Revocable living trusts need to own your assets, or the primary reason for a revocable living trust, probate avoidance, isn’t going to be achieved. Assets need to be retitled in the name of the revocable living trust. Each type of asset has a specific procedure that needs to be followed to “get it into the revocable living trust.”

Vehicles (cars, trucks, boats, airplanes, RVs, etc.) need to be owned by your revocable living trust, so they are not subject to probate after your death. (Of course, this applies to Mom and Dad’s trust also.) The question is how do you fund a revocable living trust with a vehicle?

If you try to change the title on your car from your name to the name of your revocable living trust, the state’s department of motor vehicles has this funny idea that you have sold the car, and they want a sales tax. Some states will recognize that you are changing the title to your revocable living trust, and it’s not really a sale of your vehicle, so you can call and check.

All states have a “work around” where a vehicle can be transferred after the death of the owner without a big probate proceeding. It’s better to have your vehicle in the trust than rely on the work around, but it probably isn’t worth paying the sales tax to get a vehicle you now own into your revocable living trust.

Obviously, the next vehicle you buy should be titled in your revocable living trust at the time you purchase the vehicle. But, what about putting the vehicles you own now into your brand new revocable living trust? I recommend to my clients they take the chance that they will sell their current car and get a new one before they die. Just remember to put the next one in your revocable living trust.

Revocable Living Trust Vehicles and Insurance

What about auto insurance when you put your vehicle in your revocable living trust? Insurance is always an issue when you hold a vehicle in a name other than your own. The biggest problem comes when people get the bright idea that their little company should own their vehicles. The idea is to have the company own the vehicles and let the company “write off” the vehicles for tax advantages.

People forget about the insurance when they transfer their auto into a company or have the company buy the car outright. They use the vehicle as a business vehicle and a family vehicle. When there’s an accident with the vehicle and it is being used as a family vehicle, there won’t be any insurance coverage, if the company has purchased the insurance.

On the reverse side of the coin, most people transfer the vehicle into their company and continue to carry a “personal” insurance policy on the vehicle. A “business” insurance policy is substantially more expensive than a “personal” policy. The problem is when the insurance company figures out that the vehicle is owned by a company, they have no intent of covering an accident, and they don’t have to. The short story is the insurance coverage has to match the ownership and actual use of the vehicle, or there isn’t any coverage.

Transferring your vehicle or titling it in the name of your revocable living trust, shouldn’t have any effect on your auto insurance. The car is still your “personal” vehicle as far as the insurance company is concerned. The revocable living trust is “invisible” to the insurance company. By law, a revocable living trust is “you” as far as the insurance company, tax man, and everybody else is concerned.

Revocable Living Trust Property Tax Issues

My son recently bought a $35,000 car in Virginia and had it titled in the name of his revocable living trust, which is exactly what he should have done. When property tax time rolled around he got a bill for over $8000 in property taxes. The state said since it was not in his name the car must be a commercial vehicle – more tax – a lot more tax.

It took the standard fight with the government bureaucrats to convince them it was a revocable living trust and had to be taxed as if the trustee owned the vehicle outright. I think he is the only one who has had a problem out of the thousands of cars I am aware of that have been bought in an revocable living trust’s name. So, don’t be afraid to use your revocable living trust.

Information on living trusts and much more can be found in my newly updated book, Protecting Your Financial Future. It covers, wills, trusts, taxes, business structuring and much more. Check it out HERE.

By Lee Phillips

The post Revocable Living Trust Owned Vehicles appeared first on LegaLees.

Business structure should be the fundamental consideration for asset protection and ease of administration when starting a business. Unfortunately many people miss this point when they start their business because it is not their primary interest “at the moment.” They don’t understand or care about the essential aspects of protecting and structuring a company. They just want to get started selling their widgets, or offering their great service. However, the business structure is a critical element for a successful business and for asset protection if you get in trouble later.

I recently was talking to a woman who is involved in a multi-level marketing business. She has a number of folks that she trains to run their businesses. She asked what I did. I told her I help folks form and protect their companies by choosing the correct business structure. I detailed how it protected assets and saved taxes etc. She became animated and explained, “Oh, my girls could really use that help. Most of us just start selling the products and we never think about business structure or asset protection or taxes.”

The truth is spending a little time on the business structure can make a big difference. Most states require anyone doing business to register with the state’s Department of Commerce. The Division of Corporations and Commercial Code, or some name similar, is responsible for managing and supervising all the commercial activities in a state, both protecting the consumers and assisting businesses. Neglecting this filing puts a business owner in breach of the law.

