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Running a CrossFit Facility Tips and guidance on how to open and operate a CrossFit gym.

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Old 10-04-2013, 10:20 AM   #1
Mike Doehla
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I need to buy some equipment but don't have a business set up yet...

I don't think I can buy it myself and then write it off can I? I've been told to start an LLC but I don't know exactly what I need to do to protect myself, get a good tax write off, and get this thing going quickly. Basically what I'm asking is what is the best business type and way to go about this.

Last edited by Mike Doehla : 10-04-2013 at 10:25 AM.
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Old 10-04-2013, 10:27 AM   #2
Brendan McNamar
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Re: I need to buy some equipment but don't have a business set up yet...

You can buy them now in your name. A simple LLC with 1 Member (LLC speak for owner) is a flow through tax entity. Whatever happens in the LLC will end up on your personal tax return from a form K-1 the LLC will issue you the owner.

Either way you will get to Sec. 179 depreciate the barbells either on your personal return or inside the LLC return. Either way it has the exact same effect on your taxes. You don't lose the deduction.

Make sure you hire someone to do your taxes if you don't understand this stuff.

Keep organized, careful records or your will have to pay you bookkeepers to organize them.
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Old 10-04-2013, 10:36 AM   #3
Brendan McNamar
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Re: I need to buy some equipment but don't have a business set up yet...

To answer your second question.

Hire a small local lawyer to set up an LLC for you. $200 to $400.

File for an S-Corp election for your LLC with the IRS. Tax preparers can help with this.

You will need a tax payer ID for the LLC. Easy to get.

Then each year you will have a 1120s tax return for the LLC. This will generate the K-1 which will flow to your personal return.

You can read more about it here:

http://www.irs.gov/Individuals/Self-...or-Partnership


This is the best set up for a single owner gym. Combined with good insurance it should provide you with good liability protection. Most of it won't matter until you have a big gym earning nice profits. If you get to this point the real benefits of the LLC with an S-Corp election kick in.

It is worth the money to set it up correctly from the beginning. Makes life so much easier as you grow.
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Old 10-04-2013, 10:54 AM   #4
Mike Doehla
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Re: I need to buy some equipment but don't have a business set up yet...

Quote:
Originally Posted by Brendan McNamar View Post
You can buy them now in your name. A simple LLC with 1 Member (LLC speak for owner) is a flow through tax entity. Whatever happens in the LLC will end up on your personal tax return from a form K-1 the LLC will issue you the owner.

Either way you will get to Sec. 179 depreciate the barbells either on your personal return or inside the LLC return. Either way it has the exact same effect on your taxes. You don't lose the deduction.

Make sure you hire someone to do your taxes if you don't understand this stuff.

Keep organized, careful records or your will have to pay you bookkeepers to organize them.
Thank you. So can I buy some stuff now and just keep the receipts?

Quote:
Originally Posted by Brendan McNamar View Post
To answer your second question.

Hire a small local lawyer to set up an LLC for you. $200 to $400.

File for an S-Corp election for your LLC with the IRS. Tax preparers can help with this.

You will need a tax payer ID for the LLC. Easy to get.

Then each year you will have a 1120s tax return for the LLC. This will generate the K-1 which will flow to your personal return.

You can read more about it here:

http://www.irs.gov/Individuals/Self-...or-Partnership


This is the best set up for a single owner gym. Combined with good insurance it should provide you with good liability protection. Most of it won't matter until you have a big gym earning nice profits. If you get to this point the real benefits of the LLC with an S-Corp election kick in.

It is worth the money to set it up correctly from the beginning. Makes life so much easier as you grow.
Can I do this on legal zoom? I played around a bit on there but I'm not too sure how it all works. It may be better to go to a local lawyer. How do I find one?
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Old 10-04-2013, 11:00 AM   #5
Brian Lelli
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Re: I need to buy some equipment but don't have a business set up yet...

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Originally Posted by Mike Doehla View Post
Thank you. So can I buy some stuff now and just keep the receipts?



