I recently started an LLC. I have a computer (used for 2 years personally), software packages (all new and unopened), and a few other office supplies that I want to use now exclusively for the business. Should I sell those assets to the LLC using a Bill of Sale, or should I file it as an expense reimbursement? I do not take a salary, and am the sole LLC member. What are the advantages of one approach vs. the other?
Real Estate Attorney
This sounds like my law firm! I would sell the assets to the LLC at market value. That way you personally get reimbursed at market value (and the tax effect should be minimal), and the company has an expense to set off against any revenue the LLC is generating for tax purposes.
Using an expense reimbursement that is not taxable to you requires the LLC to have an "accountable plan", and a variety of other complexities. Plus you are really selling the asset to the company, so I think this makes the most sense.
Check out my website at www.nymanlaw.com if you need any additional help. I'm happy to help.
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