Starting an LLC for tax purposes/ writing off the moto

It dont work that way. 🤣 But we can write to you in prison. 

The rule of thumb is: If you can't easily explain and prove how the expense benefits your business to the tax man when he comes knocking on your door, it's probably best to avoid it.

Also, posting questions like this publicly and creating a nice paper trail of intent doesn't help much, either.

Yep and the IRS has heard it all before when people try to write off their hobbies as a legitimate business expense.

🤣 awesome.

Get with a business accountant. I think there is potential here but you'll likely need to have a business plan in place.

I think I’d give my dogs SSN’s to claim them as dependents before trying that but I’m no H&R Block expert

Buy motohose and start a race team.🤔🤑🙄

I’d like to put my dog on my healthcare plan, vets are ridiculous now a days 

Do you hv a buisness?  U can start any kind of buisness. The most people ever hv in the last 4 yrs.  Long day but my 1st 1099 Chicago trucking job . I got my check book out & the Lithuanian super quick said , illegal repeatedly then we pay your corporation , they didn’t tell u.  I said is this so & so I thought I might hv walked into the wrong warehouse. Haha.  I came up with a funky  name that would scare the irs off.  It was a s corp I never did qtly payroll etc. penalties ouch.  I asked my 2 older sisters that hv master degrees in buisness about starting a buisness. They said they knew nothing. Next   I just googled good llc co.s the  1st co & review sounded good . Zen buisness 199.00 a yr u get your buisness name & ein # - tax id # in a day or 2.  Screen   shot it then open a chase buisness account.   Super easy to do.  I claim some stuff like van tires 15 in 1,300,   Hinson clutch baskets,  etc.  it’s a trucker tax claim the irs don’t like to mess with us. Because we say sure I,ll do 3 yrs of time and get a degree for free.  Build more prisons like we give a f.  Plus where rarely home . A audit on us would takes a week just adding up receipts.  So I claimed some bike parts or stereo big f ing deal. I know of 1099 drivers that claim 1,500!truck payment every week they never made so they show a loss every yr.  Last yr was more losses than not on legit claims.  U can also take a pic of your ein# & paper . Take it to fleet farm a store for everything & be tax exempt . No sales tax, yeah . Haha . Home Depot etc should b the same.  Old trucker trick  qtip & Mr clean can erase anything. Just write what u want on it then. We erased time stamps & dates on toll tickets b4 ez pass . Can’t write me a speeding ticket for crossing Ohio 223 miles in 2.75 hrs @ 81 mph  Ha . Oh. Was 55 mph .  

It amazes me how many people have no idea how tax "write-offs" (deductibles) work. Secondly, LLC is not a tax designation; it is a legal one. It has nothing to do with taxes at all. There's nothing you can deduct by having an LLC compared to not having one. Lastly, your business has to have a profit motive to deduct expenses or claim a loss. Meaning you better have the paperwork to show your business is legit, not a fake company used to  write-off your hobby's expenses, when you get audited.

You're a fool if you pay "income" taxes, especially now that the writing is on the wall. 

How did SCOTUS define "Income"?

How did SCOTUS define "Corporation"?

Start there and for help go here... https://losthorizons.com/

You need to have a business with income / profit and your write off (deduction) and it needs to make sense for the business. You will be taking a deduction against the profit you made. If you already have a business, take the deduction thru it for your kid for advertising. If you do not have a business you can not deduct any of it.

Reminds me of the Seinfeld episode when Kramer just wants to write everything off. Just write it off!

For almost any proposition you can think of, at some point someone has probably said it. It’s meaningless unless that someone knows what they’re talking about. The someone in question in this case almost certainly does not. 

My buddy wraps cars (as do I) but he bought a Cuban link chain with the name of his business in it and wrote it off😂😂😂

I know very little about American tax but in Canada, if you have a small business corporation, your company gets a much lower tax rate than if you are a sole proprietor, being taxed personally on your business income. Is there not a tax advantage to incorporation in the U.S.?

There certainly are benefits to creating an LLC vs. being a sole proprietor but I’m not a tax expert by any means nor do I think it’s relevant to what the OP is trying to do here so I don’t want to try and explain it.

My point was, if you want to try and get a discount on what you’re spending the money you make from your actual job to go racing by creating a “business” to expense the costs as advertising for said business, the tax man doesn’t care if your business is an LLC or not. It’s not a loop hole or offer more leeway than a sole proprietorship. 

If you have a real business or a real LLC, sponsoring a rider could be marketing expense that you can write off.  So if you paid someone $10k, you can write it off. So you technically save 30% of that on your taxes, which is $3k, but still lose out on $7k.  If you paid your kid $10k he then needs to pay tax on money they are making and will also pay tax on that. Unless they can claim a lose where no taxes will be paid.

The best bet is if you have an industry job or industry related then you can write off all your moto related expenses that you most likely would be paying for anyways.  Everything from races, bikes, gear and practice days because, “at GH that time you met XYZ guy from brand 123 and talked about a product you are working on and they will help produce it”

As a business person – in my opinion you should meet with a few accountants that live in your area.. Like 4-7 of them at a min. Each will tell you something different.... but a few will tell you the same thing. Focus in on the ones telling you the same thing. Pick one of them. 

It is like attorneys.  Talk to many... However, IMO, accountants will be much more straight up. As a species of human. Attorneys? Be afraid... be very afraid. IMO

That's how I see it.

