Hello,
I’m a 1099 independent contractor for an organization through which I teach pickleball lessons (it’s a sport lol). I have a ton of expenses related to pickleball including tournament entry fees, shoes, paddles, balls, gas to and from lessons and tournaments, etc… is this something I could set up an LLC for and write off these expenses?
Cheers!
Posted Jul 2, 2021, 2:42 AM UTC
[deleted]
Yes but why? You can do all that as a schedule C self employed individual.
Interesting, thanks for the response. I guess I’m trying to explore the limits of what can be written off. For example: I pay $50 to play in a tournament and at that tournament I meet a client that later takes a lesson from me. Can I use the entry fee for that tournament as an expense, what about the gas to get there and the damage to shoes and paddle as a result of that tournament. Is this easier to write off as a self employed individual or if I have that business under an LLC?
Is this easier to write off as a self employed individual or if I have that business under an LLC?
As multiple people have told you already, there is no difference.
The LLC is not a separate taxable entity. The income and expenses of the LLC get reported on your personal income tax return schedule C. Same rules apply for deductions whether you have a sole proprietorship or an LLC that has chosen to be taxed as a proprietorship.
Whether or not you have an LLC or not has no connection to what expenses you can write off, none. LLCs are just a legal liability thing, they're "disregarded entities" for tax purposes. Almost always worth setting up for the legal protections, though it does cost a few hundred dollars a year.
As for what you can write off, "ordinary and necessary" is the legal phrasing. Looking at your comments. Playing in tournaments- maybe? That's probably an "aggressive" tax strategy but if it's necessary for your business and you wouldn't be going if you didn't have the business, probably okay.
For driving there, you can't deduct anything for a regular commute to a place of business. If you're going somewhere special that you wouldn't normally go, you can deduct 56 cents per mile driven. You could count up the actual expenses like gas but that's a lot more work and unlikely to be better.
Equipment, I have no idea how much pickleball equipment costs. If you already owned them for personal use, no deduction. If you buy new ones for business use only, they can just be written off when purchased if they're under $200. If they're more, they technically need to be depreciated. But even if they are, you can still immediately write them off with Section 179 or with bonus depreciation.
Great info and incredibly helpful. Thank you so much for taking the time to help me understand this.
You don't need an LLC to write off business expenses. You get the LLC to separate your business from personal, such that if you negligently cause a horrific pickleball accident, they sue the business, take all it has, but theoretically can't take your house and car.
Unless you personally caused the damage, then they sue you too. The LLC insulates your personal assets from an idiot employee's mistake. If it's just you, a schedule C will do the trick for writing off all those expenses.
You will note that I said theoretically. There are certainly ways the corporate shield can be pierced.
The ideal scenario is that I can find a way to expense pretty much everything as a business expense. For example if I pay $50 to play in a tournament, and at that tournament I am meeting with clients who want to take a lesson from me, can I expense that $50? What about the gas to get to the tournament and the depreciation of shoes/paddle?
I’m looking to explore the boundaries of what’s possible to expense here, I’m quite ignorant on the subject so thank you for your response 🙏
It needs to be normal, necessary, and primary for business. If there is a personal aspect to the trip, finding a client doesn't make the whole trip deductible.