Great info, Navi. It was well explained. Just also remember the management structure of your LLC, match up the correct operating agreement, consider separately your business and personal credit sooner when going from a sole prop to LLC, and finally, your CPA may likely not believe you will hit the numbers you project, so don't be surprised if they come back with the SM LLC disregarded, and goods news is you can make a late S election if needed.
Hi Navi, just discovered your channel. This is one of those moments in time when a door opens up and it reveals a source of knowledge and inspiration. This is exactly what I need to know as I am starting my own business. So thank you for presenting this information in such accessible and engaging way.
Hey Navi, not sure if I’m missing something, but at 24:00. When talking about taxing the S corp. I believe it was supposed to be 60,000 x 6.2% = 3,720$ for the Social Security. I’m not an expert at all. Just wanted to check. Thanks for the great video!
Hi, I am not an expert either, but I have been doing a lot of digging into this topic recently, so I think I understand what he was talking about. When you are an S corp, only the "reasonable compensation" is taxed. So both the employer (you) and the employee (also you) are taxed their respective halves of the FICA tax (6.2%) on that amount. The 60,000 is "profit" and is NOT taxed. This is how an S corp can avoid paying more taxes. I hope this helps!
I appreciate your videos because you are really very explicit and I learn a lot of things, thank you very much, I have a question, if I am a day trader and I trade propfirm accounts but on these propfirm accounts I trade them on the name of a Ilc I created, so is all this information on the different tax deduction methods you say, is it also valid for such an activity of mine? Knowing that I carry out an activity on the stock market.
I just discovered your channel at the right time! I’m am a single member LLC taxed as an S-Corp. This year has been challenging financially and I am dissolving the business as of 2023. I have quarterly sent in my 941’s and form 5080, sales, use and withholding claiming zero . Now at the end of the year if I 1099 myself the $1500 that I did pay myself through my business, do I still file the 940 claiming zero?
Thank you for such informative vids that are packed with jewels. With a MMLLC taxed as a S-Corp, would it be split as partner 1 & 2 with 40k each & 120k in the MMLLC? Would the S.S & Medicare tax be against both partners (40k) salary as well as the employee Corp (40k)?
Hello Navi , Thank you for all the valuable information you share with us. Is there a way we can get the chart of tax liability that you show on your video? Thank you 🙏🏻
You’re welcome. Could you clarify what you mean by “chart of tax liability”? If you haven’t already, check the description as I provided some links to the resources used to make this video.
Thank your for this video. Very informative and easy to understand. I would like some advice on how to file a local business with my sibling in California. What would you recommend?
You’re welcome and thank you for the feedback. Unfortunately, I can’t make a personal recommendation for you. Sounds like you are forming a partnership since you’re doing business with your brother. Please consult with someone before forming a business entity and making any tax elections - especially since you’re in California.
Dang! I wish I would have known about incfile, tailorbrands etc... I actually just began doing everything myself with the help of RU-vid and chatgpt. I formed a domestic liability LLC, got the registered agent, virtual office, registered with the state, got an EIN... etc... you think I should start over or keep going? I feel like I do know what I am doing even though I am new to all this!
Hello, Regarding the multi member LLC you are getting K1’s. It’s a bit confusing for the calculation purposes. It seems to me it supposed to be same as S corp. Please, clarify if you have a chance. Thanks
Hi Navi; Can you make a video about Representatives and brokers? They controlled my company over 20 years. I revoked my company representative 2 years ago but still he is continuing control the management and never pay for my assistance. So what’s your advice?
I posted this on one of your older videos but it may be more applicable in this video. I have a SMLLC taxed as an S-Corp. I use this SMLLC as my holding company for all my IP, trademarks, etc. I wanted to start a new operating LLC taxed as a Partnership to save on Social Security/Medicare taxes. Is it legal (in the eyes of the IRS) to have my SMLLC/S-Corp to be one of the Partners along with me (under my personal name) in this LLC/Partnership? (Example: Partner 1 = SMLLC/S-Corp and Partner 2 = Me). I would be the only "human" in this operating LLC/Partnership. Appreciate your thoughts on this.
There simply is no double taxation for a C corporation and the shareholders. The C corporation is a separate legal entity known as a fictitious person. A shareholder receiving dividends should look at the payment as a gift given from one person to another (save for not receiving the exemption of taxes on the gift allowance).
@@timhill7577 That is EXACTLY how it works. A corporation is a fictitious person. For a C corporation, that "person" is taxed on its earnings. Money distributed to other persons is also taxed separately as personal income. Each person, whether real or fictional, is taxed only once on income. While any money distributed to shareholders of a C corporation is not actually a gift, under the Internal Revenue Code (IRC) it works in much the same way, but without an exemption for a portion of the distribution. All the claims of "double taxation" are made by people who seemingly do not understand the status of corporations as a separate legal entity. Of course, it is easy to avoid this "double taxation" by electing to be taxed as an S corporation, thereby having all earnings passed through to the owners who then pay taxes at their personal tax rate (though the company may not actually issue enough funds to cover the taxes due).
What about the situation where someone makes 100K+ in w2 income and has a side hustle that makes another 100K. Considering that SS and Medicare taxes are already paid from the w2 income, What's the best entity tax wise to form?
This is misleading. You can save money with an s corp but usually at higher dollar amounts where the main saving is Medicare. At the lower amounts you really just wind up paying service providers for compliance and introduce risk that the IRS will deem your salary insufficient. There’s a calculus to that salary and $40k is very low. Benefit differential here decreases as salary increases.
