Tax write-offs for creating an LLC

[Chris Roush]

I am working with an attorney to setup my first LLC. Since this is my first business, I'm trying to figure out how to handle the expenses when the 2019 tax season begins. Since I had to start the LLC with my own personal money, and the attorney fees wouldn't show up on that LLC's balance sheet, is it possible for me to write it off as a business expense after the LLC bank accounts are active?

For other expenses that I am currently paying for from my own personal account such as online subscription fees for various business-related needs such as rentometer and Bigger Pockets, do I need to move those subscription charges to a business credit card or checking account before I can write them off?

Any advice for managing my business expenses properly from the start would be greatly appreciated. Thanks!

[Ashish Acharya]

Originally posted by @Chris Roush:

I am working with an attorney to setup my first LLC. Since this is my first business, I'm trying to figure out how to handle the expenses when the 2019 tax season begins. Since I had to start the LLC with my own personal money, and the attorney fees wouldn't show up on that LLC's balance sheet, is it possible for me to write it off as a business expense after the LLC bank accounts are active?

For other expenses that I am currently paying for from my own personal account such as online subscription fees for various business-related needs such as rentometer and Bigger Pockets, do I need to move those subscription charges to a business credit card or checking account before I can write them off?

Any advice for managing my business expenses properly from the start would be greatly appreciated. Thanks!

If the LLC is a single Member LLC, you can pay expenses from your personal account and still deduct it for the tax purpose as SMLLC is disregarded for tax purpose.

However, you need to keep the separate books for the LLC to get the desired asset protection from the LLC(for legal purpose). If you want to do it right, you would have to cut a check from LLC bank account to you as the reimbursement for the initial expenses and book that in the LLC as the whatever expenses it is related to.

That way you the LLC's book are separated.

Also, not all the expenses are deductible when you start the LLC. It depends on the type of activities you conduct. for eg, sometimes the expenses are added to the basis of the property.