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moocow
05-03-2010, 10:12 AM
With our recent win we are left with how to handle our money. I am looking for advise on what to do as far as taxes, Tax ID #, etc. Do most of you guys have an LLC? Will all contests give you a 1099? How much does it cost to set up an LLC? Do you have to have a business lic.? How long before you have to make a profit? Any info would be helpful. Thanks

early mornin' smokin'
05-03-2010, 10:49 AM
well, if we ever won enough to cover what we spent, we've decided to cover the costs of entry, meat, and incidentals, and if there was money left over, reinvest in the team, ie, new cooker....im not a big fan of giving up more money than i already do to the government!

Scottie
05-03-2010, 10:57 AM
If you set up a LLC, be prepared for the IRS to look closer at you. Your best bet, unless you are planning on opening a catering business, is to just get a dba for your team name. If you get a 1099, have it under your SSN #.

But to have a LLC for a BBQ team, I would not recommend it...

Lake Dogs
05-03-2010, 11:02 AM
Only your profits are taxable. Factor in, for the entire year, all costs associated with
practices and competitions, including gasoline, spices/sauces/rubs/injections, meats,
team garb, etc. Very few actually make a profit at this. Otherwise, you're probably
fine just using your personal taxes, schedule C. For 99.9% of us, no matter how
you slice it and dice it, to the IRS it's a hobby. If it's a hobby, you cannot use the
costs as a deduction against other income (damn it). If there's a profit, schedule C.

And, what Scottie said.

paydabill
05-03-2010, 11:05 AM
Agree with Scottie. LLC means - Audit in most cases.

I would keep it in your name and SS# - remember 1099 money is taxed at the full amount to what your bracket is. So, what I did was reserved the % from the winnings and did not touch it. Then when taxes roll around, I refunded that money to my family.

Smokin' Joe
05-03-2010, 11:47 AM
Not all contests give out 1099's...We won a substantial sum at an event in 2009, no tax information was ever collected and no 1099 ever showed up. But it just would have been a little more paperwork if it did as I had several thousands of dollars of expenses to go against it :)

ique
05-03-2010, 12:01 PM
Not all contests give out 1099's...We won a substantial sum at an event in 2009, no tax information was ever collected and no 1099 ever showed up. But it just would have been a little more paperwork if it did as I had several thousands of dollars of expenses to go against it :)

Uh Joe, are you saying you didnt claim these earnings to the IRS? :tape: :-P

musicmanryann
05-03-2010, 12:09 PM
No, he Brian and Matt just spent the cash on booze and strippers on the way home, so there was no record of it!:dancer::rofl:

KC_Bobby
05-03-2010, 12:16 PM
Set up a checking account for your team using your dad's info - let him deal with it. :becky:

Might not be in your best interest to set up a biz after Belton winnings, but it could be when the year is over - let the entire year determine your best route. But keep your receipts - fortunately we did.

CivilWarBBQ
05-03-2010, 12:17 PM
Another tip - if you have a choice, have prize checks cut in the name of the team member who pays the least taxes.

moocow
05-03-2010, 12:35 PM
We would like a separate BBQ checking acount but can't use the team name without a tax ID #, Is this correct? We have a pretty big company wanting to provide us with some cash but would like to make the check out to the team name and not an individual so I am not sure what we should do. Would also like to be able to go to places like Restaurant Depot with a permanent card and not go to the desk all of the time like the current deal is set up. It not so much about the prize winnings as it would be some of the other perks that would come with it. We have been asked several times to cater and so far we have stayed away from larger things. Thanks for all of this info, keep it coming.

Scottie
05-03-2010, 12:43 PM
you just need a dba to open a business checking account.

Lake Dogs
05-03-2010, 12:46 PM
Sponsorship and catering. No longer a hobby. Do you have a CPA that you know and trust? If so, this might be a good
thing to run by them before you go too far down one avenue or another.

Smokin' Joe
05-03-2010, 12:59 PM
Uh Joe, are you saying you didnt claim these earnings to the IRS? :tape: :-P

I would never say that, certainly not on a public internet forum:doh::-D:mod:


No, he Brian and Matt just spent the cash on booze and strippers on the way home, so there was no record of it!:dancer::rofl:

Ryan, may be onto something here...cash has no paper trail especially when spent in this fashion:-P

ique
05-03-2010, 02:29 PM
No, he Brian and Matt just spent the cash on booze and strippers on the way home

I wonder if they give out receipts in the champagne lounge VIP room :idea:

2Fat
05-03-2010, 03:06 PM
I wonder if they give out receipts in the champagne lounge VIP room :idea:

Only if you ask!

Balls Casten
05-03-2010, 04:00 PM
I wonder if they give out receipts in the champagne lounge VIP room :idea:

In Minneapolis the “Sheiks Palace Royal” will give you a receipt from “SPR”. To which I have told our accounts that watch my expenses … that’s from the Saint Paul Radisson. :cool:

JD McGee
05-03-2010, 06:24 PM
We split our winnings 50/50...our local BBQ association sends out a 1099 to each of us for equal amounts. I do not claim my winnings for my catering business...it it strictly personal.

Rub
05-03-2010, 08:02 PM
I set up an LLC a few years ago.
So far, so good.

BBQ_Mayor
05-03-2010, 08:21 PM
If it gets to be too much trouble, you could just sponsor our BBQ team and I'll take care of the tax burden.:becky:

Muzzlebrake
05-04-2010, 08:02 AM
I think the main reasoning behind forming an LLC is not to handle money but to limit your personal liability from any actions that may arrise out of your actions of the BBQ team. I know that a few folks here that operate under an LLC I'm in the process of forming an LLC now for just that reason

KC_Bobby
05-04-2010, 08:35 AM
What's the difference between an LLC and an LTD?

