Just a practical perspective - I tried something similar in my 3-member LLC a few years back. We took out a business line of credit and distributed some to partners when we were having a down year. We didn't get audited, but our accountant had to do some complex basis adjustments. The distributions reduced our basis, and when the business became profitable again, we had to restore that basis before taking tax-free distributions. Also worth noting - if your business stays unprofitable for too long while you're taking distributions, you might run into the "hobby loss" rules where the IRS decides your business isn't really a business if it never makes money!

I appreciate everyone sharing their experiences and insights here. As someone who's dealt with similar partnership tax issues, I wanted to add a few practical considerations that might help. The strategy you're describing reminds me of what tax professionals call "basis shifting" - trying to manipulate the timing of income and distributions to minimize taxes. While not inherently illegal, it's definitely in the gray area that attracts IRS scrutiny. One thing I learned the hard way is that partnership taxation is incredibly complex, and seemingly small details can have major consequences. For example, if your LLC has debt, that debt increases your basis (which is good for taking distributions), but only if you're personally liable for it. Non-recourse debt has different rules. Also consider the long-term implications. Even if this strategy works in the short term, you'll eventually need to repay the loan with after-tax dollars. Plus, if your business becomes profitable again, you might face higher taxes later when your basis is depleted from the distributions. My advice? Document everything thoroughly if you decide to proceed, and make sure you have legitimate business reasons for both the loan and the expenses. The IRS is much more forgiving of strategies that serve actual business purposes beyond tax minimization. Have you considered alternatives like adjusting your profit-sharing percentages or exploring guaranteed payments to partners? Sometimes simpler approaches are less risky.

As someone who used to audit small businesses for a major accounting firm, I'd strongly recommend against trying to justify your kitchen remodel as a business expense. The IRS specifically looks for this kind of thing with home-based businesses, especially S-Corps. If you're audited, they'll almost certainly classify it as a distribution or compensation to you, possibly with penalties. The cleanest approach is to have your accountant reclassify the expenses as either: 1) Shareholder distributions (if you have enough basis) 2) A loan to you from the company (with proper documentation) 3) Additional compensation (which means payroll taxes) Whatever you do, don't try to create a business justification after the fact. That rarely works and often makes the situation worse.

I'm dealing with a similar situation right now with my home-based consulting business. Made the mistake of putting some personal home improvements on the business card and now trying to sort it out before tax season. From what I've learned talking to my CPA, the key thing with S-Corps is that the IRS is really strict about separating business and personal expenses. Even if you use part of your home for business, a full kitchen remodel is going to be hard to justify as a business expense unless you can prove it's primarily used for business purposes (like if you regularly host client meetings there). Your accountant is probably going to recommend either treating it as a distribution to you as the owner, or setting up a formal loan agreement where you pay the business back over time. The loan route might be better if you don't have enough basis in the S-Corp to take an $11k distribution without tax consequences. Whatever you do, make sure you get proper documentation in place. The IRS tends to scrutinize home-based S-Corps more closely, so having everything properly categorized and documented is crucial.

Has anyone used TurboTax for reporting income without a 1099? I'm in a similar situation and wondering if it's straightforward through their interface or if there are specific sections I should look for.

Just wanted to add my experience as someone who went through this exact situation last year. I had about $800 in Venmo payments from tutoring services, all through my personal account and marked as friends & family to avoid fees. No 1099-K from Venmo obviously. I reported it all as self-employment income on Schedule C and kept screenshots of all my Venmo transactions as documentation. The IRS accepted my return without any issues. The key thing I learned is that having that electronic trail from Venmo is actually better documentation than cash payments would be - you have dates, amounts, and even the person's name who paid you. One tip: make sure you also track any related expenses (gas for travel, supplies, etc.) since those can be deducted against the income. Even small amounts add up and can reduce your tax liability. Better to be completely above board from the start!

Remember, even without the 1099-K, you still have to report all your income. I went through this last year and just reported everything based on my own records. When the 1099-K finally showed up in late March, I compared it to what I reported and everything matched up, so I didn't need to amend anything.

I dealt with this exact situation last year with Quickbooks Self-Employed! You're right to be concerned, but here's what I learned: Quickbooks Payments (their payment processor) is supposed to issue 1099-Ks by January 31st, but they sometimes have delays or system issues. First, double-check that your tax information is complete in your Quickbooks account - go to Account Settings > Tax Info and make sure your SSN/EIN and address are correct. Sometimes missing or incorrect tax info prevents them from generating the form. If everything looks right, you have two options: 1) Contact Quickbooks support directly (prepare for long wait times), or 2) File without it using your own records. I went with option 2 and reported all my income based on my Quickbooks reports. The IRS allows this - you're not required to wait for tax forms to file. Generate a detailed transaction report from your Quickbooks account showing all payments received in 2024. This serves as your backup documentation. Report the total as gross receipts on Schedule C, and deduct any processing fees as business expenses. Don't stress too much - as long as you report all your income accurately, you'll be fine even if the 1099-K arrives later with slight discrepancies.

Just wanted to share my experience - I tried deducting a gym membership for my construction business 3 years ago (I argued it was necessary for physical strength to handle materials). Got audited and not only did they disallow the deduction, but it triggered them to look at everything else! Ended up having to pay back the gym deduction plus they found some other issues with my vehicle expenses. It's seriously not worth the headache for such a small deduction. There are so many legitimate deductions available to small businesses - focus on those instead. Tools, insurance, vehicle expenses (properly documented), professional services, office supplies, etc. I now work with a bookkeeper who helps me find all the legitimate deductions without wandering into risky territory.

As a tax professional, I want to emphasize what others have said - gym memberships are almost never deductible for business owners, even when there's a tangential connection to your business. The IRS is very clear that these are personal expenses. However, I'd like to suggest some legitimate alternatives that might actually save you more money: 1. **Home office deduction** - If you use part of your home exclusively for business, this can be substantial 2. **Business equipment** - Computers, software, office furniture used for your marketing consultancy 3. **Professional development** - Courses, conferences, industry publications related to marketing 4. **Business meals** - 50% of meals with clients or potential clients (properly documented) 5. **Business insurance** - Professional liability, errors & omissions insurance for your consultancy These legitimate deductions will likely save you much more than the $100/month difference between individual and family gym memberships, without any audit risk. Focus on building a solid foundation of proper business expense tracking rather than trying to justify personal expenses as business ones.