As long as you must file with the state it is a good idea to spend some time on selecting a business structure. There are several business structure options. Each structure has different tax implications, management options, costs and registration requirements. It is important to pick the business structure that is most beneficial to you and fits your needs. Here are some common types of legally recognized business structures:

• Corporations (C or S)

• Professional Corporations

• Limited Liability Companies (LLCs)

• Professional Limited Liability Companies (PLLCs)

• Non-Profit Organizations

• General Partnerships

• Sole Proprietorships

The business structure selection is an important decision with significant consequences. Seek appropriate legal and financial advice when making your decision. It is a good idea to do this before you start your business. This is because at the time of your business registration with the state, you must file your Articles of Organization or Articles of Incorporation (which is a similar document). These documents outline the primary rules associated with your Limited Liability Company (LLC) or Corporation. Generally a Limited Liability Company or LLC is the best choice for a small business. If you are doing this yourself, the LLC Wizard can help you with the business structure choice and the set-up. It contains over 2 hours of audio instruction and written copy to help you evaluate the pros and cons of each arrangement.

Having your business in order from the beginning is important. I think about the woman with the multi-level and her girls, who just start selling product. I can imagine how much they would save in taxes if they started with an appropriate business structure in place. Or the asset protection they would have in place if they had trouble. My grandma used to say if it is worth doing at all it is worth doing well. This is true when starting a business.

By Lee Phillips

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Self-Directed IRA Custodians are not all created equally. You need to carefully check out your self directed IRA custodian. I have seen a number of cases this past year where the IRS is coming after people because of what they have done with their self directed IRA.

When the self directed IRA industry caught on in a big way about fifteen years ago, there were a limited number of custodians and they seemed to be a lot more interested in following the law. Today, it’s more of a free for all. The philosophy of the industry in general is “Tell the dumb IRA owner whatever they want to be told, and sign up their account.”

Checkbook IRA is a NO NO

I have written a number of articles on checkbook IRAs and LLC/IRA combinations. The short story is the checkbook IRA is a NO NO and the LLC/IRA combination had better be structured and operated very carefully or the IRS will disallow it. The operating agreement of an LLC is the key to operating the company and complying with the asset protection and tax laws.  If it is written properly, you can save a ton of taxes.

You can go to IRS.gov and type IR-2011-39 in the little search window. Read the Dirty Dozen and note that under abusive retirement plans the LLC IRA combination is subtly listed. Being on the list means it is on the top 12 list of IRS abuses. No, it doesn’t directly use the words “checkbook IRA,” but that is what the reference is about. It hasn’t made the list since 2011, but the IRS has still got LLC IRA abuses on their radar.

Self-Directed IRA Custodians Should Be Qualified

One other issue I am seeing quite a bit of today is folks signing on with self directed IRA custodians that are really not IRS qualified. The whole concept of an IRA is an account that is controlled by a custodian that the IRS has qualified and approved.

One of the big self directed IRA custodians started franchising offices about 10 years ago. They recruited quite a few franchisees and had a big operation going within a couple of years. Everything went along fine until the IRS figured out that each of the franchisees was managing their accounts independent of the franchisor

The franchisor was an IRS qualified self-directed IRA custodian, but since they didn’t actually manage the IRA accounts of each franchisee’s clients, the accounts were not being managed properly. The individual franchisees weren’t considered a qualified self-directed IRA custodian, so the IRAs were in danger of being disallowed.

The IRS came in and shut all of the operation down. Most of the IRA “owners” didn’t really know what happened. They just knew that things changed. Some of the franchisees went through the steps of getting individually approved by the IRS as custodians, and some just collapsed. The IRS was nice and didn’t go directly after the IRA owners.

IRS Cracking Down on Checkbook IRAs with Self-Directed IRA Custodians

Since the IRS has doubled the number of agents in the past couple of years, they have lost their warm and fuzzy side and are leaner and meaner than ever. The next round probably won’t leave the individual IRA owners free from scars.

A number of my students have asked me about specific self directed IRA custodians. One that I have investigated is acting as a custodian, but they aren’t really an IRS approved self-directed IRA custodian. They have associated with a bank that is fronting as the IRS approved custodian. It looks a lot like the franchisee problem under a different name.

The penalty for placing an IRA in the hands of a non qualified person is the loss of the IRA, if the IRS decides to come after the individual accounts.

