Claiming Laptop as LLC expense


4

I don't have a separate bank account for my LLC (I am sole owner). I am planning to buy a new laptop. How do I claim it as an LLC expense, come tax time?

Related questions:

  1. What are pros/cons of having separate bank account for LLC.
  2. What can I really claim for tax benefits (office furniture etc that I already had before I created the LLC?)--I tried a google search and haven't yet found all relevant info.

I don't have any revenue from the LLC.

Thanks!
Madhavi

LLC Tax Accounting Bank Account

asked Oct 27 '10 at 04:45
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User5027
21 points
  • Welcome to the site, and that's a perfect question for it! – Adam 9 years ago

2 Answers


11

When I first started out in business I had only a personal bank account and a home office. I was audited by the IRS, and they sent two agents who worked in my home office for four days. In the end, I owed nothing, but they told me most of their auditing would have been unnecessary if I had a spearate business bank account.

Get a separate bank account for the business. Get an accountant to tell you what items may be expensed. Never under report your business income. Make sure your business expenses are all for the business and not for personal use.

answered Oct 27 '10 at 05:30
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Gary E
12,510 points
  • Thanks Gary. Will open a bank account right away! – User5027 9 years ago

4

1.What are pros/cons of having separate bank account for LLC.

You need to get a separate bank account for your LLC. You are risking your company's future by using one bank account for both personal and business funds. Getting a business bank account costs you nothing, and is a quick and simple process.

If you don't separate your business and personal funds you risk:

  1. Your corporate veil being pierced. As an LLC owner, you have the advantage of having limited liability, which protects your personal assets (to a certain degree) in a legal proceeding. If you continue to run your business with one bank account, and your business ends up getting sued for some reason, you run the risk that they will "pierce your corporate veil". They may be able to claim that because you were using the same bank account, you were actually running your business as a sole-proprietorship, instead of an LLC - eliminating your limited liability. Search for "pierce corporate veil" in Google to get more information on this.
  2. An IRS Audit. If you use one bank account for both, the IRS may claim that you don't really have a business. If they succeed in that claim, you may end up having to pay the IRS more money in fees and interests.

Don't take that risk! On top of what I've already mentioned, having a separate business bank account will make your accounting so much easier!

2.What can I really claim for tax benefits (office furniture etc that I already had before I created the LLC?)

You might be able to claim office furniture that you owned pre-LLC, if you kept good records. Your accountant can help you with that. But depending on how much money you are talking about, it may not be worth it. In my opinion, it's not worth it to pay an accountant ~$200/hr to try to sift through your records to "save" you a couple hundred dollars.

You should be able to claim the laptop as a business expense if in fact you are using it for your business. If you will be using the laptop partly for business and partly for personal use, you will only be able to deduct the percentage that is used for business. For example, if you use the laptop 80% of the time for your business and 20% of the time for personal reasons, then you can only deduct 80% of the cost as a business deduction. Again, your accountant can help you with this.

Please note that I am not an accountant, so take my advice for what it's worth.

answered Oct 27 '10 at 07:35
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Zuly Gonzalez
9,194 points

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