If you see yourself generating a lot of cash that you just want to hold, consider setting your llc up to be taxed as a c corp. The c corp tax rate is 21%. The issue is you get taxed again when you issue dividends, so this isn’t the best for everyone. But if your objective is to generate cash and hold it in your business, this is one option to consider.
The CPA warned us that the tax cuts Trump signed it (and have been helping a lot of his small business clients earn/keep more of their $ since 2019) will be expiring after next year. Who gets selected this Nov will determine whether the taxes go up and stay up.
The qualified business income deduction, a 20% reduction in taxable profits, is a 2017 law actually helping many small businesses. Unsurprising it was passed during Trump’s, not Biden’s, presidency
I think cash flow is tax free. Could be wrong. Listen to Robert Kiyosaki. He talks it. I dont necessarily agree with him but if your trying to learn, listen to Kiyosaki and Tom Wheelright.
You still have to pay back the financing. Plus interest. So yes you get to keep the taxes now but pay more than you saved over the long term. Also it only makes sense if you need those assets to produce income. Spending $10k on an asset that does nothing but depreciate to same $4k in taxes is dumb.
The problem is for small business owners the profit is taxed at their personal tax bracket. So it’s like a 35 to 40% rate once you get above a certain level plus whatever state you’re in. You look at some of these billionaires who own large companies and they’re effective tax rate is like 10% because they just borrow money and then live off of the borrowed money. So the bigger businesses are paying a lower effective tax rate, then small businesses that don’t havesuch large ass bases that they can just live on borrowed money. Don’t get me started with the capital gains tax being so low as well. Small business owners are tax like W-2 employees but are taking risks much greater than just taking a job from somebody else.
@@jessehudson1318 but if the business is an LLC or Incorporated, that would separate the wages from the business profits. I believe that was what Dave was alluding to at the beginning of the video.
@@oldfredbearno, what Dave was alluding to at the beginning is just the basics of how to set up a small business. What the above comment was saying is that small business owners profits are taxed as general income until/ unless they can payroll themselves a salary. Which small business’ and small “start ups” usually can’t pay themselves a salary for the first few years until cash flow and savings is built up enough to support that. Your lubing off your profits and trying to live as frugal as possible to save for the future and then Uncle Sam gets 30-40% because those profits are your “payroll”. This is just the basics of what I understand and 101 level stuff.
@@cjsawinski, dude is talking about taking a huge profit with his business that he doesn't want taxed as income and he can't afford to pay himself a salary? I understand your point, but I feel like this guy is missing something here.
