Starting my small business

[Vidit Maini]

Dear BP family, I am finally on my way to start my small business. I have setup an LLC as a C corporation. I have the option of turning it into an S corporation. Year 1, I intend to keep my W2 job while i work to get my small business going. Looking for tips on tax savings on the small business. I think I will need a car and an office space in the first few months itself. Please give your best tips/suggestions as I embark on this journey.

Thanks,

Vidit

[Ashish Acharya]

@Vidit Maini Starting your business as an LLC taxed as a C corporation offers flexibility but involves double taxation unless you elect S corp status, allowing profits to pass through to your personal return.

For tax savings, deduct startup costs, track business mileage or vehicle expenses, and consider a home office deduction. Contributing to a Solo 401(k) or SEP-IRA can reduce taxable income, and Section 179 or bonus depreciation lets you deduct equipment costs upfront.

If electing S Corp status, pay yourself a reasonable salary to avoid IRS scrutiny.

To be honest with you, you don't need any kind of Corp for tax savings unless you reach a certain amount of net income. Compliance costs can really make it though for a startup if you don't intent to explode. Get SMLLC to start, you can elect S-corp when the time is right.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.