I purchased a Pre-paid legal membership two years ago. As a member I pay $26.00 a month for a wide range of legal services. an LLC for an online business
One of the benefits that came with the membership was the ability to pick up a phone anytime during normal business hours and speak with an attorney. If I wanted to chat for 30 min. or an hour it didn’t matter, my monthly membership fee stays the same.
During 2005 I opened up a LLC (Limited Liability Company) for my real estate business. It seemed like a good idea at the time and I liked the asset protection that the LLC provided. In 2006 I decided to put my real estate business on hold and try something different. However, I did not close my LLC. I left it open on the pretense that I would work my real estate business in the future.
During May 2006 I decided to build a network marketing business. I left the LLC alone for an entire year. When I went to file my taxes at the beginning of 2007 I went to a local accountant. I explained my situation to her and this is what I gave her.
- My personal income W-2
- My business income 1099
- LLC info.
Now, as far as my personal and 1099 were concerned they didn’t present a problem, however when it came to my LLC, she told me that I would need to contact a CPA and fill out a business return.
I was confused, especially sense the LLC didn’t produce any money for the year. I also new that she wanted to charge me $500.00 to complete my return as is and a CPA would be even more.
I know this sounds cliche, but what did I do? That’s right, I called my TAX ATTORNEY. I ran my situation by her and she informed me that all I had to do was file my 1040 and schedule C for my network marketing business and file an additional schedule C for my LLC just showing that the LLC made no profit for the year. That’s it! No CPA!
I took my attorney’s advise and filled out all the returns and submitted them electronically for a little over $100.00. I saved $400.00.
It was great to have an experienced attorney to call when I needed help. The best part is the advise I got was right on, I’ve had no problems with the IRS for that tax year.