Formed an LLC, Just taking steps

My spouse and I just filed the paperwork for our LLC, since we got married on Saturday and now we get even better tax bennies for running a homestead. Using our wedding money to seed the business.

We're still trying to hammer out exactly what our strategy is, and I think it's mostly a way to organize our homestead finances in a way where we can just look at one place and see if our homestead is bleeding us dry. We've been running it over a year now, and our savings has been growing. We'd like to buy a farm one day, so we'd like to get the rabbits and quail to pay their own bills and maybe give us a little wiggle room to expand the business. Right now our salable goods are rabbits for breeding stock, rabbits and quail as people food, rabbits and quail as animal food (you can charge more per pound for animal food around us, who woulda thought?) We're hoping to grow enough veggies to sell as well, but we're not super sure on that just yet. We have a half acre leased for the project.

Is there anyone who has experience using LLCs to move money around in a way that works? What's your attitude towards the whole thing?

Honestly, this is an elaborate scheme so we can hide money in a legal way from the government by telling them all of the crap we do, and show them how little money we make off of it. Wage labor pays less and gets taxed more, and it's also less fun. If we can get away with running a poorly run business (but a well run homestead) and have a lot of fun and only make a few thousand each year, we'd be thrilled.

Any fun and easy money makers so it's not all a sham?

Having an LLC is a smart business decision for small businesses.

My last job as Manager was for a business with a LLC.

Of course, their accountant took care of all the financial stuff.

The main reason they became an LLC is the reason most businesses become LLC:

For the liability protection, management flexibility, and tax advantages.

Just make sure you know how to file and run a schedule C like you can make a peanut butter sandwich, and learn about hobby loss rules.

If you have a bank account and credit card that you can use only for business purposes it helps at the end of the year. Do whatever you can to look forward to filing taxes, don't show up in March/April with a pile of paper to sift through.

I ran a small business for about a decade, only went the LLC route when I had an employee, mainly to protect payroll from any possible personal financial problems.

It does not really change much about tax payment, etc. in U.S. You’ll probably still report the income as “pass-through” on your personal income tax form.

You can only claim business losses 3 years running. Otherwise you can claim “hobby” losses only to the extent of “hobby” income.

There are particular requirements for claiming expenses for home businesses. To do things legally, you really need to have separate spaces and equipment for living and working.

Also distinction between “farm income” and other— my business was not a farm, so I don’t know the particulars.

All that said, the IRS does not put much resources into investigating people who don’t make much money.

My wife is a licensed attorney in New York operating partially in business law.

I however am not.

Please be careful with your documentation. The tax man does not play. The good news is that the tax man doesn't tend to look at homestead type businesses all that often. LLCs are a great device in order to protect your personal assets from liability. LLCs allow the operators to more easily raise capital for projects than other business forms.

There really isn't any super secret tax loopholes that exist just by utilizing an LLC. It just is easier to do business as an entity than as a person.

Tony Hawkins wrote: Do whatever you can to look forward to filing taxes, don't show up in March/April with a pile of paper to sift through.

This is really good advice.

My dad did tax returns for a living.  I helped him.

One year a pig farmer brought him a cigar box full of receipts.

I spent hours organizing them only to have my dad tell the man to find someone else.

Most folks are like my daughter and have a really good tax guy who also advises them on how to run their business the best way.

Timothy Norton wrote: There really isn't any super secret tax loopholes that exist just by utilizing an LLC. It just is easier to do business as an entity than as a person.

The tax loophole is, thankfully, not the main reason why we formed an LLC. It's more of the functionality that you describe here. Also, people like buying from businesses and it makes everything a little clearer on whether or not we are losing money, breaking even, or making money doing the homestead. When our homestead finances are mixed in with our personal finances, things get really weird. Our budget book has been getting weirder every month (we're very careful with our money) mainly because we weren't treating rabbit raising as a business, but a lifestyle. Now we're finding that our rabbits can pay their own bills if we let them, and we're having fun calling ourselves rabbit farmers.

I almost view the LLC the same as my rabbit pedigrees. Means a lot to some people (the banks, customers) and less to others (people who know more than me, people who run larger operations). As long as I'm working on learning, I'd might as well pick up some business knowledge along the way.

I'd like the whole thing to be a success! Whatever that means. I'd like a good balance between having my ducks in a row, and having a lot of fun. Feels like the LLC will give me more options in whatever I decide to do, rather than keep it as a hobby operation.

Anne Miller wrote:

Tony Hawkins wrote: Do whatever you can to look forward to filing taxes, don't show up in March/April with a pile of paper to sift through.

This is really good advice.

My dad did tax returns for a living.  I helped him.

One year a pig farmer brought him a cigar box full of receipts.

I spent hours organizing them only to have my dad tell the man to find someone else.

Most folks are like my daughter and have a really good tax guy who also advises them on how to run their business the best way.

Heard, I will start on this today. I have some receipts to sort.