I am about to start a new business entity (probably an LLC), but I have already been earning income (intended for this business) under my name and personal bank account, since the LLC has not been formed yet and I do not have a business bank acount yet.
I will probably be filing IRS Form 8832 so that the LLC is taxed like a corporation, and can seperate my personal income tax from my business income tax.
Can I transfer income related to the business that i personally received before starting the LLC into the LLC so that the business would be taxed on it, and it would not be applicable towards my personal tax? How would this be done?
The income was received within the 2006 tax year, so I'm assuming i may need to start the LLC within 2006 as well?
2006-10-13 17:30:11 · 3 answers · asked by Matt 1 in Business & Finance ➔ Taxes ➔ United States
No, you can't just assign your personal income to the LLC before the entity existed. Once you file the paperwork for the LLC it can start to generate income separately.
2006-10-13 17:37:49 · answer #1 · answered by CPAKeith 3 · 0⤊ 0⤋
Technically the income you received prior to becoming an LLC belongs to you as a sole proprietor (sch c). The best thing tax wise for now would be to pull your P&L to make sure you have enough expenses to create a loss or break even (since most start ups do for the first few years). If you have a loss no big deal... it will off set all other income for the year and you are ok. Then start your LLC paperwork now. The income and Assets you have acquired prior to starting the LLC would be considered part of your investment into the business. But since we are calendar tax payers it could be more beneficial to start your LLC on 1/1/2007 instead of 2006 check your financials and with your tax advisor to be sure this is good for your situation.
2006-10-14 00:43:32 · answer #2 · answered by confair 2 · 1⤊ 0⤋
Hey! Spend a few bucks, and see
A qualified TAX man - no freeby's here.
2006-10-14 00:36:50 · answer #3 · answered by trebor2 6 · 1⤊ 0⤋