Setting Up A One-Person Llc

1040 Self Employed Health Insurance Deduction - Setting Up A One-Person Llc

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The Llc, or petite Liability Company, is the new entity of selection for both experienced entrepreneurs and new start-ups. The one-person corporation is being substituted by the one-memnber Llc.

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1040 Self Employed Health Insurance Deduction

An Llc combines the liability safety of a corporation with the flexibility and ease of filing as a sole proprietorship.

Every small business, even those that in the past would not have elected to incorporate, should register as an Llc. If you own rental property it is a good idea to put title to the property in an Llc. If you own more than one rental property you should have a detach Llc for each property.

One thing to keep in mind when setting up your enterprise is that, like a corporation, an Llc should be treated as a detach legal entity. Here are some things you should do:

* If your enterprise will have employees you will need to apply for a federal employer Identification Number. This can be done online at http://www.irs.gov. Click on "Businesses" under "Information for", and then click on "Employer Id Numbers" under "Related Topics". A one-member Llc that does not have employees does not need a federal Id number. You can use your group safety number.

* Open a detach checking inventory in the name of the Llc. Deposit all enterprise income to this inventory and pay all enterprise expenses from it. Avoid using your personal checkbook for enterprise operation and try not to pay personal bills from the enterprise account. If the balance in the Llc inventory is low, you can "loan" money to the business. Be sure to recognize all such deposits as loans in the check register. Reimburse yourself for cash payments, automobile use and home-office use, and pay yourself a "drawings" by writing a check from the Llc account.

* All enterprise leases for office or warehouse space and equipment should be in the name of the Llc, as well as all enterprise assurance policies (i.e. Liability, office overhead, workers' compensation).

* All store prestige card accounts for enterprise purchases (i.e. Staples, Office Max or Office Depot, Lowes or Office Depot) should be in the name of the Llc. Have a bank or American Express prestige card in the name of the Llc and use it exclusively for enterprise purposes.

* The name of the Llc should appear on all enterprise stationery, letterhead and billhead, and all enterprise forms and applications.

*The Llc should hold "title" to all enterprise equipment, copyrights and trademarks. If you own "real property", such as an office building or warehouse facility, which is used by the business, have title held by a detach Llc.

A one-member Llc will narrative income and expenses on program C of the owner's Form 1040. An Llc does not have to file a detach tax return, as one would for a corporation.

A loss from the Llc can be deducted against other dutible income of the owner, such as wages, interest and dividends and capital gains, to sell out Adjusted Gross Income. Any behalf from the Llc will be branch to "self-employment tax", 50% of which can be claimed as an "above-the-line" deduction on Page 1 of the Form 1040. The owner may also claim an "above-the-line" deduction for qualifying condition assurance premiums and contributions to a Keogh, Sep or uncomplicated self-employed pension plan.

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