What can be spent on business bank account?

[VA_er]

Location: USA


I have dealt with my own tax return(mainly W2, stock capital gain/loss) on my own, never hired professional accountant. I think with e-filing website, it is quite easy to DIY.


However, I decide to form LLC (learning to be mobile app developer), I think if I can get my questions cleared, I can still be able to file tax return on my own. Even hiring an accountant for filing tax return, I still need to know what need to be spent on business bank account.


I am trying to ask my questions as clearly as I can, let me know if there is something else I need to pay attention to.


I decide to form LLC (only one member: myself), and decide to develop and publish mobile apps and/or websites under the LLC, main goal is to develop Google Play Android app and Apple Store App. After forming LLC, I will open a business checking account/business debit card.


LLC is just about App development and website development, on my spare time. It is not like other small business, this LLC should not have some kind of mileage, travel, etc.


Now let me get into my questions (what can be deducted from LLC), I have come up a few things(below) and please let me know which can be deducted from LLC (therefore I will put those spending under business bank account), and if there are anything else I have not covered. Maybe some questions are silly, but I would like to ask and be as clearly as I can.


1) Home office: Without LLC, I also need an office for my job anyway(I occasionally telework), but most of time, the office will be used for developing apps/websites. If I don't develop app/websites, then the office will be empty.


2) Internet fee/Office Supplies: I will ignore office supply, since the spending will be almost zero. But how about internet fee, without LLC, I need internet too, however, developing apps/websites also uses internet.


3) Computer devices: Without LLC, most people have personal laptop/smartphone anyway. But with LLC, I definitely will need more devices and better devices. For example, I have been using Window PC and android phones all the time, never had Apple PC/iPhone, but in order to publish Apple Store app, I have to buy some Apple device, such as Mac. At the meanwhile, in order to better develop app, I need better/more powerful computer, not like before (just a few hundred laptop for home entertainment, watching videos, etc). So can computer devices be deducted from LLC spending? Most devices will be for both personal use and LLC use.


4) Food: How about food? If spending weekends and weekday nights developing app, developer needs to eat, right? Can I deduct some food spending?


5) Annual LLC registration fee, business ad cost, company website domain annual fee, company customer email account monthly fee, Apple Store developer annual fee: I believe those are exclusive for LLC, and can be spent under business bank account, correct?


6) During the initial phase of LLC, if the business deduction is more than business income, will the business lost be deducted from my personal income (I have full time job W2 too).


7) In general, as app/website developer, what else can spent on business bank account (deducted as business spending)?


Thank you very much!

[Fulcrum]

Let's simplify this even further, why go the LLC route rather than stay as a sole proprietor?

[VA_er]

Let's simplify this even further, why go the LLC route rather than stay as a sole proprietor?

Suggestions from other person, basically, legal protection, in case of being sued, for whatever reasons, e.g. the app is too attrative, people cannot stop playing while driving, then car accident

Too many lawsuits out there

https://www.computerworld.com/articl...bile-apps.html

[Fulcrum]

Personally, I would stay as a proprietor and just keep my books as if the business were a separate entity. Unless the apps you plan on developing are going to be intrusive or require high security, I don't see where the need is. Of course, I'm just a dinosaur when it comes to tech, nor am I a lawyer, so I'm hoping that some of our more "evolved" members can weigh in on this.

[tallen]

You should read IRS Publication 535 "Business Expenses" -- this outlines what you can and cannot deduct as business expenses. The latest version is here: https://www.irs.gov/pub/irs-pdf/p535.pdf

In your listing above, your food would generally not be an appropriate business expense.

Regardless of whether you do form a single-member LLC or remain as a sole proprietor, you should have a separate bank account for your business (as a sole proprietor, you don't necessarily have to, but it is good practice in order to better separate business and personal expenditures).

Also, regardless of whether you are a single-member LLC or a sole proprietor, you will be filing a Schedule C along with your form 1040 tax return. Schedule C is where you report all of your business income and business expenses, so it might be worth reviewing the instructions for that schedule as well to better understand what and you can and can't claim: https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

[VA_er]

You should read IRS Publication 535 "Business Expenses" --

Thanks much.

[Harold Mansfield]

I would stay as a sole proprietor too, and just add language in your contracts about liability, and have a terms of service (that people are aware of) to protect yourself.

[VA_er]

I would stay as a sole proprietor too, and just add language in your contracts about liability, and have a terms of service (that people are aware of) to protect yourself.

What contract? Basically, it is universal "agreement" between Google/Apple and developers, no developer can have custom agreement. Developers build mobile applications, which are usually published via Google Play Store/Apple App Store, since most smartphones are android phone or iPhone.

Edit: I mean I build app on my own, directly publish my applications via Google Play/Apple Store, not working for others.

[Harold Mansfield]

What contract? Basically, it is universal "agreement" between Google/Apple and developers, no developer can have custom agreement. Developers build mobile applications, which are usually published via Google Play Store/Apple App Store, since most smartphones are android phone or iPhone.

Edit: I mean I build app on my own, directly publish my applications via Google Play/Apple Store, not working for others.

Yes, but apps all still have their own terms of service. Don't they?

[Lewis-H]

You can use your business bank account to pay for day-to-day business expenses, pay invoices and staff wages and also to receive payments from clients and customers.

--
Lewis