How does W-2 and business works?

[Guka Kagu]

I have a full time job. I am planning on opening an LLC for my brand new business and I'm going to hire somebody to run that business.
I know when you are self employed you can show business expenses, would i be able to do that if I have a full time job? How does bracket work when you are full time employed and self employed at the same time

[Chris Seveney]

@Guka Kagu

I had a w2 and had a LLC for many years

1. For an LLC you are not an employee if you are the owner, you cannot collect a paycheck from the LLC unless you are taxed as a corporation - so you are not "self employed" - you are an owner. This is why when people leave their w2 to just work their LLC they have trouble getting financing but if they were an s Corp or taxed as a Corp then they could be employees of their own company.

The LLC can have expenses and losses but typically if you have 2+ years of losses expect to get audited.

Speak to your cpa on how the LLC flows through your personal return.