I write off some racing expenses because my suspension parts business is directly involved with motocross and racing.  
There are some limits in what and how much you can write off and some things can really put you in a bad situation...

An example.   I could legally write off the costs of operating and owning the vehicle I use to go racing as a business expense.   
The problem that would create is with my personal insurance plan.  My insurance company has a different set of rates and plans for commercial vehicles.  If I have my vehicle wrapped with my company name and start running up and down the interstate and eventually get into a traffic accident, my insurance is bound to figure all of that out and I'm in breach of the terms of the agreement...

That's just one example, but in general it is a good idea to avoid mixing personal and business assets and costs if you can.
If you do blur those lines, you had better talk to a good accountant and a good lawyer familiar with your local and the federal laws.

Another simple, local example...
Do I buy race gas with the company card?  You bet your ass I do.
I also pay Washington state "Use Tax" on every gallon even though I have a valid reseller permit.
 

I would say to take all the advice that has been articulated here so far with a huge grain of salt. Many here are on the 9 to 5 lamb. And have zero experience with what you are seeking to do. 

Starting an LLC does not automatically mean you want to commit fraud. And the IRS is not monitoring these pages one bit.

I would say read read read all about LLC's. They are meant to protect you as an individual.  But remember this when it comes to the FTB, EDD and the IRS you are guilty until you can prove yourself innocent. I am very knowledgeable about this. 

So, again read up on LLC's. You can legally do what you want to do within the parameters of the laws. It just takes one who will take the time to become very educated so you can do it all correctly and thereby not exposing yourself to liability. 

Again don't trust someone else. Learn it. Good luck brother!

What is your time worth?   Is it really worth it to have to go talking to all these accountants and lawyers ($$$$) and jumping through all the hoops it takes to have a "business" just to try to save a few bucks?  Don't forget, now you are going to have to file business taxes continually, and it's going to look really weird when you perpetually show a loss due to "marketing expenses"... LOL  😁  Best bet, learn how to work on bikes yourself and change tires and never pay someone else to do any of that.

I have to disagree with this advice. Why waste your time reading who knows what on your own, only to misunderstand it and do something stupid, which is what almost inevitably happens when people without the background to understand what they’re reading try to do things on their own? I can’t begin to explain the stupidity I’ve seen when clients who don’t know what they’re doing go ahead and get themselves into a bad situation that could have been avoided with a simple phone call to our office. People take tax advice from someone at the coffee shop or something they’ve read online and misunderstood (or failed to realize that what they were reading was garbage - it takes expertise to distinguish between garbage and competence) and then are shocked when the result isn’t what they expected. Find a good accountant and trust their advice. 

 

Short answer, yes you can, and I’ve done it. 

But it has to be a viable business with income/loss statements, otherwise they won’t consider it a real business and won’t consider it tax deductible. My buddy did this with a lawn care business for 15 years. He mowed just enough lawns, and doctored up just enough invoices to make it look legit. 

Also, you just can’t go into a shop and buy parts with the company credit card and write it off, it has to be a necessity, a motorcycle, gear, and parts aren’t a necessity for that company. I learned this the hard way. 

You have to pay an amount for sponsorship, that’s considered advertising. At the beginning of the year, you give the rider an amount of money to put your logo on his jersey and trailer, what he does with the money is up to them. If you think your son’s expenses will be 10k, you write a check for 10k. 

If you do start an LLC, or an S corp, buy a truck/trailer through the corp not only will they be expensed over time, all the repairs and gas for them is tax deductible. 
 

But the funny thing about tax deductions, you need to have the money to spend in order to get the deduction. If you have 10k of deductions, you’re only getting back 3k, it’s not free money, this is what people don’t understand. 

It is 100% legal, I did this for years with a few race/street cars! My CPA fully backed me on this, but since audits are 100% random, they never pulled my straw from the hat! I did it all under an S corp.

Why a moto related co ? It can be anything.  I know of Vietnam Vets that hv there own authority in trucking. That showed a 600k profit on good yrs. They will buy a new bulldozer & let it rust on there property b4 the give the government a dime.  They say they need the dozer for pothole repair.  A American can purchase a 275k truck in Canada & not pay sales tax.  Learn the tax codes man only a fool would let the government at 35% of there check. See all the new pu trucks for law care . That’s a legal write off.  Don’t claim your residence because u hv a office. There touchy about that 1. Stay at a nice hotel that’s a write off .  Remember the buisness meetings u had there . lol . Most exp truckers do 1099 as a ic because u can claim days out etc. vs a 12k write off like someone that’s home every night.  It’s really shitty out here say I make 280 I claim

 Everything I bought that day 110 bucks. Plus 69 per today a traveling expense X that by 80% then by the number of days out 339.  I hv my guy reimburse my scale tickets, oil, straps, trk parts from a Zelle account into a non buisness different bank account.  I don’t think I should pay taxes on supplies I bought so I found a way around it.  Supplies otherwise r figured in as gross pay .  Aron Rogers bought a Leer jet a few yrs ago 100% a write off. 

You may also want to pursue this venture as a charitable non profit or religious organization. Money donated to the organization (by you or others) could be tax deductable, and racing event expenses could be considered outreach/advocacy.  

A couple general rules of thumb on taxes.

- the answer to a lot of questions is ‘it depends’.  Context matters, a lot.

- Pigs get fat, hogs get slaughtered. 

- Documentation! (Insert pulp sound drop here).  Keep records, don’t commingle funds, issue 1099s, document the purpose and intent of what you’re paying for.