I don't know about llc. My accountant (former IRS auditor) says if they wanted to get nasty over a few thousand bucks interest on money borrowed in a biz name in a sole prop, they could call it self-employment income, and you'd be looking at 15.3% on a schedule SE, PLUS your marginal rate.

Does anyone want to chime in on this issue?

I don't see how that would happen on a sole prop. The bank would generate a 1099-INT with your SSN on it.


That being said, does anyone know how to properly declare income reported on a 1099-INT under a personal SSN as self-employment income under schedule SE?

Nope. A 1099-INT with your SSN on it goes to schedule B.
If you open a S-corp, the interest income gets reported on schedule K (not page one), flows to K-1, and flows to your Sch B.
If you open a C-corp, then things change. The corporation can pay you wages, rent, interest, dividends.... If you have the corp pay you wages, it becomes earned income subject to FICA taxes and retirement contributions.

wow, now om getting confused. i do have two very small business. shouldf i use the business or sole oropretor what do i need to do with taxes

bargdill said:so do i put the money in a business or personal account. can i put it in my daughters'to avoid taxes or am i getting into illegal now. thanks again.Actually there is a law (called Kiddie Tax Law) that will prevent you from profiting from this. Essentially, if you claim your kid as a dependant, any interst income over a low threshhold is taxed at your rate, not hers. This law gets renewed teeth this year with a lower threshold. You can google it for details. In any event, your intent is to defraud the gov with this move, and that is a no no .

However, with respect to getting the money as a corp or a sole prop, actually you can in theory do both (but they both will pull your personal report resulting in an inquiry). If you choose one, I would probably just do your sole prop and then put the proceeds in a personal savings, which will give you a 1099 at the end of the year to just add to your personal taxes. If you create a sole prop savings account to earn interest, then you will report that interest on schedule C of your pesonal report. If you use a corp account to earn interest, you will have to file separately for that corporation and there are other tax consequences.

Personally, I keep it simple and use a sole prop to apply, put the funds in a personal account, get the 1099, and pay taxes on the interest on my personal tax filing.

so what do i put it in?

bargdill said:so what do i put it in?Read up. Don't expect spoons every time.

Has Bank Atlantic changed their policy regarding re-allocation of personal lines to the biz card? I was told by personal CC CSR that a biz CSR could move it over, but personal couldn't move it. So I called the number on my Biz CC but they said it wasn't possible. TIA

***Edit*** Found this suggestion in the "Credit cards which allow you to move / shift / reallocate credit lines among various cards from that issuer" thread. I'll discuss my results there.

"call the credit department directly for juniper reallocations. look in the "credit card issuer faq" for the number. let us know how it goes.

EDIT: here's the number: 866.408.4064 Message edited by: lhendricks92 on 2007-10-10 06:57:59 CDT "

****2nd Edit**** Phone number above worked great. Once the credit line was shifted I called the number on back of card and was told there is a $20k BT per day limit. So I could do a >$20k BT but would have to pay $75 fee twice.

waterman said:Citi denied my application for a business card because my business does not have a complete Dun & Bradstreet file. I do not have any active credit lines for the company, so D&B has not given me a Paydex score.

Is this a new Citi policy for all business cards?Yes, I think it is fairly new trend given all the credit crisis, as in the last 4-5 months. Companies are definately tightening up their risk management. They appear to only take businesses with established revenue, however small.

I have also seen business credit tightening. I have several corporations I use to conceal personal credit. The only thing that hits with most business cards is the inquiry ( which I have removed shortly). This extends my AORs greatly. I also use Business LOCs to "eat up" debt on my personal cards. I have never had a problem with taxes, I pay taxes on interest I use, but besides that, it doesn't cross with my accountant.

You do need a corporation with a good experian business score and an established DNB profile. Business lenders pay a lot more attention to experian than DNB. You will want the company to be at least 2 years old, it will be better if it is five years old at least. I buy shelf companies for this purpose, but you have to be very careful with who you buy them from because there are a lot of scams out there.

How long have you been at the address? I'm sorry if you already mentioned it here, but are you applying as a sole proprietor or corporation? Providing a business license is easy, send them a certificate of good standing if you are incorporated. If not, get incorporated under your name and produce that business license. Or buy a shelf corporation and rename it your name....utility bill is easy....there are numerous utility companies who will sell you a utility bill with the address you need.....thinking outside the box will get you this line.

Those advising people to apply under a sole proprietorship, hoping this will avoid reporting on your personal credit......I'm sorry but you are wrong.

Applying as a sole proprietor will only qualify you to apply for business credit. You might as well apply personally, you are using your ssn, so therefore, it will report to your personal credit report. I am very impressed with the knowledge on this board regarding AORs and personal credit issues. Business credit seems to be a bit behind, let's talk about it and share FACTS between people who are actively trying and testing new methods to expand their credit and to use business credit to keep utilization on their personal report low.

corporatecash said:How long have you been at the address? I'm sorry if you already mentioned it here, but are you applying as a sole proprietor or corporation? Providing a business license is easy, send them a certificate of good standing if you are incorporated. If not, get incorporated under your name and produce that business license. Or buy a shelf corporation and rename it your name....utility bill is easy....there are numerous utility companies who will sell you a utility bill with the address you need.....thinking outside the box will get you this line.

Those advising people to apply under a sole proprietorship, hoping this will avoid reporting on your personal credit......I'm sorry but you are wrong.

Applying as a sole proprietor will only qualify you to apply for business credit. You might as well apply personally, you are using your ssn, so therefore, it will report to your personal credit report. I am very impressed with the knowledge on this board regarding AORs and personal credit issues. Business credit seems to be a bit behind, let's talk about it and share FACTS between people who are actively trying and testing new methods to expand their credit and to use business credit to keep utilization on their personal report low.

Um, corporatecash, you seem to be assuming incorrectly. I have a legit sole proprietorship (consultant) and a few biz credit cards and none appears on my personal credit report. You do indeed use your SSN to apply, and they pull your personal credit, but the accounts do not report there.

Cheers,
VW