[TriLUG] Re: [GoLugTech] legal question

Mack.Joseph at epamail.epa.gov Mack.Joseph at epamail.epa.gov
Wed Mar 23 17:15:23 EST 2005


Joseph Mack PhD, High Performance Computing & Scientific Visualisation
LMIT, Supporting the EPA Research Triangle Park, NC 919-541-0007 Federal
Infrastructure Contact-Ravi Nair 919-541-5467 - nair.ravi at epa.gov

trilug-bounces at trilug.org wrote on 03/23/2005 04:32:47 PM:

> > > >From what I understand you <CAN> get some massive advantages,
> > > tax-wise.  For example you can write off a lot of stuff that you
> > > cannot write off as a regular W2 employee.  Computers,training,
> > > travel, lodging, etc.

OK (IANAAccountant).

The problem here is that "you" is not properly defined and there
are several "you"s here. If you want to see a fuller explanation of
the confusion that results see a talk I gave to NCSA a while ago

http://www.austintek.com/gnucash/

where towards the end at

http://www.austintek.com/gnucash/ncsa-gnucash-talk-4.html#ss4.8

the problem is explained.

Basically businesses deduct expenses from revenue to give income
(which is then taxed). If you're a W2 worker, the BigCo incurs the
expenses (pays your salary, buys computers, sends you to conferences
in Hawaii). If you setup an LLC, then the LLC incurs the expenses.
Everything is exactly the same - there are no advantages.

The problem is that you (the person) set up the LLC (the business)
and you (the person) think that you (the person) are the business.
You aren't - you and the business are separate legal entities.
So when you, working in your own LLC looking at all your
receipts, say "how much did I spend on computers/ink paper clips this
year?"
and you come up with some number, you're confused. You should have said
"how much did the business spend on computers this year?", because you
(personally) probably didn't buy any computers at all. The computers
in your basement (or wherever) belong to the LLC, they are assets of the
business (they aren't yours). If you (personally) don't want the
computers
anymore, the LLC business will have to sell them and the money will go
into
the equity (ie cash) of the business.

Joe




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