Last week I had a nice chat with a good friend Jacob, who has also been a CPA for over 35 years. “Jacob, any new changes in the tax laws worthy of talking about?”
“Adam, we’ve been hammered with audit notices for clients filing a Schedule C!”
Often, people start a side hustle or start businesses and don’t give much thought to taxation. Our government has a completely different set of rules for business owners. Lots of incentives for you to start and operate your business.
As a w-2 employee, you make money, they take out taxes, and you use what’s left to pay the bills. As a business owner, you make money, spend the money first, and pay taxes on what’s left. The tax laws are set up to encourage you to own a business. But if you’re not structured properly, you’re going to have to itemize expenses on Schedule C.
Using pre-tax dollars to pay a lot of your expenses is a huge benefit. Our government provides tax benefits to business owners:
Home Office (Office Expense)
Mileage (67 cents per mile)
Travel Cost (airfare, hotels, uber, meals)
Cable TV Satellite
New desk, computer, phone
There are hundreds of things you can write off when as a business owner. These expenses must be itemized on Schedule C. You are 900% more likely to be audited by filing a Schedule C!
Solution: S-Corp or LLC taxed as an S-Corp both file form 1120s, eliminating the Schedule C! Your audit risk filing as an S-Corp (form 1120S) is less than ¼ of 1%. Big difference.
Start your Nevada LLC in 24 hours guaranteed
You don’t need to live in Nevada to enjoy the best asset protection and audit defense a Nevada LLC can provide.
Additionally, you can save thousands of dollars in self-employment taxes. Self-employment tax is 15.3% of your net profit for Social Security (12.4%) and Medicare (2.9%). When you’re taxed as an S-Corp, you only pay self-employment tax on a small portion of your profit.
If you’re starting an active income-producing business or side hustle, start a Wyoming LLC taxed as an S-Corp IMMEDIATELY! This gives you the very best protection and the lowest audit risk, and you can start building business credit!
Regardless of the amount of income, get the LLC started. It is from the date of incorporation moving forward that you’ll get these tax benefits. We can’t go backward for income before the date of incorporation. NCH has a team of professionals here to support you with any of your business needs.
With NCH, the state’s top business formation service, you can register your LLC in Nevada quickly and easily. Our specialists will help you choose the right entity for your company and understand why an LLC in Nevada is your best option. We’ll assist you with all necessary Nevada LLC forms, including the vital Articles of Organization, and help you comply with state regulations. In addition, we offer expert assistance with tax compliance, credit building, and payroll management. Schedule a private consultation to explore effective solutions to minimize tax liabilities and protect your wealth. Start unleashing your LLC’s full potential today with NCH. Schedule a consultation with Adam Kintigh today!
DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.