Q&A | LLC or Not, Home Office vs Augusta Rule, and Hiring Kids the Right Way

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Dec 10, 2025

New business owners often face tough questions. Discover if forming an LLC is necessary for tax deductions. Learn the ins and outs of hiring your kids correctly to maximize benefits. Explore the differences between using retirement funds via ROBS and SBA loans for financing. Understand the nuances of home office deductions and the implications when selling your home. Navigate the confusing world of tax strategies with clarity and confidence.

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ADVICE

Start With Clean Books And Separate Accounts

Keep business finances and records separate from personal accounts from day one.
Start simple bookkeeping and a business bank account to build good habits as your business grows.

INSIGHT

1099 Means You're A Business Owner

Receiving a 1099 NEC means you're a business owner and must report income on Schedule C.
Schedule C shows profit and loss and triggers self-employment tax obligations when applicable.

ADVICE

LLC Not Required For Common Deductions

You do not need an LLC to claim home office, mileage, meals, or travel deductions.
Open a separate bank account anyway to keep records clean and simplify audits.

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If you’re a new business owner, you've probably wondered if you are doing any of this correctly.

Should you get an LLC? Do you file a Schedule C? Can you hire your kids? Does a home office hurt you when you sell your house?

In this episode, Mike walks through real questions from listeners and gives clear answers to the tax issues that confuse most new entrepreneurs. From 1099 income and deductions to home office rules, the Augusta Rule, and hiring your kids, this Q&A hits the topics every early-stage owner struggles with.

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Chapters

(01:00) Starting as a 1099 Contractor & What Is Schedule C? The foundational steps every new contractor must take and how 1099 NEC income flows into Schedule C, how expenses reduce profit, and why self employment tax becomes a factor.

(05:10) Do You Need an LLC to Take Deductions? Home office, mileage, meals, and travel can all be deducted without an LLC
(08:53) ROBS vs SBA Loans for New Businesses: Mike breaks down the pros and cons of using retirement funds through a ROBS structure compared to financing with an SBA loan.
(10:19) Hiring Your Kids: Payroll vs Contractor: The age rule most parents get wrong. Under 18, children should be W2 employees. Over 18, contractor payments may work if they have legitimate expenses.
(13:00) Home Office Deduction and Selling Your House: Simplified method vs actual method. When depreciation recapture applies. Why the impact is usually small.
(15:00) Transitioning to Business Ownership: A listener plans to leave a W2 job for business ownership. Mike explains where strategy matters most at the beginning.

(17:40) Home Office vs Augusta Rule: Yes, you can use both. The key is using different rooms. Home office in one area. Board meeting in another.
(19:47) Do You Need an LLC for a Small Side Gig: A listener making five to nine thousand a year wonders whether to form an LLC. Mike explains why it will not change taxes at low income levels and when it becomes useful.

Podcast Host:

Mike Jesowshek, CPA – Founder and Host of Small Business Tax Savings Podcast
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🎙 ABOUT THE PODCAST
The Small Business Tax Savings Podcast is your go-to resource for cutting-edge tax strategies to help entrepreneurs legally slash their tax bills. Hosted by Mike Jesowshek, CPA, this show breaks down complex tax topics into clear, no-fluff insights so you can keep more of your hard-earned money.