I recommend you do some homework when you choose a self directed IRA custodian. Don’t be afraid to ask questions and get exact answers. I have my accounts with Equity Trust Company, which is one of the oldest and probably the largest self-directed IRA custodian. I admit they are frustrating to work with, because they cross all the t’s and dot all the i’s, but I’m not interested in IRS problems because I choose poorly when I picked a self-directed IRA custodian.

By Lee Phillips

The post Self-Directed IRA Custodian – Choose Wisely appeared first on LegaLees.

By Lee Phillips

Inheritance is the way assets are passed to your family or heirs once you have died. Assets are pretty much anything you own such as real estate, stock certificates or bank accounts. The average inheritance passed in the United States today is about $200,000. Yours may be a little more or less, but for most folks, their inheritance will be the biggest financial deal they will ever handle. If you are interested in saving your inheritance, planning today, could actually increase the amount you get. You could even double it in many cases.

How is it possible to double your inheritance? Two words: estate planning. When most people think of estate planning they think of a will. And it is true, if a will is not set up at your death, passing your inheritance becomes complicated. With complication, comes expense and time. But there is more to a good estate plan than a will. Just like not having a will can cost you, not having the other pieces of an estate plan can complicate the passing of an inheritance.

To prevent this complication to you inheritance, you should ask, “Do my parents have their “affairs in order?” If not you should be worried. Look what could happen. Say your parent’s estate is worth the average $200,000. That will include their house, their life insurance, brokerage and bank accounts. If your parents die without a proper estate plan, probate will take $10,000 out of your inheritance. Plus the 18 months delay in claiming the assets and the time and effort. Then depending on the size your parent’s estate and which state they live in, there could be state and federal estate taxes that will take a chunk.

There are other costs that can take from your inheritance. During the final years of a parent’s life, the family can lose a lot of the estate in rest home expenses or legal fees. Plus as your parents age, they can become infirm and unable to care for their affairs. When this happens, you cannot just take over. You have to go to court and get the judge to sign an order that declares your parents are incompetent. This is embarrassing for them and a matter of public record. You must then get the judge to give you permission to manage their affairs. This is an unnecessary, time consuming and costly legal procedure. If a Durable Power of Attorney is in place none of this will happen.

Good estate planning is worth the effort, not just in the inheritance, money and time savings, but in the peace of mind it will give your family. However, often it is difficult to discuss this with your parents. Your parents may feel threatened that you are grabbing their money, threatening their independence, or are just waiting for them to die. Let’s face it nobody wants to face their own mortality. So you avoid it and nothing gets done.

The sooner the estate planning discussion takes place the better. If you don’t want to approach this discussion, I recommend you give your parents a copy of Protecting Your Financial Future. Challenge them to read the first two chapters. It has been my experience that they not only finish the book, they get their estate planning in place. The book is available on Amazon, but you can get it on the website at a discount. An inheritance is a big deal. Getting the estate planning taken care of early is not just good business and financial management, it gives peace of mind. The worst time to try and take care of estate planning is when someone is in intensive care.

Experts predict $10 trillion in inheritance will be transferred in the next two decades. Will you get your share? Is your family’s estate planning in place? If not, now is the time to get it done. After all, you’re the one who will have to pay unnecessary taxes and endure time-consuming court procedures. Without some forethought and planning, you could be facing a lot of wasted time and money from your inheritance, in addition to a lot of frustration. Make the effort to avoid this and get an estate plan in place.

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Tax audit fear increases with every tax season. And this fear is becoming more justified. I was shocked to read in Bloomberg that Uncle Sam is auditing more Americans than ever before. In the year 2000, one in every 203 Americans faced a tax audit. In 2012 it was one in every 92 returns. Among those making more than $200,000, that rose to four times the likelihood. If you were in that favored group making over one million dollars, your chance was even greater still.

Statistics show that Americans devote 2 hours and 13 minutes of every eight-hour workday, or over a quarter of their working hours (27.7%), to paying their taxes. Even worse, if we add the federal deficit to the picture—if the government collected enough in taxes during 2014 to balance the budget—it would take more than half of our earnings to pay Uncle Sam. And this figure will only go up with the proposed increases in government spending.

Use Tax Loopholes and Avoid a Tax Audit

With taxes on the rise there is an ever increasing incentive to find tax loopholes to save on taxes. The trick is to use loopholes and still avoid a tax audit. The first important thing to remember if you want to avoid a tax audit is to check for math errors or computation errors before mailing your tax form. Take a moment to glance over your forms to make certain they are filled out correctly. Check your name, address and social security number.