DMDon
05-05-2010, 09:11 AM
bump

Finney
05-05-2010, 09:41 AM
Got this from a google search
(As we all know, not all information on the 'interwebs' is correct... so I would check with a professional):

LLC vs LTD

LLC offers its owners the advantage of limited personal liability and a choice of how the business will be taxed. Partners can choose for the LLC to be taxed as a separate entity or as a partnership-like entity in which profits are passed through to partners and taxed on their personal income tax returns. Although state laws governing creation of LLCs and IRS regulations controlling their federal tax status are still evolving because of their flexibility LLCs are increasingly regarded as the small business legal entity of choice. LTD is A business structure in which shareholder responsibility for company debt is limited to the amount he/she has invested in the company.

moocow
05-05-2010, 10:18 AM
For now I got an DBA(doing business as) from the state($7) online. This let me get a checking account in the team name. We will decide at the end of the year if we want to go LLC. I talked with my tax guy yesterday and as a hobby it seems I would be able to write off my expenses until I had a zero tax liability and no more. This may be under a partnership but I am not sure of all of the details. Thanks for all of the info.

Scottie
05-05-2010, 10:45 AM
What's the difference between an LLC and an LTD?


i will give you the very generic version. A Ltd. is a limited partnership. Therefore you are subject to any claims that might be brought against the Ltd. If you were an LLC, you would not be liable.

Jacked UP BBQ
05-05-2010, 11:49 AM
I am a LLC and actually took a loss last year and it helped out on my taxes. There is a hobby tax that you can claim if you are using personal but there is a max on it, I think around 2100, I would advise to speak with an accountant they shoul be able to lead you in the right direction. My LLC for Jacked Up BBQ actually saved me 2400 in taxes this year which if I had used it as a personal hobby would have never gotten the tax credit. Good luck.

Ohly Smokes
05-05-2010, 12:12 PM
People win money at bbq competitions? :-P

Jeff
www.ohlysmokes.com (http://www.ohlysmokes.com)

DMDon
05-05-2010, 12:13 PM
We formed a C corp, for the purposes of keeping our bbq empire seperate from personal taxes, as 50/50 owners it will make the tax process much easier, than trying to figure out personal taxes when a 1099 comes in only one of our names. As far as the LTD vs LLC vs PC vs INC etc, when I asked my tax guy to explain, he stated that because we are a C corp with a seperate tax return the LTD really doesn't mean much its just a name. An LLC is an S Corp that does not file its own return and it flows through to your personal taxes.

So if I understand this correctly an LLC is an S corp and if you become a C corp the LTD, INC designates that you have become incorporated. Its really the the type of corp you are that defines the amount of liability you have and how it is taxed.

Some please correct me, if this is not right

ique
05-05-2010, 12:24 PM
People win money at bbq competitions? :-P

Jeff
www.ohlysmokes.com (http://www.ohlysmokes.com)


Often.

People ending a competition bbq season with a profit? Not very often.

ZILLA
05-05-2010, 12:28 PM
Cook Texas where they pay cash.

Bigdog
05-05-2010, 02:10 PM
Often.

People ending a competition bbq season with a profit? Not very often.

Much like gambling. :wink:

Haltech
05-06-2010, 11:12 PM
I went from an LLC to an S-Corp. I own a forum that generates decent income. So what i did was i took my forum as one dba and added my bbq gig as a second dba. I filed a new S- Corp under a generic name. What this allows me to do is write off a loss obviously. So, equipment, trailer, supplies, etc can all be calculated into this whole business figure.

LLCs and S-Corps are very similiar as it still protects your from absorbing personal debt if the business fails. Where the S-Corp excels over the LLC is when it comes to monies distributed and how its taxed. An LLC is basically a double tax. See below for an explanation:


A major factor that differentiates an S corporation from an LLC is the employment tax that is paid on earnings. The owner of an LLC is considered to be self-employed and, as such, must pay a “self-employment tax” of 15.3% which goes toward social security and Medicare. The entire net income of the business is subject to self-employment tax.*

In an S corporation, only the salary paid to the employee-owner is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules. Therefore, there is the potential to realize substantial employment tax savings. Case in point:

Mary owns a print shop. In keeping with the industry standard, Mary decides that a reasonable salary for a print shop manager is $35,000 and pays herself accordingly. Mary’s total earnings for the year are $60,000: $35,000 paid in salary and the remaining $25,000 paid as a distribution from the S corp. Mary’s total employment tax is $5,355 (15.3% of $35,000).

If Mary were the owner of an LLC, she would have to pay employment tax on the entire $60,000, equaling $9,180. But as an S corporation, she realizes savings of $3,825 in employment tax.

One might assume that these savings could be further manipulated by reducing the salary to an extremely low amount and attributing the rest of one’s earnings to distributions—but this would be an incorrect assumption. In practice, the IRS is careful to notice whether a salary is reasonable by industry standards. If it determines a salary to be unreasonable, the IRS will not hesitate to reclassify distributions as salary.


Now, the largest disadvantage to a S-Corp is you do a pay as you go tax and if late when payment is due, you incur fee's/penalties on it. An LLC is much easier as you pay by a annual tax due by April 15th. Its confusing stuff and a CPA or tax person is needed to handle the paperwork. I see about 70% of competitors go into catering anyhow so you do have an advantage here, esp if the business doesnt take off like first anticipated.