I've been thinking about this for a while and with us having a bit of breathing rooming coming up, here's what I'm planning to reduce our taxes in the future and protect us legally:
LLC to Manage Home:
Right now, if one of our roommates or one of their guests took us to court they could in theory sue us and collect everything we have. I'm planning for us to create a LLC to limit our liability to just the home and not the retirement nest egg we'll be seeing in the coming years. The reason I'm going with that form of a company is our total personal income for the year has not hit more than $63K (so far), it is a simpler company to form and the rental net profits (which the way it operates it does not make any profits) would be taxed at our personal rate.
Corporation for Software Development/Other:
I'm planning on developing software myself to sell or continue doing consulting. Right now with my consulting job they are paying me directly, which I then have to pay all the fun taxes of being self-employed without the benefits of business deductions. I would much rather have a corporation that I own keep the profits from the programming I do and it would take care of my business expenses of computer equipment. Yes, I would get double-taxation (taxed as corporation, taxed as personal income) for any profits I take out of the corporation and put in my bank account, but for this I plan on plowing the profits back in anyways to grow the company into something great.
What do you think?
PS - I'm taking a break tonight from working since I'm a bit sick. Hopefully tomorrow I'll be OK.
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