I have a LLC for snowplow removal but no expenses

by Matt
(XXXX@sbcglobal.net (email changed for your privacy and protection from spammers))

I have a LLC for snowplow removal but no expenses. My friend own a snowplowing business in which I help him. I have opened my own LLC and he pays the company not me but I drive his vehicle and he pays for all repairs and gas. The only thing I have had to purchase is $300.00 worth of insurance. I have a couple questions:

1. I know I have to deposit all the money into a separate account in the LLC's name, but how can I withdraw money to pay myself?

2. Are you taxed on money that is withdrawn for personal use?

Answer

1. Write yourself a check from the LLC's bank account.

2. Assuming that the LLC is taxed as a disregarded entity or partnership, you are taxed on the LLC's net profits--revenues minus expenses.

As you can see from the above equation, the way to lower your taxes is to claim as many expenses from the LLC as you legally can.

It doesn't matter for tax purposes how much you withdraw.

For some tips on reducing your taxes, I'd recommend taking a look at The Tax Reduction Toolkit.

Another way to "learn" the tax code, in a practical sense, is to use small business tax preparation software, such as TurboTax Online for LLCs

TurboTax takes you through a simple question and answer format about your business income, expenses, structure and so forth. From the questions and help guide, you'll see which expenses are deductible, and how to take the deductions and lower your taxes.