I have also heard that you are less likely to face a tax audit if you fill out your own forms. When you use an electronic program you cannot make any disclosure statements. It is important to include a statement of explanation whenever there’s something unusual in your return. A type-written note that explains red flag issues, such as bigger than normal loss for your small business, or a higher than normal mortgage-interest deduction, could prevent an audit.

You may have heard that giving to charities will flag your return for a tax audit. I am told that it is normal to give 2% to charities. If you claim more say 10%, then your return could be flagged. This does not mean you should not give more, just have the documentation. You should attach signed documents for your charitable contributions. You should also list all of the items you give to Goodwill and include the documentation.

I have read some places that you should never take a home office deduction. The reality is that if you do it right, this is a good tax loophole. Self-employed people who take advantage of tax loopholes will be in the lower tax bracket and will be better off financially than others who do not. The sad truth is that a lot of businessmen fail to take advantage of the many legal tax loopholes that could save taxes. I have written the 10 Ten Tax Tips course which shows many tax loopholes you can use and still avoid a tax audit.

I go around the country and lecture to small business owners and self-employed individuals. I will often mention these tax tactics. The audience is thrilled and some have found that by using just one tactic they can double their business’ profit. Because of the positive response, I have made these 10 Tax Tips available on LegaLees.com.

Of course, there is no sure way to prevent a tax audit, but being accurate and prudent in your filing could help a lot. If you want to explore other good tax saving strategies and thus avoid a tax audit, you need to consider my 10 Tax Tips.

By Lee Phillips

The post Tax Audit appeared first on LegaLees.

Advanced planning and a good estate plan can make a difference for any person or business. A good example was in the news last week when the Carnival ship Triumph broke loose from its moorings and was damaged. This was the same ship that was towed across the Gulf of Mexico about a month ago. At that time I read in the New York Times that it would cost $500 million to replace a ship like this, so whatever the cost to clean was a worthwhile option (and probably a more eco-friendly one). Carnival was in the process of cleaning the ship when it broke loose.

You may be shaking your head in disbelief, who wouldn’t carefully moor a $500 million ship? While you are wondering how the Carnival staff could be so careless, ask yourself this: “Are my personal and business affairs in order?” Do I have the four main tools of advanced planning in place? Or will my financial ship lose its mooring?

Because of a lack of advanced planning you could lose money in the form of probate, state estate taxes, and federal estate taxes. These are costs that you could avoid with a good estate plan. Lack of planning could also cost you in such ways as paying more taxes than you need or in the form of an unexpected lawsuit. Advanced planning and asset protection go hand in hand. Take the time to plan your estate in advance so you can get the most asset protection. Establishing a good estate plan in advance is not just smart, it is essential.

More important than the monetary cost of probate, taxes, and everything else is the emotional cost. The time and effort required to handle advanced planning is not that big. If you take time to put the four elements of a good estate plan in place and know how to use it, you’ll be saving your family not only money, but a lot of stress. That’s sometimes more important than the money.

A Good Estate Plan is Your Best Advanced Planning Tool

What elements make a good estate plan? The advance planning tools you need are a will, a trust, a durable power of attorney and a living will. The will and trust work together in a good estate plan. Most people understand what a will is and what is does. They may question why they need a trust.

A trust is a legal entity that is allowed to hold property for the benefit of another. This means that the property that is held in a trust can pass free of a probate court. Avoiding probate is a time and money saving tool and the basis of a good estate plan. If structured correctly it can be used and changed at will. This is called a revocable trust. A revocable trust, as its name suggests, may be amended, altered or revoked by at any time. It will be taxed under your social security number so it does not require an extra tax filing. Such a trust is easily managed and a good choice for holding property. Revocable living trusts not only minimize costs by avoiding probate, they also provide easy administration of a person’s assets and they provide maximum privacy.

Many people excuse themselves from estate planning by saying they aren’t wealthy enough for it to matter. Just like it seemed so obvious that significant care would be taken to tie up an expensive ship. Advanced planning requires that you ask, “Do I have the vital four estate planning documents that would prevent my financial life from breaking lose from its moorings in a storm?

Why anyone would risk this happening is a mystery to me. The legal process, including these four tools, can protect your assets, save you lots of grief, and allow you to pass the maximum amount on to your heirs. If you neglect your advanced planning, it will not only cost your family when you die, it will put you at risk during your life.

