Jan 08, 2021

You should get an LLC

Disclaimer: I am not a professional accountant or financial advisor of any kind so the following information is just my opinion.

If you are a W-2 employee with a portion of your wages withheld for taxes, you are missing out on a big tax refund if you do not have an LLC. With an LLC, you get a K-1 tax form indicating your net profit or loss. If your LLC has business expenses that exceed its revenue, then you can subtract that loss from the income of your day job and receive a refund for 20-30% of that amount (based on your tax rate).

Here are some things that you might be paying for right now that could be considered business expenses:

  • Suits, dresses, shoes, and other kinds of attire.
  • Expensive technology purchases like phones or laptops.
  • A portion of your internet, phone, and cable bills.
  • Travel expenses (if travel is for business).
  • Dinners, coffee, drinks, or any other situations where you might be discussing business.

What kind of business could you create?

That depends. What do you spend a lot of money on? Is there anything that you do for fun that you might be able to get paid for?

One idea for a business that is low effort is to start a YouTube channel discussing something that you like to purchase like makeup or tech. You can post a video once a year and those products that you probably would’ve bought anyways are now considered business expenses.

Get creative with it! Maybe there’s a hobby that you have that might produce something that you can try to sell.

To be clear, I’m not recommending that you do anything illegal. You should speak with an accountant to make sure your expenses make sense.

But if you sit down and think about it, there is probably something that you’re already doing that can be turned into a business. At the very least, it will unlock a lot of tax savings for you. Start your LLC today here.