RockyBoy

I run a farm with my Dad as a 50% owner and have another LLC for a small trucking company. If you are paying 45% in taxes, you are making money which is the whole point of a side business. Limiting your tax exposure really shouldn't be a goal of any LLC, but can be a small advantage if done right. Paying that much in taxes still gives you 55% more of $0 if you didn't have the business. Taxes are painful, but they are no different than any other expense.

Most CPA's should be very comfortable (and recommend) that you deduct anything that is legal. Personal stuff generally is deductible (cell phone, internet, etc.) as a percentage of use that relates to your business, but it doesn't add up to much really. Large capital investments are where the biggest tax write-offs come from. Trucks, offices, real estate, etc. Your CPA should write off a portion of automobile use for the business, cell phone, internet, and obviously all supplies relating to the business. It is also very easy to write off meals when business is discussed. Grey area's that CPS's will be careful about are home office space and business "vacations". Legit trade show meetings etc. are easy, but need to be well documented. To really lower your effective tax rate much, you need large capital expenses. Farms are great for that, real estate business's probably not so much. The easiest way to go bankrupt is to make capital expenditures just for tax purposes. If it won't make your business more money, don't buy it just because it is a good "tax break".

Your LLC also has to make money or the IRS will classify it as a hobby and limit your deductions to basically 0. They usually don't audit that until you have shown a loss for 3-5 years in a row.

I always tell my friends that ask that running a business can be fun if you enjoy it and if it makes money. Don't ever run a business or buy a farm for a tax "shelter". It's cheaper to just pay the taxes.