When you have an investor in your LLC, who works less than 500 hours in a given tax year for the LLC, and they do not participate in its management, they are considered limited in their liability and their income is usually considered passive income subjecting the income to only federal and state income taxes based on their marginal tax rate.
How to Pay a Non-Manager Member of a Multi-Member LLC Read More »
A member in an LLC that is a decision-maker (manager) is considered an employee of the business by the IRS and is treated differently than non-manager members. Income for managers is considered earned income and is subject to additional taxes but also to additional potential tax deductions. Moreover, as a manager, you are exposed to additional liabilities.
How to Get Paid in a Multi-Member LLC Read More »
As a sole proprietor or as a single-member LLC you are the only owner, and as a result, you do not take a salary or a wage from a business. Instead, you can simply take out excess cash from the business, which is known as an owner draw, to pay yourself.
How to Get Paid as an Owner of a Sole Proprietor or Single-Member LLC Read More »
How you pay yourself as an owner depends on the type of entity you are and how many owners there are. This post lays the groundwork and defines a few terms that should help demystify how entities pay the owners of the business.
How to Get Paid as an Owner of a Pass-Through Entity Read More »
Would your business benefit from lower downside risk but less profit potential, or higher profit potential with greater risk if break even is not met? In this post, discover how a businesses fixed and variable costs will shape its risk and reward possibilities.
How to Control Business Risk Read More »
The question, “Is it better to lease office space or own it?” is at the core of many business plan decisions that I review. On the one hand, I never advise owning real estate for startups because they have a high rate of failure. However, it is a decision that should not be undertaken lightly
Should You Rent or Own Your Business Real Estate? Read More »
Don’t look to our government as a model in understanding good vs. bad debt. Every day the media highlights another case of the government’s ignorance in the way money should be used. One side of the aisle says it is a revenue problem and we need to raise taxes on the rich. The other side
Is Bad Debt Destroying Your Business? Read More »
The US dollar continues to rise in value in relation to the Euro. A strong dollar makes products manufactured overseas cheaper to buy. While it may make buying a Mercedes cheaper and may make your international travel budget go further, these savings come at the expense of business revenue. On the flipside, goods and services
There is a bit of an injustice in the way entrepreneurs are told about the business planning process. First, new entrepreneurs are told that to get money from a bank they need a business plan. While there is some truth to this, a major missing piece is that they will likely not get any funds
Not All Customers Are Equal; Some Drive Profits, While Others Quietly Drain Resources. Customer Profitability Analysis (CPA) Helps You Identify Which Customers to Nurture, Improve, or Let Go.
How to Master Customer Profitability Analysis Read More »
