Please explain the positives and the negatives with either? This would be in a O/O situation. And why you are chose that specific entity? Thanks in advance.
L.L.C. or Incorporated?
Discussion in 'Trucker Taxes and Truck Financing' started by istumped, Dec 2, 2019.
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You want an S corporation. If I remember correctly, because you can pay yourself a reasonable salary. Then after all expenses you can take a Draw or pay yourself all the money left over and save on taxes. Because the money is not income to you, so you don't have to pay income tax on the money.
People also get wrong about if your in an accident they think the corporation will save them from law suit, they are wrong because they will sue your corporation and the driver. Since your the driver also, your on the hook personally. Only if you did something wrong as driver.OldeSkool, whosfate, Driver Eight and 2 others Thank this. -
LLC, file a form with the irs designating your LLC as a s corp As stated above. You pay yourself a reasonable salary as being a driver The rest you dont have to pay the 15% employment tax on.
This is how my tax guy recommended. Saves you thousands I'm taxes every year. However you must fully sperates the LLC from yourself. Do not use the business account for anything personal or the irs will come after you.Driver Eight and Rightaway Thank this. -
as one that is buying a first truck to lease on...is this designation necessarily done before you buy the truck? Before you lease on to a carrier?
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But it does extend to just an owner with a separate driver if there is negligence involved like telling the driver to falsify a log.Brandt Thanks this. -
On another note, I thought an LLC is a separate class of business, and to get an S-corp you filed to get incorporated & did the election to become an S-corp. -
dwells40 Thanks this.
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There's at least one disadvantage of using S-Corp. You can't claim per diem deduction. If you are a sole proprietor you can easily deduct around $53/day while on the road. If you are an employee of S-corp, or you own 10% or more interest in that S-corp - you can't deduct per diem. Instead of it, you need to deduct the actual meal/lodging expenses, which could be a nightmare to keep track of.
Also, it appears that it's way harder to deduct your medical insurance if you have an S-corp (if you're self-employed - you can deduct it easily).
So, I would say...It's not an easy choice, at least for me. -
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