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Better to form an LLC or keep it personal
Posted on 9/20/13 at 9:23 am
Posted on 9/20/13 at 9:23 am
I have been selling products on ebay for a few years now and just this year started selling alot more product. I'm wondering about taxes would I be better off forming an LLC or keep the ebay store personal? At what amount of money would you form an LLC? Thanks for your time. R. Head
This post was edited on 9/20/13 at 9:24 am
3
Posted on 9/20/13 at 9:29 am to Richardheadtigah
just selling on ebay? no other website or storefront? do you use a personal paypal account or a business account?
more importantly: how much liability do your products pass on to you. in other words, can one be defective and injure someone? do you ever make a massive sell which could possibly cause significant financial harm to yourself if you had to eat the transaction for some reason?
more importantly: how much liability do your products pass on to you. in other words, can one be defective and injure someone? do you ever make a massive sell which could possibly cause significant financial harm to yourself if you had to eat the transaction for some reason?
Posted on 9/20/13 at 9:34 am to jcole4lsu
Originally I had 1 business paypal account that served my company website and my ebay store. I ended up getting a second business paypal account to seperate the two. I did this because I would sell other things on ebay and at the end of the year I was having to seperate the items I sold. My items don't have much liability at all and I couldn't harm myself if I had to eat a few transactions.
Posted on 9/20/13 at 9:38 am to Richardheadtigah
Creating an LLC typically won't change your taxes. It is a flow through entity, therefore, any gains or losses will be reflected on your personal return.
You could choose to file as an S-corp under the LLC to potentially minimize some taxes on distributions vs. salary. But I would only do this if you were making a relatively good amount of money over your annual "salary" from selling online.
You could choose to file as an S-corp under the LLC to potentially minimize some taxes on distributions vs. salary. But I would only do this if you were making a relatively good amount of money over your annual "salary" from selling online.
Posted on 9/20/13 at 9:38 am to Richardheadtigah
well then i dont see a point in forming the LLC from a liability stand point. however im not at all qualified to speak on the advantages you might gain from the pass through taxation of the LLC. someone else will have to help you out there.
Posted on 9/20/13 at 9:48 am to NEWBIE
quote:
Creating an LLC typically won't change your taxes. It is a flow through entity, therefore, any gains or losses will be reflected on your personal return.
Not true.
quote:
You could choose to file as an S-corp under the LLC
This is how you make a LLC a flow through entity
ETA: Some advantages would be depreciation of the computer you use (if it is only for work), you could deduct the utilities used by your "office space", stuff like that. But for a business like that you are not creating a LLC for it's tax deductions but more for its liability coverage.
This post was edited on 9/20/13 at 9:52 am
Posted on 9/20/13 at 10:55 am to reb13
quote:
Not true.
Can you explain this? My understanding is that it is a flow through entity.
The LLC does not pay its own taxes; the member/owners pay the taxes. The gains/losses pass through to your personal k-1 when you file your own taxes.
Posted on 9/20/13 at 11:07 am to Richardheadtigah
Well, you are really pinching pennies over about $75 either way.
Posted on 9/20/13 at 11:14 am to NEWBIE
A true LLC is not a flow through entity, it is a corporation. There are a lot of different ways to file and I do not know all of the idiosyncrasies. But the benefit from a LLC is that it is a protector against full liability.
I am sure poodlebrain will come in here and point everyone in the right direction I am just a grad student studying corps and partnerships right now.
I am sure poodlebrain will come in here and point everyone in the right direction I am just a grad student studying corps and partnerships right now.
Posted on 9/20/13 at 11:31 am to Teddy Ruxpin
quote:
Well, you are really pinching pennies over about $75 either way.
Wouldn't this depend on how much money I make? Or is it a flat rate of $75
Posted on 9/20/13 at 11:36 am to Richardheadtigah
quote:
Wouldn't this depend on how much money I make? Or is it a flat rate of $75
I was talking about the filing fee. I can't imagine there being much, if any, difference to you besides the liability stand point. So, do you want the LLC to be liable or you personally? Pay $75 (or whatever it is now) and off you go.
I'm sure it can get more complicated than that, but there is a reason everyone forms an LLC these days.
This post was edited on 9/20/13 at 11:37 am
Posted on 9/20/13 at 11:56 am to reb13
In an LLC, it depends on if it is a single member or not.
If single member, it falls as a Schedule C on your personal taxes and this is "flow through" as has been discussed here.
If multiple members, you can elect to be taxed as a partnership or corporation. If Partnership, a K-1 will be issued to all partners based on their share of membership units.
If you make it a single member LLC, you can deduct some expenses like % of your home used as a home office so utilities equal to that % become expenses to the LLC on the Schedule C.
There are others as well. Turbo Tax is your friend for it.
If single member, it falls as a Schedule C on your personal taxes and this is "flow through" as has been discussed here.
If multiple members, you can elect to be taxed as a partnership or corporation. If Partnership, a K-1 will be issued to all partners based on their share of membership units.
If you make it a single member LLC, you can deduct some expenses like % of your home used as a home office so utilities equal to that % become expenses to the LLC on the Schedule C.
There are others as well. Turbo Tax is your friend for it.
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