For other tax saving tips, check out my 10 Tax Tips.

The post Advanced Planning and a Good Estate Plan Forestalls Troubled Waters appeared first on LegaLees.

How much money do I need to retire is one of the most common questions I get. It’s a question there isn’t an answer for, because there are so many variables. But, I can show you were to get more money to put into your retirement.

Maybe the answer to the “how much money do I need to retire” questions is easy – as much as you can get. Most people don’t have enough. Last week the Wall Street Journal front page article was on “Workers Saving Too Little to Retire.” Fifty-seven percent of workers have less than $25,000 in savings, the article reported.

The fact is the average worker takes every dime he or she makes just to make daily ends meet. There simply isn’t anything left over to save. The biggest expense middle-age Americans have is usually taxes. If you could just save some of those taxes and put the money saved toward retirement, you might actually build up some retirement money and smile at the “how much money do I need to retire” question.

Use Tax Savings to Fund Retirement

I’ve developed a set of 10 Tax Tips that are practical ideas that people can use to cut their tax bill. If you can cut your tax bill, will you have enough discipline to consider that “new-found money,” and use it towards retirement savings?

Why not let tax savings fund some of your retirement? You’ll note that a lot of the tax tips require a little company to “implement” them. Don’t be discouraged. It’s easy to set up a little company. Suddenly, a whole new tax world will open up when you look at your financial situation through the eyes of a small business owner. Businesses are in a different tax world.

A good goal would be to cut your tax bill by 10-20%. You’re not going to get rid of the tax thorn in your side, but I am positive you can cut your taxes this year. However, there’s a warning. You’ll have to start today. Your taxes need to be considered every day, so that you can “create” the numbers that are finally used to calculate your taxes.

“Create” isn’t anything under the table. It isn’t “creative” tax planning, it’s just considering the tax outcome of your activities each day and choosing the path that will give you the best tax advantage at the end of the year. Suddenly the “how much money do I need to retire” question will become “how much money can I cut off my taxes.”

You can’t work harder, but you can play the IRS game a little smarter. If you put what you save in taxes toward your retirement, you’ll have the same amount to live on each month, and you’ll have money to put into retirement.

If you are paying big taxes this year, you can play the tax game a lot smarter. The tax tips will help, but if you’re paying over $50,000 in taxes this year, we need to talk, because there are things that can be done after you’ve maxed out the tax tips. Give me a call at 801-802-9020.

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Trust tax rates are outrageous. (See table of Trust Tax Rates below.) A simple trust is one that is required to pay all of its income out every year to the beneficiaries. Technically, a simple trust can’t accumulate income. A complex trust can accumulate income and make its corpus (trust estate) grow.

Simple trusts include the standard estate planning “living revocable trust,” and many other trusts. Most of them are the “revocable trusts.” Usually, the trust doesn’t have a tax ID number. If a tax ID is asked for the Grantor/trustee/beneficiary’s Social Security number is used.

Complex trusts can accumulate income, so they are required to have their own tax ID number. Even though complex trusts can accumulate income, it’s usually not wise to have the trust actually accumulate income, because the trust will be taxed on the income it accumulates. With trust tax rates hitting 39.6% at only $11,950 it’s not good to pay taxes out of a trust. Additionally, the 3.8% Obama-care surtax kicks in at $11, 950. Obviously, trust tax rates are outrageous. (See table of trust tax rates below.)

A trust, either a complex trust or a simple trust, gets a tax deduction for money it pays out to the beneficiaries. Thus, it is relatively easy to “zero out” a trust’s income and avoid paying taxes on trust money. A complex trust may have to file a 1041 tax form, but if there isn’t any income retained in the trust, the tax will be zero, even if a 1041 form is filed.

Note that when a simple trust says all of its “income will be paid out at least annually” that doesn’t mean the money has to be transferred from the trust’s accounts to the beneficiary’s accounts. It simply means that the beneficiary(ies) have to claim all of the income on their tax return(s). Thus, a simple trust isn’t supposed to accumulate money.

Think twice before letting your trust get into a position where it has a tax liability.

Trust Tax Rates Table

Rev. Proc. 2013-15 of the American Taxpayer Relief Act sets the above tax rates for 2013. The rates will be inflation-adjusted each year, so check for the year you are interested in. These rates apply to estates and trusts. The sure Obama-care tax of 3.8% applies to trust income above the $11,950 level.

For great tax saving ideas, check out my 10 Tax Tips.

