The Truth About LLCs and Taxes
Registering an LLC by yourself, where you’re the only owner doesn’t change anything about how your business and how you as the owner of that business are taxed. There are no tax savings that you get by registering an LLC. There are no business deductions that you’re missing out on by not having an LLC.
You don’t get any extra deductions now that you have an LLC. These are some common misconceptions I deal with. If you are an individual, you own the business 100%, going out and registering an LLC doesn’t necessarily change anything about your business finances, about whether you can deduct expenses or not, and it doesn’t change anything about how your business, and how you as the owner of that business, are going to be taxed.
So why do a lot of individual business owners have an LLC? From an accounting perspective, there’s really only one reason and that is to save on self-employment taxes with an S corporation, and that’s a fairly complex discussion in and of itself. I’ll have other videos on this topic. One of the most common parts of what I do for my clients is I use an LLC that is taxed as an S corporation as a vehicle to generate tax savings for them. But it doesn’t necessarily mean that it’s what your business needs right now. So, does an LLC affect my taxes? No. If it’s just you, and all you’ve done is register the LLC, you haven’t done anything else… then, no, it doesn’t affect your taxes at all.
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