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I am looking at starting a small business. I have some upcoming medical expenses and would like my small business to provide health care as a benefit (US). Is there any issue with:

  1. Start my LLC
  2. Have LLC pay for medical expenses associated with employee.
  3. Year end file expenses loss.
  4. Next year when sales pick up filing medical expenses this year against next years earnings?
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    Is this in the US? Not entirely clear why business is responsible for your healthcare
    – littleadv
    Commented Apr 10 at 18:42
  • There are lots of companies in the US that provide health care benefits. Why should a small business not have the same feature? Commented Apr 10 at 18:44
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    You'd be surprised how insane the American system looks to anyone who's not an American...
    – littleadv
    Commented Apr 10 at 19:04
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    @littleadv And to Americans... We're just used to the monster as it has evolved, to the point where too many are afraid of alternatives.
    – keshlam
    Commented Apr 10 at 19:13

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In the US, LLC is a disregarded entity and has no bearing on your taxes whatsoever. For self-employed, medical insurance is a deductible expense regardless of how the business is legally organized. See the IRS form 7206 and its instructions.

Note, this is for coverage premiums. The medical expenses you personally incur are deductible (subject to certain conditions and limitations) regardless of how you earn money. See the IRS Publication 502.

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  • Does this answer change if the LLC is taxed as a Corp? I was thinking of doing this anyways in order to preserve certain federal contracting benefits (if I make too much then I would lose them). Commented Apr 10 at 19:46
  • Not really. If you look at the IRS instructions for the form 7206 - S-Corp is treated similarly to sole proprietorship, for C-Corp - premiums is just an expense like any other, will be part of your payroll. The general rule is that a business deduction is a deduction regardless of how your business is organized.
    – littleadv
    Commented Apr 10 at 19:48

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