Major Tax Benefits Possible by Establishing a Limited Liability Company

by TTMK on December 27, 2013 · 0 comments

There are quite a few potential advantages that the average business owner can experience by deciding to establish a Limited Liability Corporation (LLC). For example, the IRS allows LLC owners to claim the profits and losses of their company within their own personal tax returns. There are several other major tax benefits that have piqued the curiosity of many business owners and convinced them to make this transition.

Equipment & Supply Purchases

One of the biggest tax benefits that a person can take if they register a business such as a Limited Liability Company is that they can take full advantage of deals with the amount that can be deducted each year on equipment and supplies alone. The IRS allows LLC owners to write off these purchases up to a maximum of $100,000. The only stipulation is that the items that are purchased have to be used within the United States. In addition to the initial purchase amounts, LLC owners are also able to deduct the depreciation values of the equipment that they have claimed, as well.

Other Business-Related Expenses

In addition to the deduction of equipment and supply purchases; LLC owners are also able to write off a number of other business-related expenses and costs that are incurred throughout the year. For instance, any type of professional training program or seminar that is attended is completely tax deductible. As an eCommerce business owner, there are many different online and offline seminars and training courses that are held throughout the year. Knowing that the costs associated with attending them are tax-deductible should convince more owners to sign up and benefit from the information provided.

Build Employee Morale with Tax-Deductible Options

There is also an extensive range of other tax benefits that LLC owners can enjoy that can benefit their employees and improve employee morale. For example, the IRS allows all education-related expenses (i.e. tuition, books, course materials, etc.) to be deducted, which is why there are many LLCs that offer tuition reimbursement to their employees. The expenses associated with any type of employee retreats, business trips, or banquets that are held throughout the year to boost morale can also be written off, as well.

Reducing the Burden of Retirement Plans

Another benefit of establishing an LLC is that the IRS provides the company with a substantial amount of tax relief when it comes to retirement funds and contributions that are maintained and managed throughout the year. The contributions that are made directly to the retirement plans of all employees, including 403b and 401k plans, can be directly deducted from the taxes of the LLC. There is an extensive list of retirement plans approved by the IRS in this regard that qualifies for this type of corporate tax deduction.

Putting the Savings into Perspective

There are many eCommerce business owners that may not necessarily need to take advantage of many of the major tax benefits available to LLCs, such as when it comes to retirement plans or using anywhere close to the $100,000 maximum amount allotted for equipment and supplies. Keep in mind that over half of small businesses are based in the actual homes of the owners, according to the Small Business Administration.

However, it is important to pay attention to all of the deductions that the average home-based business owner would still be able to enjoy by establishing an LLC, in addition to the benefit of not being fully liable for any bumps in the road that their business may encounter. Before making any decisions in regards to your business entity, take the time to weigh the pros against the cons, consult a professional, and make sure that it is going to benefit you both on a short as well as a long-term basis.

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