Love your explanation on this topic! Best I've seen yet and I've watched quite a few videos on it. One question though, you mentioned "run the payroll", can you explain this? I am about to start a business (it's just myself) and I didn't know if what you are saying would apply to me. Or is "run the payroll" just what you mentioned about "saying you make $35,000 for example"? Thank you for being so helpful
Thank you the way that you explain is amazing, one question if someone who is not a citizen or legal resident made the mistake to opt for a S Corp and it is doing the payroll, what will be your recommendation? Close de S and register like a C Corp or an llc?
As most business owners often do, they are 3 people in 1 from day one thier business. That being said, let's assume you pay yourself on year 1 20k salary from 100k profit (20%); now it's year 3 and you've made 1 million profit, I can now pay myself 200k I'm salary correct? And if year 4 or 5 I'm at 2 million profit, 400k salary should not be out of the question, correct? I ask because the same 20% is being applied.. I would be the single employee of my llc s elected and my contracts keep growing at a pace that I can manage.. 400k might be a lot even though i am now doing 4 peoples job, but realistically, minus my QBI, I cannot pay myself less because of the 1,280,000 that remains to be taxed as business, it already look questionable to the IRS. Would you say I'm in the right mind with this strategy?
I have a question, I prematurely enrolled in Scorp status and dont make as near as what I expected to make when I created my LLC- to the point where I havent sold in my online store all year. How would you reverse/ withdraw the Scorp election? I cant seem to find a direct answer on the IRS site, only how to elect. I would hate to pay so much when filing and made less than $500 since I opened my LLC. The Scorp is not for me but I dont know how to notify the IRS about it.
Thank you, so helpful! Question: My LLC was created early December. Is it too late/ too risky to try and elect SCorp for 2021 and run payroll by 12/31? I became a full time realtor 2021 and I did not expect high earnings on my 1099. I checked with a couple of CPA and one said yes then changed her mind and the other said yes I can try but I don't want to create something I may regret though not sure if I'll get audited for selecting SCorp b'cos I didn't understand the benefit and my cpa was not proactive enough to tell me or thought I wouldn't earn so much in my first year!
Depends on if you're taking distributions or not. But the quick answer is if there is money to pay all then all should be paid as an EMPLOYEE. Distributions are not salary.
