Is it dangerous to buy equipment for a new LLC without guaranteed Income yet.
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Hopefully I will manage to create an LLC pretty soon, within the next few weeks. I do not own a laptop and I was thinking in buying a laptop then I can write it off as a business expense.
- What happens If I spend $5000 worth of equipment and I do not get any clients? Or in other words, my company does not generate any income?
- Will they think that I have setup an LLC to cheat the system and go to jail?
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Where are you located? – Zuly Gonzalez 12 years ago
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In Ohio but If clients were to appear and relocation was required I would. Would that be a problem if the LLC was created in Ohio? – Viriato 12 years ago
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No, its not a problem. It's just that you should state what jurisdiction you are in when asking legal questions, as laws vary from country to country. – Zuly Gonzalez 12 years ago
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Will they think that I have setup an LLC to cheat the system and go to jail?No. Most businesses fail and the IRS knows that. As long as you aren't doing anything illegal you should be fine.
What happens If I spend $5000 worth of equipment and I do not get any clients? Or in other words, my company does not generate any income?You can claim your equipment purchases as a business expense. Depending on how your LLC is setup tax-wise (pass-through taxation vs corporate taxation) you may be able to use these expenses to offset any other income you may be receiving. There is a limit on what you can deduct on your income tax return. If you exceed that amount you can rollover the difference to the following tax year.
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