Fake: Stimulus Check Get-Rich-Quick Scheme
The Claim
By taking some money from your stimulus check to form an LLC, you can make thousands of dollars.
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Emerging story
This idea can be credited to Nique the Freak. They suggest taking out $150 dollars from one’s stimulus check and using it to form an LLC. Then, they apply for a $5,000-dollar small business grant, getting a company credit card, then paying it off.
Like many “free money” posts, this was reposted on various social media websites.
Misbar’s Analysis
There are quite a few problems with this scheme. First off, it’s clearly tax fraud. An LLC is a term used for companies (or for individual cashflow in some cases). It’s certainly not to be used as a source for “free money” through government grants. The IRS is likely to investigate – especially since the scheme relies on a government grant – prompting fines and/or jailtime.
Secondly, the structure of it isn’t quite accurate. The actual cost of forming an LLC depends on the state. Making an LLC can cost up to $1,000. The process of forming an LLC can take weeks. The grant itself has specific uses mentioned on the website, so it is unlikely that it can be used as freely as the post suggests.
However, you can use your stimulus check to contribute to an IRA, which will make you money in the long run.
Suffice to say, we here at Misbar strongly advise against any get-rich-quick stimulus check schemes.
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