Anyone ever set up an LLC for their team
 

I had wondered about financial winnings and losses in the past and with Mark's thread about 1099's I figured I'd ask away to see what others have done.

Has anyone set up an LLC for their comp team? I don't know what it would cost to do so, but if I listed the team as a business I wonder if it would be benefitial to my taxes. So far this year we've spent well over $5,000 to do a handful of comps this year. This includes entry fees, meats and supplies, smokers and a trailer - you know, business supplies and equipment) and have won $25.

Could the business be listed as a catering business and the comps be listed as promotional/advertising expenses? Yeah, we'd claim catering revenue (if we ever did do that) and comp wins. Let's face it, it's going to be awhile before the revenue outweighs the expenses - if that ever happens.

Just wondering if anyone's done it, thought about it or has any advise.

B&B BBQ and Catering, llc

Talk to your lawyer. Our reasoning was that it helps insulate you from personal liability. Plus makes it easier to satisfy the taxman.

PS - Bear in mind that to really satisfy the taxman, you need a business plan that shows a reasonable expectation of profit, thereby legitimizing the deductible expenses. You be the judge of how liberally you interpret that.

Any lawyers out there that want to join a BBQ team? Your primary responsiblity will be to set up the business, do the paper work and file taxes. No need to show on game day - thanks in advance! :biggrin:

We traded our lawyer meat for his efforts. We got an llc, and he got a brisket and pork loin.

And which cuts are considered the "lawer meat"?
ModelMaker

Easy, ya provide them the Lawyer's Plate.

5 pounds of sliced brisket, 5 pounds of shreaded pork, 5 pounds of sliced ham and 3 slabs of ribs and deliver it to his/her home about 3 hours before kick off of the Super Bowl.

Tri-tip. "You know, that special cut that lies directly between the anus and the testicles." [MilitantSquatter mod]

I agree. At some point in time the IRS is going to expect that a business make a profit. The first couple of years of any business are lean but after that my account has told me that we have to show sales that start wiping out some of the losses that have been deducted.

So what if one folds? At least we'd be able to write off our initial equipment expenses.

Yes but you could have future ramifications on equipment based on how your wrote them off. You get into depreciation schedules for items. When you dispand the LLC then you will have to get into what has a value when dispanded and whether or not it will be considered income. For instance a $5000 smoker. It will depreciate over a long period of time.
You should probably talk to a tax attorney or your accountant. My accountant set one up for a little business my wife had and it has been a major headache. Quarterly tax filings, letters when you do not get it filed timely, etc adding to the additional cost.

Folding is always an option. Many businesses do it regularly and to their advantage. I doubt we will, as you lose all your brand identity, and we have been fortunate to have some sucees and recognition locally.

In our case, we just have to keep buying stuff to offset income. This year, FEC 500 and trailer. Next year, RV?

I am not a lawyer but we went through this for my wifes pet sitting agency. We incorporated to protect ourselves from any personal litigation should there be a lawsuit against her business. Thats the good part of incorporation. The other or dark side of corporation is that the IRS will know about everything in your business. You will pay tax on all assets of your corporation. This could include your smoker or other assets of your company. It is not uncomplicated. Her first business running an internet storefront that had very little chance of litigation, so she ran it as a DBA and life was so much better. Let me tell you, the less the IRS knows about what you are doing the better.

DBA??? What is that? Are their other options?

You can show a loss for 7 years then the IRS will look for a profit but a BBQ team is so small you are never going to show up on there radar unless you start winning big money and the majic number there is 10,000 anything undre that and you have to clam it so thay will never know one way or the other any thing over that the taxes have to come out right away...I stayed at a holiday in last night

what if you incorporated yourself, and ran the bbq as DBA (doing business as) Not sure of legal ramifications, but doc's do it all the time. S