Income Question

[azballer]

For the means test, if my wife and I both are self-employed and all of our commissions (100% of our income) are put into a business checking account and we are looking at a personal chapter 7, would the income calculation be based off of the money we put into the business account or the money we pay ourselves from the account and deposit into our personal account? I ask because we obviously have business expenses we pay with our business account and not everything we make in commissions is eventually moved over to our personal account.

Thanks!

[despritfreya]

Who are the checks payable to, you or your entity, which, if I recall correctly is an LLC?

If the checks are to you it is income to you. If the checks are to the entity it is income to the entity, unless you have somehow been depositing them into your personal account. If the checks are to the entity and those checks are deposited into the LLC account, your income from the entity would be your actual wages or draws and payments by the entity for your personal expenses. (Lots of folks pay personal bills out of corporate accounts - not a good idea but it is done all the time)

This is the way we handle things in my local jurisdiction, which is not Georgia.

[azballer]

I appreciate the explanation. The checks are written in the name of the LLC and we draw money as needed and deposit it in our checking accounts. Other than legit expenses for the business (tax prep fees, a few "business" dinners and gas for our cars), we never pay personal bills.

I am starting to wonder about my attorney...she never caught that the income I was giving her at our initial meeting was the commissions paid to the LLC and not the draws we had made to our personal accounts. There is not a huge difference in the two figures, but every dollar counts for the means test.

It may be time to talk to another attorney. I am only out $300 at this point, but it may be worth it in the long run.

[SMinGA]

The means test should have an area for business income AND business expenses.

[despritfreya]

Azballer,

Before you jump ship to find another attny, speak to the one you have. Remember, what I indicated as your income (draws from the LLC as opposed to deposits into it) is how I handle cases in my jurisdiction. It may be different in yours.

[azballer]

The means test should have an area for business income AND business expenses.

Exactly...she knew that it was our business income and still entered it for our personal income. Maybe she was just doing a "down and dirty" means test to see if we qualified, but she could have at least entered that information on the correct line.