Re: LLC Member Fringe Benefits

Alfred,

    Here are my thoughts. Medical insurance is 100% deductible for the
business LLC or not. Also, if it was extended by congress this year (I
haven't yet checked that), you could also qualify for an Medical Savings
Account which allows you to pay for medical expenses with pre tax dollars.
Talk to your accountant about that.

  If you are not a minority or disabled veteran, make your wife at least a
51% member. Your business will then qualify for special treatment from all
government and many non government organizations. I cannot speak for
Colorado, but in California distributions for an LLC do not have to match
membership percent. You can put whatever distribution you want in your
operating agreement.

For IRS purposes, business expenses are business expenses. For an LLC, you
will limit your liability like a corporation but you will operate on a cash
basis for accounting like a DBA.

W2 employees. If you have any, you will need all the stuff that goes with
it. Workers Comp insurance, unemployment insurance and conformance to all
kinds of labor laws. Avoid it if you can. Again, California is very
socialist in its attitude toward business so that is my slant.

For foreign (out of State or country) LLC members, again in California, they
must pay income tax on distributions. If they don't, you must withhold the
maximum tax rate. I am sure the IRS will also take it's cut since you will
have to file distributions.



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Fred Parker
Lynn Consulting Group, L.L.C.
http://www.lynnconsultinggroup.com
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