Today TaxMama hears from Stephanie in North Carolina who tells us. “I have an LLC and do not yet have a business account opened. I have received a check that is payable to Stephanie International (my LLC) OR Stephanie. If I deposit this into my present business account, will I lose the tax benefits of the LLC?”
What are you waiting for?
You opened the LLC. Now, open the bank account!
If you want to be able to access that money quickly, open the bank account in the same bank that already has your business account. Discuss your need for the funds with the bank manager BEFORE opening the account there to ensure they don’t put a hold on the check because it’s a new account. If they can’t do that for you – find a bank that understands how to deal with a growing business. You, my friend, have clout!
What’s if you just deposit the check into your present business account? It will not be included in the income of your LLC. So whatever tax benefits you were hoping to generate by setting up an LLC to receive your income will not apply to that check.
On the other hand, so far, there are no tax benefits from the LLC. Right now, all you have are liability protection benefits.
To get tax benefits you need to do some tax planning. You need to decide what form of business your LLC will take. It’s not enough to just set up an LLC. You need to decide if your LLC will be reporting its income as a sole proprietor, on your own Schedule C, or as a partnership (if you have a partner), or an S corporation, or a C corporation. Chapter 3 of Small Business Taxes Made Easy will help you decide. http://www.taxmama.com/AskTaxMama/book/
Incidentally, I ran across this really practical guide to LLCs – Limited Liability Companies for Dummies, by Jennifer Reuting. There is a great deal of information about the care and feeding of LLCs. http://www.amazon.com/Limited-Liability-Companies-Business-Personal/dp/0470173289/mywishlistA
At this point in your business, I’d urge you to find a good tax professional who understands the options and your industry. This article will help you: http://www.taxmama.com/Articles-cur/hiringtaxpro.html
And remember, you can find answers to all kinds of questions about LLCs and other tax issues, free. Where? Where else? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- Small Business Taxes Made Easy :: Chapter 3 explains the different business forms, like corporations, LLCs, etc.
- Limited Liability Companies for Dummies :: by Jennifer Reuting
- TaxMama article :: Why Your Business Needs A Tax Pro