The Small Business Tax Help Blog

Archive for July, 2009

Question: Are loan payments by an LLC considered a business expense?

My son is considering forming an LLC to purchase a percentage of the company he currently works for. He will own a portion of the company and receive profits commensuate with his ownership. The make this purchase possible, I am considering making a large loan to his LLC. If the LLC elects to be taxed as a corporation, are the payments of interest and principal of the loan expensed against the ‘profits’ he will receive from his partial ownership. Can remaining profit or a portion of the profit be retained by the LLC and taxed at a lower corporate rate? We’re trying to structure this purchase in a way to minimize income tax due while the capitalization loan is being paid off. Any help will be greatly appreciated.

Answer: Above is correct. The principle is an investment in the company he works for. It could only be written off it the investment went bad.
You don't say what the business is. Personal service corporations do not pay at the reduced corporate rates. A personal service corporation is medical, legal, accounting, consulting etc. Before electing corporate status make sure of what taxes will apply. S-corp may be a better way to go.
I would suggest that you have a consultation with a good CPA before moving forward.

Street parking rates rise -- but many don't notice

Chicago parking meter rates jumped higher today, but many Chicagoans said they didn't notice the extra charge. "I didn't even know," said Andrea Miller of Wicker Park , who parked her car in a metered spot on the 100 block of Ohio Street today. The hourly rates in Chicago 's Central Business District jumped from $2 to $2.50 this week. "It's Chicago ," Miller said. "You expect to pay that." Tony ...

Lesniski Business Tax Holiday 8 17 09

Question: Cellular One problem?

I tried to log in to the Cell One Usa website and it needs the “Last 4 of the SSN or,
Federal Tax ID” What is that?

Answer: they’re asking for the last 4 digits of your Social Security Number (SSN). Federal Tax ID is for company cell phone plans.

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