Homebased business incorporated as a LLC is the LLC a new company or a continuation

[dlejeune]

I have run a computer consulting business on a parttime basis out of my home for several years. During 2009 I did not perform any business but I did not disolve the business. During 2010 I created a limited liability company performing the same services and am planning on expanding my service offerings and move the business to a storefront. My question is this- is the LLC considered a new company? Do I need to disolve the home base business and sell the assests to my new business? How do I handle the depreciation over multiple tax years?

Thank you.

[Evan]

I suggest hiring a qualified tax professional to prepare your tax returns.

Your consulting business was a disregarded entity, and still is even as a LLC. If you have assets, those should be retitled to the LLC for legal purposes, but for tax purposes nothing changes. For example, if you had a computer you bought in 2008 for $1,000 and was depreciating that over the 5 years, you'd just continue depreciating it (as if nothing happened) with the LLC.

[greenoak]

i would say be careful and conservative... we always think home based business expenses are a red flag to the irs....and so we are real careful ...and we have a big legitimate home office...

[Evan]

Schedule C is more of a red flag than "business use of home". But the latter they try to disallow by finding that the area isn't being used exclusively for business, so it's very easy to not meet the requirements.