole prop, partnership, S-corp)? - Is the LLC actively operated or more of a holding entity? Those details would let a tax pro know exactly what needs to be reported and what the impact would be.
- Ask an Accountant
Hi, I am an IT consultant and resell software subscriptions, such as Microsoft 365. Some of those are true cloud-based services - i.e., just an email box, no software included. Some of those have downloadable software that only works while the subscription is active (typically annual). I moved my LLC to Florida, but I have nexus in Indiana as nearly all of my clients are there. For those clients, should I be charging sale tax on all of these products, or just the ones that have downloadable software? I also resell 1Password for MSPs (managed service providers.) Their wording is much more like an internet access only situation - i.e., they give you access to their app free but it only works when you pay the subscription, so same question on that product specifically. Thank you in advance! Gary
Good question—the key factor is where your customers are located, not where your LLC is formed. Because your clients are in Indiana, Indiana Department of Revenue rules govern whether sales tax applies. Under Indiana Sales Tax Information Bulletin #8, prewritten computer software downloaded to a device is treated as taxable tangible personal property, whereas pure cloud-hosted Software-as-a-Service (SaaS) accessed entirely through a web browser with no local software download is exempt from Indiana sales tax. Applying this rule to your products: standalone email mailboxes or web-only cloud subscriptions with no local downloads are non-taxable. Conversely, Microsoft 365 plans that include downloadable desktop applications (Word, Excel, Outlook) are taxable, even though they operate on active annual subscriptions. Password management platforms like 1Password are also taxable because functional deployment requires installing local desktop apps, mobile apps, or browser extension binaries onto the client's devices. To stay compliant, be sure to itemize taxable downloaded software separately from exempt pure-SaaS or support services on your invoices, and use Form ST-105 with your distributors to buy these licenses tax-free for resale.
- Ask an Accountant
How to transition from Sole Proprietor to multi member LLC
The tax side of this transition is simpler than most people expect. When you add a second member to your single-member LLC (or form a new multi-member LLC), the IRS automatically classifies it as a partnership for tax purposes. That means you'll file Form 1065 each year instead of reporting business income on your personal Schedule C, and each member receives a K-1 showing their share of income, deductions, and credits. Here's what you actually need to do. First, handle the legal side: draft an operating agreement that spells out ownership percentages, profit and loss allocations, and how decisions get made. Then register the new LLC structure with your state (requirements vary, so check your Secretary of State's website). You'll also need to get a new EIN from the IRS, even if you already had one as a sole proprietor, because the entity type is changing. You can do that for free at IRS.gov in about five minutes. On the tax filing side, your final year as a sole proprietor will include a Schedule C covering the period before the transition. After that, the partnership files its own return (Form 1065) by March 15 each year. One thing worth planning for: partners pay self-employment tax on their distributive share of active income, similar to how you did as a sole proprietor. If the LLC will have significant profits, it may be worth discussing whether electing S-corp status makes sense down the road.
- Ask an Accountant
I am employed with full benefits and get W2 form. I also have outside employment teaching and get paid and will get 1099 form. Can I form an LLC with 1099 employment to save taxes as this is about 25% of my total income (substantial amount, won't go on)?
You can absolutely take advantage of business deductions to reduce your taxes. To sweeten the deal, you don’t even have to form an LLC to do this. By default, the tax code treats you as a “sole proprietor” and allows you to report your business income and expenses on a Schedule C without officially registering as an LLC. Your Schedule C is attached to your 1040 at tax time and submitted to federal and state governments. For more information on how this works, check out our guide to deducting your business expenses without an LLC!
- Ask an Accountant
I am just wondering which is the best tax filing for my small business? It is an LLC and I did not file anything within the first 75 days (I didn't realize I only had 75 days)
The good news is that missing that 75 day window almost certainly is not a problem, because your LLC does not need to file anything special to be taxed at all. By default, the IRS treats a single member LLC as a sole proprietorship (reported on Schedule C with your personal return) and a multi member LLC as a partnership (Form 1065). Neither of those requires an election or a deadline. So if you have not filed any special paperwork, your business is likely just being taxed the default way, which is completely normal and valid. The 75 day rule you are thinking of applies only if you wanted your LLC taxed as an S corporation instead, which some business owners do once profits get high enough to make the self employment tax savings worthwhile. That election (Form 2553) normally needs to be filed within two and a half months of either forming the LLC or the start of the tax year. If you missed it but genuinely intended to elect S corp status and have a reasonable explanation for the delay, the IRS often allows a late election under its late relief procedures, sometimes up to three years and 75 days after the original intended effective date. So the real question is whether you actually wanted S corp treatment or just default treatment. If your net profit is under roughly $100,000 to $110,000 dollars a year, staying with default treatment is usually simpler and fine. If you are earning more and self employment tax is getting painful, it might be worth exploring the late S corp election. If you want, a Keeper tax pro can look at your numbers and tell you whether S corp treatment would actually save you money before you go through the late election process.