Question: How do I use the per diem option for travel expenses? Answer: Per diem is a standard allowance permissible in lieu of actual expenses. There are no receipts required. The owner of a business is not allowed to use per diem for travel and lodging. However, business owners are allowed to use per diem
Question: Should I rent my home office to my business or take a deduction? Answer: In order to determine which choice is best for you, either taking the home office deduction or renting your home office to your company, you will first want to review your entity structure and determine which business entity will use
Question: In which states does my entity need to register? Answer: Each state has its own laws that set forth the rules as to when an entity (or business) must register to do business in that state. Usually the laws use the terms “transacts business” or “conducts affairs”. Registration is usually required if the entity
Question: Does my entity need a bank account? Answer: Every entity should have its own bank account. Having its own separate bank account allows an entity to pay for its own expenses and collect its own income. This is important when it comes to protecting your entities for asset protection and tax purposes.
Question: When should I add a C Corporation? Answer: If you are not yet in a tax bracket higher than 21% (the current C Corporation tax rate), then you don’t need a C corporation yet. Instead, add the C Corporation when your tax bracket increases. When you do add a C Corporation, keep in mind
Question: How do I handle expenses used by more than one of my businesses? Answer: The expenses should be allocated to the business (or investing) activty. The two keys here are to be reasonable and consistent. Reasonable means that the method you use to determine how much of each expense should be allocated is fair.
Question: Can an IRA invest in real estate? Answer: First, I have to share my thoughts on real estate investing in an IRA. I never ever want to put a tax shelter investment inside another tax shelter. What many people don't realize is that this is exactly what they are doing when they invest in
Question: Isn't it risky to focus on one asset class? Answer: I suggest you focus as narrowly as you feel comfortable handling different investment strategies. The challenge is that there are so many investment strategies that it is easy to pull your focus and try too many. There has never been a time in the
Question: What are the differences of being considered a "Dealer" vs. an "Investor" and why does it matter for tax purposes? Answer: There are two primary tax differences of being considered a dealer of real estate. First, the gain on the sale of the real estate is taxed as ordinary income if you are a
Question: How do I get money in to my entity? Answer: Your choices here are to contribute the money to your entity (this is called a capital contribution) or to loan the money to your entity. If you are the only member of your entity, or if you own it with your spouse, then typically