Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 08-11-2014, 10:56 AM
Junior Member
 
Join Date: Aug 2014
Posts: 2
Putting money back into your business inquiry

Hi all. Sorry if this is not in the right place.

I have just started an LLC. I believe it to be considered a Sole Proprietorship; the LLC is comprised of only me. I have no partners, no officers, and no employees. I run the business out of my house.

My question is regarding whether or not I am allowed to take some money that the business makes, and put it directly back into the business, without that money being subject to tax. Not being sure if such a thing even exists is the reason I am here. So, let's say that in 2014, the business profits $100,000. Would I be able to take a portion of that - say, $30,000 - put it directly back into the business with the intention of growing the business, and then pay tax only on the remaining $70,000?

Not sure if the question is too ambiguous, and/or if more info would be required for a proper answer. If I need to provide more info, I can.

Thanks in advance.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 08-12-2014, 08:27 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by riffwraith View Post
.

My question is regarding whether or not I am allowed to take some money that the business makes, and put it directly back into the business, without that money being subject to tax. Not being sure if such a thing even exists is the reason I am here. So, let's say that in 2014, the business profits $100,000. Would I be able to take a portion of that - say, $30,000 - put it directly back into the business with the intention of growing the business, and then pay tax only on the remaining $70,000?

Not sure if the question is too ambiguous, and/or if more info would be required for a proper answer. If I need to provide more info, I can.
.
>NO. A self-employed business owner does not usually take a salary. Instead, he or she makes an initial investment (capital contribution) in the business from personal funds and during the course of the business takes money out as draw and invests more money, from profits or from personal savingsyou need to pay tax on the taxable net earnings of $100k, not on only $70K.Then after you pay taxes, you can transfer $30k of the after tax dollars into your SMLLC;on the contrary, Owner's draw decreases the owner's capital account. Typically, a check is written on the business account to the owner and it is deposited in the owner's personal account. The draws are not taxable income. As a sole proprietor, you are taxed on the net income of the business whether you take draws or not so it is the net income of the business that determines your tax.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #3 (permalink)  
Old 08-13-2014, 11:20 PM
Junior Member
 
Join Date: Aug 2014
Posts: 2
K, thank you.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
2 LLCs, transfer money to the other for business expense - how to record for tax purposes? olimits7 For 2013 0 03-11-2014 11:47 AM
Accepting money on behalf of a foreign Business dom44 Income 4 05-22-2011 10:43 PM
Is there a way to deduct money that was provided as a loan to open business bentoit S-Corporation 1 04-18-2011 08:58 AM
moving money between business and personal texastaxpayer S-Corporation 1 03-25-2009 11:46 PM
Is it worth putting my spouse on Corporate payroll? Sabby Payroll 1 01-31-2007 01:33 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.