Can I do this on legal zoom? I played around a bit on there but I'm not too sure how it all works. It may be better to go to a local lawyer. How do I find one?
i went through legalzoom. they are awesome, fast and inexpensive.

from what i've read, if you get stuff pre-LLC; you can't write it off.

correct me if i'm wrong (anyone) but you have to buy your stuff after an LLC has been formed and you have paid for it with a business account.

which means, you need an EIN and a business account.

LLC-->EIN-->Bank Account for LLC--> Equipment-->Write Offs

I just got my EIN last week and bank account today.
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Old 10-04-2013, 11:09 AM   #6
Brendan McNamar
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Re: I need to buy some equipment but don't have a business set up yet...

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Originally Posted by Brian Lelli View Post
from what i've read, if you get stuff pre-LLC; you can't write it off.

correct me if i'm wrong (anyone) but you have to buy your stuff after an LLC has been formed and you have paid for it with a business account.
OK I'll correct you. Anything bought pre LLC formation will be a sole proprietor expense handled on the Individual 1040. It will be on your Schedule C "Profit or Loss from a Business". When it come to computing taxes owed it makes no difference if the expense is on the 1040 Scheduled C or the LLC return which will put it on the K-1 which will flow into the Individual 1040. It will not change you taxes.

Get good professional tax advise early in the setup folks it doesn't cost that much and it is so much easier to get it right the first time then go back and try to fix it latter. If you don't have a back ground in this stuff don't try to learn it. Pay someone and spend your time attracting and retaining members.

Before anyone corrects me there is another way to treat it which is to contribute it to the LLC after formation as an owner investment. This treatment will also result in the exact same tax bill.
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Old 10-04-2013, 11:22 AM   #7
Mike Doehla
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Re: I need to buy some equipment but don't have a business set up yet...

Quote:
Originally Posted by Brian Lelli View Post
i went through legalzoom. they are awesome, fast and inexpensive.

from what i've read, if you get stuff pre-LLC; you can't write it off.

correct me if i'm wrong (anyone) but you have to buy your stuff after an LLC has been formed and you have paid for it with a business account.

which means, you need an EIN and a business account.

LLC-->EIN-->Bank Account for LLC--> Equipment-->Write Offs

I just got my EIN last week and bank account today.
Ok so if I want to use a personal CC to pay for business expenses how do I do this with an LLC? Is it possible?
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Old 10-04-2013, 11:27 AM   #8
Brian Strump
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Re: I need to buy some equipment but don't have a business set up yet...

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Originally Posted by Mike Doehla View Post
Ok so if I want to use a personal CC to pay for business expenses how do I do this with an LLC? Is it possible?
Yes, just keep them separate so your accountant can track them accordingly.

I agree with everything Brandon said....Listen to him; he's usually on point with questions like this.

Never used legalzoom.com; I've heard good and bad. As for myself, I like to have someone to goto when things don't go right. I mean, like show up on the door step of their business; not get the run around over a phone. Ask an accountant regarding helping you with businesses taxes and the cost to set up a corporation, LLC, etc. Benefits vary by state, and also dependent on what you're looking to get from it in terms of benefits.
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Last edited by Brian Strump : 10-04-2013 at 11:30 AM.
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Old 10-04-2013, 11:35 AM   #9
Mike Doehla
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Re: I need to buy some equipment but don't have a business set up yet...

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Originally Posted by Brian Strump View Post
Yes, just keep them separate so your accountant can track them accordingly.

I agree with everything Brandon said....Listen to him; he's usually on point with questions like this.

Never used legalzoom.com; I've heard good and bad. As for myself, I like to have someone to goto when things don't go right. I mean, like show up on the door step of their business; not get the run around over a phone. Ask an accountant regarding helping you with businesses taxes and the cost to set up a corporation, LLC, etc. Benefits vary by state, and also dependent on what you're looking to get from it in terms of benefits.
Thank you.
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Old 10-04-2013, 12:34 PM   #10
Vincent Miceli
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Re: I need to buy some equipment but don't have a business set up yet...

This is a great thread with some basics that are essential in business. Well said guys! Reminded me of some things I have forgotten.
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