I have a full time job, but have started making/selling jewelry. I want to make this hobby legitimate, so that I can deduct my “loses” from my income tax…as well as purchase wholesale with a federal tax ID number (EIN). Right now my expenses are more then I’m making. It seems the SMLLC is the right way to go…any advice?
– Tracy, Tennessee
The single member LLC setup will let you deduct your losses from your personal income taxes.
This is one of the big benefits to an LLC over a corporation (personal tax deduction of losses during startup, which you cannot do with a corporation).
One thing I need to clarify you on, though. When it comes to wholesale purchasing, you are likely going to need a sales tax ID from your state in addition to an EIN.
The sales tax ID allows your wholesalers to sell to you without charging sales tax.