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Updated over 4 years ago on . Most recent reply
Paying yourself for work on a flip?
I'm looking to do a flip soon and I'm going to do a good amount of the work myself. I have an established handyman business and a separate REI LLC. I would like to account for the labor I will be putting in. So my question is this, is there a way for my LLC to hire and pay my Handyman business? Is this legal? Are there tax benefits to this strategy? My original goal of the handyman business was to supplement my REI projects
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#5 Tax, SDIRAs & Cost Segregation Contributor
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- Atlanta, GA
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#5 Tax, SDIRAs & Cost Segregation Contributor
- Accountant
- Atlanta, GA
A sole proprietorship and a single-member LLC taxed as a 'disregarded entity' and owned by an individual are one and the same. Tax theory dictates that a sole proprietor that has two trades or business cannot pay himself (and therefore expense) a fee.
High level, you're just moving money from one pocket to another. It's not income (or deduction).
If a corporate tax election (S Corp or C Corp) is made, the answer can change. Ask your tax pro for details.