Financial question - writing off expenses

Help Support Homesteading Forum:

Curmudgeon

Malinois' are awesome.
Neighbor
Joined
Nov 28, 2017
Messages
2,233
Location
The Wolverine
Doing an LLC is a good idea, 1) it secures the name 2) it separates your personal assets from business assets.

If you are actually starting a 'business' I recommend the LLC and take complete advantage of the write offs.

My business was an LLC for the whole time I ran it.
 

SheepDog

Awesome Friend
Neighbor
HCL Supporter
Joined
Dec 3, 2017
Messages
4,862
Location
SE Washington State
The best practice is to pay a CPA (Certified Public Accountant) to make sure you can write off the expenses for a business.
The "rule of thumb" is that any purely business expense can be a write off BUT you have to be able to show that it is a business expense and document the expenditure.
If you are farming and you need a new tractor that is an obvious business expense BUT The tractors value depreciates each year and unless you are paying on a loan the price is rarely fully covered. With a loan you write off the payments over the life of the loan and of course your interest is part of those payments. You end up getting as much credit for tax purposes as you pay out. Without the loan you end up getting about half of what you pay for the tractor. As an LLC you will be an employee of the business. The business can write of your salary but you have to pay income taxes on it.
 

Cascadian

Awesome Friend
Neighbor
HCL Supporter
Joined
Dec 9, 2017
Messages
919
We have a Cpa because I don't want to spend my energy on it. I give her receipts, documents and the description of the expenses. She figures out what is what. We think it is money well spent.
 
Last edited:

SheepDog

Awesome Friend
Neighbor
HCL Supporter
Joined
Dec 3, 2017
Messages
4,862
Location
SE Washington State
I agree! A CPA and a good real estate lawyer are worth the money spent.
 

LadyLocust

Awesome Friend
Neighbor
HCL Supporter
Joined
Mar 5, 2019
Messages
2,519
Location
Washington
I was told you have to show an income. If you are homesteading for only your personal living, will it generate an income? I was also told that you could only claim a loss for 3 years as a valid business. I think some of this varies by state- definitely CPA questions.
 

Latest posts

Top