3 ms·

no but instead of taking out the money to pay yourself, you just buy things as assets of the company therefore reducing tax exposure.. at least thats the way I

no but instead of taking out the money to pay yourself, you just buy things as assets of the company therefore reducing tax exposure.. at least thats the way I have heard of.

JamesBarney 9y ago
This is called "piercing the corporate veil" and will not only get you in trouble with the IRS but will also mean if you're ever sued you won't get any of the normal protections to your personal assets that you would expect from doing business as a corporation.
- jjeaff 9y ago
  Protecting yourself in a single owner corporation or LLC would require extraordinary discipline and bookkeeping. The protections offered by an LLC or corporation to a single owner are generally overstated. In other words, the corporate veil will be pierced either way.
  - xapata 9y ago
    It's not that bad. I keep a separate credit card, laptop, and office for company use.
hippich 9y ago
assets are not expenses. (that's why it called assets) some assets can be depreciated over years. some small assets (like printer, laptop) - can be written off in one year... but amount you would save on it is negligible.
- bduerst 9y ago
  Asset purchases are expense. It's a way to get cash out of a company to avoid paying taxes. Money launderers will sell themselves electronics at a 5-10x markup on Amazon, for example, to get the cash out.
  - hippich 9y ago
    This is Cost of Goods Sold (this is an expense) To get there you need to acquire Goods to Sell first. Either way, it is not applicable to what parent was saying. What typically people mean in these situations is that "I can buy a car in the name of my corporation tax free, I can replace home AC unit in the name of corporation tax free" etc. And that is very wrong. (I am here talking about accounting meaning of word "expense")
prostoalex 9y ago
You have to prove to the IRS that the asset is used 100% for work. If it's not 100%, you have to show documentation for arriving at that specific interpretation of a split. That's why buying a whole house to live in and writing it off won't work, but claiming 10% of the square footage of the house that's used for business (and business only) will. Unless you feel very comfortable with IRS regulations and annual changes in them, you have to pay a business CPA to run the numbers, and in many cases the added complexity is just not worth it.

no but instead of taking out the money to pay yourself, you just buy things as assets of the company therefore reducing tax exposure.. at least thats the way I have heard of.

JamesBarney 9y ago

This is called "piercing the corporate veil" and will not only get you in trouble with the IRS but will also mean if you're ever sued you won't get any of the normal protections to your personal assets that you would expect from doing business as a corporation.

jjeaff 9y ago
Protecting yourself in a single owner corporation or LLC would require extraordinary discipline and bookkeeping. The protections offered by an LLC or corporation to a single owner are generally overstated. In other words, the corporate veil will be pierced either way.
- xapata 9y ago
  It's not that bad. I keep a separate credit card, laptop, and office for company use.

hippich 9y ago

assets are not expenses. (that's why it called assets) some assets can be depreciated over years. some small assets (like printer, laptop) - can be written off in one year... but amount you would save on it is negligible.

bduerst 9y ago
Asset purchases are expense. It's a way to get cash out of a company to avoid paying taxes. Money launderers will sell themselves electronics at a 5-10x markup on Amazon, for example, to get the cash out.
- hippich 9y ago
  This is Cost of Goods Sold (this is an expense) To get there you need to acquire Goods to Sell first. Either way, it is not applicable to what parent was saying. What typically people mean in these situations is that "I can buy a car in the name of my corporation tax free, I can replace home AC unit in the name of corporation tax free" etc. And that is very wrong. (I am here talking about accounting meaning of word "expense")

prostoalex 9y ago

You have to prove to the IRS that the asset is used 100% for work. If it's not 100%, you have to show documentation for arriving at that specific interpretation of a split. That's why buying a whole house to live in and writing it off won't work, but claiming 10% of the square footage of the house that's used for business (and business only) will. Unless you feel very comfortable with IRS regulations and annual changes in them, you have to pay a business CPA to run the numbers, and in many cases the added complexity is just not worth it.