The post Trust Tax Rates (Simple Trust or Complex Trust) Will Blow Your Mind appeared first on LegaLees.

LLC Tax Classification: What it is and How to get it

LLC tax classification is the way you choose your LLC entity taxing structure. LLC is short for limited liability company. There are folks who think that LLC is short for Limited Liability Corporation, but that’s not right. An LLC is not a corporation, but a company. An LLC does offer the same corporate shield protection as a corporation. In addition, the LLC offers another type of asset protection called “charging order” protection.

An LLC tax classification requires that you file paperwork with the state where you form the LLC and also file your tax election with the IRS. At that time, you can elect your LLC tax classification or how your new business will be viewed by the IRS for tax purposes. If your LLC is a single member LLC (one owner) then you can tax it as a “disregarded entity” and simply file a schedule C on your 1040 tax return. If your LLC has two or more members you can choose to be classified as either a corporation or a partnership. If you elect to be a corporation you can also choose to have it taxed either a C or S corporate tax structure.

LLC Tax Classification C or S

If you choose to have a LLC tax classification as a C corporation structure, you should file a Form 8832 to elect your LLC’s tax classification. On the other hand, if you choose to be taxed as an S corporation, file a form 2553. If you fail to file any tax forms, your LLC will be classified, under the IRS default rules, as either a sole proprietorship or a partnership if there are two or more members. The sole proprietorship will automatically default to the classification as a disregarded entity.

The LLC tax classification under a specific tax code section doesn’t affect the asset protection of the LLC entity. People often ask, “What is an LLC entity classification?” They often confuse asset protection with the tax issues. An LLC is an LLC for asset protection purposes, but it can be any one of the above listed tax entity structures for tax purposes.

The LLC entity classification is one of a small businessman’s best asset protection tools, and it is definitely one of the most flexible tax tools, because you can choose any tax structure you want. When forming an LLC it may be a good idea to check with your accountant and review your type of business and its potential operations, so you can pick the best entity for your business. My LLC Wizard Course also details all the options with a full chapter on Tax Decisions, complete with audio explanation.

The post LLC Tax Classification – What’s Important? appeared first on LegaLees.

LLC yourself or form an LLC company without a lawyer? Sure, you can do it yourself. The forms are not complicated and can be easily filled out and filed. In fact, most states have a set of “fill in the blank” Articles of Organization available on the state website, making it simple to get the correct Articles of Organization for your state and then you just have to file them and pay the fees. Sounds easy, doesn’t it?

Unfortunately, to “LLC yourself” requires a bit more knowledge. It isn’t sufficient to just file the Articles of Organization. To stop there will mean that you do not get the full asset protection or tax advantages an LLC has to offer. To LLC yourself the right way means that you must make all the correct elections. It is not difficult, and can be completed sequentially, but you should consider each step carefully to make the correct choices for what you are trying to achieve.

LLC Yourself – Liability Protection

When you LLC yourself, and you are serious about liability protection, you will need an Operating Agreement. All too often a business owner will file the Articles of Organization and think they are done. The Operating Agreement defines how your LLC is set up and run. By including the correct language and structure, if your LLC is involved in a lawsuit, your Operating Agreement can level the playing field in your favor. Why would you take the time to LLC yourself and neglect this critical step? Let’s face it, the main reason to have an LLC is for liability protection.

Another important liability question to answer when you LLC yourself is how many partners to have. For instance, if your business could easily have a liability problem, you should get at least one more partner and open a multi member LLC. Multi member LLCs can qualify for charging order protection. I explain charging order protection and how to benefit from it in the LLC Wizard. On the other hand, if your business doesn’t have a great liability exposure, say you are selling multi-level products or buying art, or some other activity and you’re acting alone, then you should probably just act as a sole member- manager, at least until you are making money.

LLC Yourself – Get Tax ID Number

Finally, when you LLC yourself, you should file for a company tax id number and make the proper tax elections. A word of warning! Do not get the tax id until you actually start in business. I have seen the IRS come back and sue for back taxes before the company was even working. This is a difficult thing to prove, so don’t get caught in this trap.

Once you file your articles of organization, it is vital to make the proper tax elections before your opportunity to determine how your LLC will be taxed expires. If you neglect to make your elections the IRS will choose how to tax your LLC.

These are just a few of the important considerations that you should be aware of when you LLC yourself. In my completeLLC Wizard I give you everything you need to LLC yourself and walk you through how to customize your forms and then how to use them. Remember, your little business can be your best tax saving tool!

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