Awesome video, thank you, someone had to say it, very good points you made there. IMO as a rule of thumb, when income:
@FeedbackWrench
6 жыл бұрын
Marcos, that's great advice. What do you think are some other tax/small business subjects that should be covered in our content?
@marcosvidal3146
6 жыл бұрын
Ideas: -benefits of a c-corp for small businesses (small meaning
@sincerethunderstorm9317
6 жыл бұрын
This is right on point with the type of information I am looking for. In the early start of establishing a business and these are topics that I am hoping to wrap my head around. As you mentioned a lot of videos on theories and possibilities but no one is actually putting out there to really see. If you do find something please feel free to tag me. Great suggestion!!!!
@le_th_
4 жыл бұрын
@@marcosvidal3146 Wow, this is so generous of you to provide these suggestions to this KZitem channel. You basically gave him a list of incredibly valuable income topics because there are few more profitable YT channels than those related to finance and earning profits. Well done and kind of you to offer such keen insight.
@BLAMBERRY
6 жыл бұрын
Can’t let this scare you. These aren’t drawbacks-they are just part of doing business. If you haven’t figured out how to play chess with your business moves, you should be worried. I’m not paying $500 a month for someone to do my bookkeeping though.
@FeedbackWrench
6 жыл бұрын
BLAMBERRY the point is to make people aware of what they are biting off... Also, to make sure they don't buy real estate and put it in an s-corp. The 500 is that tax return, tax planning, QBO, bookkeeping, payroll service and running the payroll. It's not for everyone.... But it's usually much cheaper than a valuable person's time and the other payroll, qbo, and tax return costs. Thanks for watching g and commenting. ..... We love the chess game.
@BLAMBERRY
6 жыл бұрын
The video was great-and thanks for putting it out! The more people are aware of just how in control of things they are-the better off they will be!. Thanks again.
@BLAMBERRY
6 жыл бұрын
I use these wonderful hands, the IRS tax book, and the will to get things done! It's just another process, and any competent bookkeeper can handle payroll.
@NuEnque
6 жыл бұрын
I had a limited company (LTD) in the UK and it wasn't nearly as complicated as having an LLC in the US.
@powerofknowledge7771
5 жыл бұрын
@@FeedbackWrench Just curious as to why you wouldn't want to put real estate into an Scorp? What is the drawback to that?
@johnsmith-fw8np
4 жыл бұрын
Yes. 2 years ago. Is was so difficult to buy a house if one give himself a low salary or write off everything. You just need an account with a imagination. One in a million. Just keep looking and you can find. I am a Lyft/Uber driver and 2 years ago, after spending about 2 years in failed attempts, I bought 2 houses. Under 200 K. It is doable. You just need to be ready with 30 % down payment. And that combined with the imagination to refinance later on. If you manage to do that you can bay a house every year. Once when you have 15 you retire. If you want. Make money from passive and let the IRS free you of your taxes. Don't pay anything in Social security. When you decide to retire just start making your houses a prime residence and then sell. 250 K tax free. 3 more years the next house. And meanwhile solo 401 k is your best friend. And that's all.
@FeedbackWrench
4 жыл бұрын
THANK YOU for sharing this. It's so funny, that the only people that bring up the mortgage advice is..... drum roll please.... mortgage brokers... and then they're like "This video is false...i get S-Corps mortgages all the time". My point is EXACTLY what you said - you'll need to shop around for mortgage companies and LENDERs, you'll need to provide some additional background, COMPARED to jack and jill w-2 folks. That's all this is about. Good luck in all you do, and I hope you can continue to build momentum.
@BrannaMulvey
7 жыл бұрын
So far, this is the best video did a great job to explain the S-C tax structure.
@FeedbackWrench
7 жыл бұрын
I really appreciate that.
@punisherjoe3335
6 жыл бұрын
Screw Social Security fund your investments instead. 🤑
@FeedbackWrench
6 жыл бұрын
I couldn't agree more. What we're trying to do is to at least let people know before it's too late. Not sure about you, but we've met entrepreneurs that are so averse to "wall street" that they "live and let live" with their finances, thinking they'd at least have a healthy social security check - only to discover later in life their SS is so low they're screwed. We're saying that people need to invest WAY more if they implement an S-Corp, because the already dismal social security check is going to be even lower. We TOTALLY agree that people will benefit massively by investing rather than relying on government social security checks...
@menschen23
6 жыл бұрын
This channel is extremely valuable. Thank you for the information and condensing what can often be very convoluted laws and regulations.
