Mileage and LLC

Today TaxMama® hears from Randal in the TaxQuips Forum with a sensible question. “I am an outside salesperson working as a sole proprietor, getting 1099s each year. My largest deduction is mileage. I earn less than $30k most years. If I setup an LLC to run my business through, will I lose my mileage deduction?”

Ask TaxMama

 Hi Randal,

As a single-owner LLC, you would probably end up reporting your business on your own Schedule C. So nothing really changes – unless you decide to file the business as a corporation – C or S.

Why do you want an LLC, anyway? Do you need one?

Bill Porter at points out that, in Minnesota, registering a LLC is easier than registering a DBA for a sole proprietorship, and costs about the same. We don’t have a minimum fee or anything like California does. Because of an LLC’s ability to potentially protect the personal assets, it’s a good choice in Minnesota.

That’s an interesting point. But there are two things to understand.

1) When you have an LLC, you are required to make decisions about how to treat the LLC for tax purposes. Here’s some information to help you, at the BizFilings site.

2) Establishing an LLC purely for protection from liability can be deceptive. When you are the only person working, it will be your actions that cause harm, or you are the only one who might mislead a customer. If so, when your company is sued, you will be sued personally, as well. The LLC won’t protect you.

So remember, you can find answers to all kinds of questions about LLCs and other tax issues, free. Where? Where else? At

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