Leasing a car as a sole proprietor then transitioning to LLC

[nordseri]

I am about to lease a car that will be roughly 80% for business use in my sole proprietorship. For several reasons, I am putting off transitioning the company into an LLC, but plan to make that change in the coming year. As a sole proprietorship, since the taxpayer ID is just the SSN, it shouldn't matter if I lease the car under my own name or under the "dba" fictitious name (or should it?). Is there a process for transferring that lease to the LLC once it is formed so that I can continue to deduct real-use costs (lease payments etc), assuming they are higher than the standard mileage deduction? What, if anything, should I pay close attention to before I sign any lease? Thanks!

[veritas]

Why are you

wanting to lease?

[nordseri]

lease reason

It is important at this point to keep payments lower and maintain liquidity. I started the company with a lot of my own personal capital and just can't afford to make payments on a financed car at the level we need to get the job done without putting down a very large down-payment. Thanks for your response

[fliszt]

Why consider

putting the auto in the name of the LLC? Isn't one of the purposes of being an LLC to protect your assets? Would it be permissible for the LLC to pay mileage to you, the employee? Or are you setting up differently.
Larry

[Bees Knees]

To answer the original poster, I assume this is going to be a single member LLC, and that you are not going to elect to be taxed as a corporation.

Then there is nothing that needs to happen with the lease. You continue to lease the auto in your name and deduct all expenses on Schedule C, the same as when you were a sole proprietor.

The reason is a single member LLC that does not elect to be taxed as a corporation is a disregarded entity for federal tax purposes. You file Schedule C and deduct all expenses as if you were not an LLC. The only thing the LLC does is provide liability protection under state law. Otherwise, nothing changes for federal tax purposes.

Therefore, go ahead an lease the auto and deduct the expenses the same you did prior to being an LLC. No need to mess around with mileage reimbursement, as that would only apply if you were a partnership or a corporation.