@Sandwich137
3 жыл бұрын
You rock man this was what I’ve been trying to figure out for weeks Thank you so much
@spencerkim4755
6 жыл бұрын
Thank you so much for posting. Helpful to get a circumspect view and not just jump in after merely hearing the benefits.
@vertronics
5 жыл бұрын
Great video overall. Business owners note that there are many ways to buy a house without going to a bank or credit union. It's called creative financing and it works!.
@FeedbackWrench
5 жыл бұрын
Totally agree.
@jorgenegrete1194
6 жыл бұрын
Good information, but this person is teaching how to keep yourself as a employee. I own a bussines and I keep all my profits growing. And if I want to buy a house I won't worry about getting approved for a loan , I will pay it all. We need to think BIG. Keep the good work.
@amandadayman1760
6 жыл бұрын
I see these things as benefits, not necessarily drawbacks? 1. Formalities (bookkeeping, payroll, & legal): if you're running your own business, you SHOULD have a solid handle on these things, especially in the very beginning. 2. Social Security benefits: ok, so do what you suggested and take that 15% or so and invest it in your own personal retirement account so you won't have to depend on SS. 3. Lowered mortgage/retirement contributions: just don't be silly when paying yourself a reasonable salary. Keep it in the normal range of your career path/peers. Thank you for sharing, this was helpful!
@FeedbackWrench
6 жыл бұрын
Totally agree! Its a warning video for people who blindly convert...
@Senseiryan
6 жыл бұрын
This video is awesome! I had a CPA tell me that a bank would give me the same mortgage even if I took a lower salary and I knew that was wrong. You guys are awesome
@kennytinker24
2 жыл бұрын
One thing most of these llc vs s corp video never mention is Some States, if you are a S-corp charge up to 10% business tax, so there goes the diff, in savings.
@FeedbackWrench
2 жыл бұрын
True - leave the commie state.
@stevewaclo167
4 жыл бұрын
Thanks for this and earlier video on the topic. Sent along to my son who just set up an S Corp and this will surely supplement his understanding 👍👍👍.
@albertb5863
4 жыл бұрын
Some of it is not true I am a mortgage planner we can use the combined W2 salary and K1 profit pass through averaged over 12 or 24 months depending on our approval findings for Fannie or Freddie. We can also in some cases add back non cash deductions like amortization, depletion, or depreciation a borrower takes, business mileage add back, home office deduction or reimbursements can generally be added back as well since were already factoring in the cost of housing already and if we hit the borrower for it personally and through the business then we’d been hitting them for it twice so that’s the theory behind why we add it back. Also regarding contributions and income calculations we only count the employer 401k or SoloK deductions not the employer deductions so that means if salary is 60k and borrower contributes 15k employee contributions then we still count salary as 60k however the employer portion is counted as an expense to retain the owner officer of the company.
@user-gq3xw6lu5n
6 жыл бұрын
Very helpful. My stress level is lower now that I watched this video. Thank you
@radigass
7 жыл бұрын
When you take out money from the dividend or when company no longer in business, how much tax do u pay taking the money out?
@DanielTrainTheSequel
6 жыл бұрын
So helpful. Thanks so much. I was told to form an S Corp and have been slowly finding out all these drawbacks for the past year and a half and it's given me so much anxiety. I would have been so much happier if my lawyer and accountant told me these things up front.
@FeedbackWrench
6 жыл бұрын
Daniel Scheinert sorry it was soo late. That firm I mention, Nuance Financial, has a great all in one service for s-corps... all the messing around done for you and the tax returns. Nuancefinancial.com
@KK-nk4uv
5 жыл бұрын
Quality content not doubt about it... Can u suggest which one will be better for someone who is a stockholder as well as trader
@Samaramar111
6 жыл бұрын
Your videos are great! You have an effective teaching style and awesome slides. What program did you use to make your animated slides?
@FeedbackWrench
6 жыл бұрын
Adobe After effects, and I we like to use the Mister Horse Animation composer.
@MrOldSchoolSF
6 жыл бұрын
I dispute drawback #3. Distributions might be out. But rental income and other passive income is not.
@Gstevenz1
5 жыл бұрын
GN. In a previous example 100k Net Profit ded. LLC (S/E tax) = combined tax - 33k S-Corp (S/E tax) 15k average savings $500 Monthly .. in.short paying Nuance Financial $500 where is the savings ? I'll dig into your vids deeper.
