I was unable to find a thread specific to LLC’s so I’ll post it here.
Once I post, I’m sure someone knows more than I who can fill in the gory details where necessary.
An LLC (limited liability company) ‘s main purpose is to protect assets from lawsuits. It is not as good as an S corp as far as tax laws go.
An S corp demands that the owner, owners, declare a reasonable salary commensurate with the work the owner does to support the business. You can take declare 0 as a salary, but this is a flag to the IRS.
An S corp has more tax advantages than does an LLC. There is no reason why any one person or persons cannot have multiple businesses, using an LLC for one or more businesses and an S Corp for others.
Although one could get into the deep weeds as to how one could nefariously manipulate the system to pay lower taxes,
the quickest way for any business owner to pay low income taxes is simply to do work for cash, and/or have work done for their home and ask the contractor to do the work for the home, but claim to have done it for business.
It is possible that the Frosts could have inherited money upon which they draw and/or saved and invested, but they of course would have to note that as income.
If you would like me to post this on another thread, let me know, but it is very basic. I’m sure others will know more.
On another related point, if the grandmother gives money to the family, and its over 10, 11 or 12,000 (I can’t recall the current figure) it must be declared on your income tax as a gift. No matter where you got it, it is still income.
I amsure there is a freeper lawyer/investor/smarty who knows more about this than I.
Some quick notes: LLCs have a lot of tax advantages over s corps. For instance, in an S corp, profits and losses are allocated pro-rata to shareholders, whereas in an LLC, if you elected to be taxed as a partnership, you can specially allocate profits and losses.
AS for the gift issue, a gift is a gift, not income. Taxes on gifts are paid by the maker of the gift, but there is an exemption of $11,000 per year for gifts, so mom can give $11,000 to each kid taxfree every year. Mom and Dad can give $22,000 to each kid, tax free. Now, if you want to give a bigger gift, you can, but it is subject to gift tax (paid by the giver). You can elect to use a portion of your unified credit (gift and estate tax) on the gift, but it reduces the credit for your estate taxes when you die. There. Did I thoroughly confuse everyone now?