@gopalprashad270
3 жыл бұрын
Still confused, How do I save taxes by lowering my salary portion? Isn't distribution has higher % of Tax returns over salary? Example 1: if my S-corp generates revenue of 120k$ and 20$ deductions. The reasonable salary: 110$k, so I pay tax on 100$K, which I believe is less. But I can show a loss of 10$K and can carry it forward until my business stands up. Plus I get good mortgage rates and good Retirement Benefits if I also invest in retirement savings. Example 2: if my S-corp generates revenue of 120k$ and 20$ deductions. The reasonable salary I take is 50$k, So I pay tax on 50$K, but the rest 50k is distributed(Owners cut) with a higher tax rate?? Also, I lose opportunities like Mortgage limits/interest, Retirement limits, benefits, etc.
@powerofknowledge7771
5 жыл бұрын
This is such fabulous information for a real estate investor who is just getting started. Most other videos and sites are geared toward investors who already have a lot of money coming in from their business, which led me to believe that Scorp was the way to go. But after looking at all the extra things that come with it, I think I"ll just stick to the simple method of being taxed as a partnership. This has helped to alleviate some stress for me.
@Capoeiristadiogo
4 жыл бұрын
Thank for the amazing video regarding pros/cons of a S corp... do you need a payroll company as a single member of the company?
@FeedbackWrench
4 жыл бұрын
You will need payroll. But I just use Quickbook Payroll. It's cheap, easy, and integrated with QBO. Use my affiliate link and I make like $10. quickbooks.grsm.io/robsatrom9246
@richavic4520
7 жыл бұрын
I'm 60. I have enough SS credits already and my wife has a better than average salary. I had a services LLC from '08-'12, until taking an offer from one of my clients. It was a good five year run, but was laid off in May. I'm thinking about restarting my co but I project a low gross (again) as my industry is depressed due to competetive forces. First year, maybe $15-20k. I would be subcontracting environmental contractors for short-notice, high priority jobs. Basically keeping their work in compliance with scheduling requirements. That is my company's strategy to gain a couple extra bucks versus jumping through all the hoops to be qualified as a consultant and being able to bid on work-tough for an individual and the overseeing entity has the ultimate power to judge if a consultant, in their opinion, can complete the work in a timely manner. Then me, as a consultant, would need to subcontract those with the manpower and equipment to complete said work. Clear as mud? S-corp this time, or back to LLC? I got to the point last time where I would need to get some help, part-time, and additional equipment. But work would dry up mid October through January 1. That I learned to budget because the phone would ring off the hook Jan 2. I couldn't do that to an employee thus taking the offer from my former empliyee.
@richavic4520
7 жыл бұрын
Dang. Employer.
@FeedbackWrench
7 жыл бұрын
Ric Havic if you can handle the bureaucracy, and your tax savings exceed the cost of complying with the bureaucracy - then there are probably few reasons not to become an S-Corp. You might want to do some tax planning and also align these decisions with a retirement plan. I think all this depends on your goals (I hate that answer) but will you be saving most of your income, spending it, investing it, or what? Is this income discretionary that you would spend - or do you want to maximize its tax efficiency and get a good return on it?
@trentpadgett2427
6 жыл бұрын
I am a beekeeper. My wife and I run the business full time, currently set up as an LLC. We make about 120-140k net yearly. I believe when I pay self employment taxes I am the only one benefiting from social security contributions. We are looking at switching to S Corp to obviously lower our self employment taxes. Would it be better to pay just myself a reasonable income, or split the income between the two of us so that she will benefit down the line with social security?
@FeedbackWrench
6 жыл бұрын
Trent Padgett great great question. The answer is to ibry the law (disclaimer) and judge on participation and contributions to the business. That being said.... Paying two people tends to create more social security taxes. I don't think it would make sense to pay a spouse ifnot needed.... The argument could be made that it would giver her a social security benefits.... To which I'd say that SS has a horrible rate of return for most, and investing the saved taxes into a vanguard index fund would be much better. You could even leverage the individual 401k from vanguard to give profit share contributions which are highly tax advantaged AND can do up to 18k in Roth or traditional on the employee side contributions. In all, paying additional employees costs in SS taxes. Rwmber to simply read and apply the it's tax code and this is not legal advice.
@aurora571000
4 жыл бұрын
Trent Padgett As a wife, I say if she works she deserves a paycheck in her name, SS credits in her name, and valid work experience in her name she can put on a resume. She can decide to put it in traditional IRA etc to reduce taxes. You can still discuss as a couple how to handle your money, but it is wrong to not give her the recognition and validity.
@CobraCommander11
4 жыл бұрын
I would listen to the expert over the housewife. Just my 2 pence.
@condohatesme
5 жыл бұрын
Is there anything wrong with electing to be taxed as an S-Corp before you’ve made $35,000, or in my case any money at all? I’m aspiring to get into real estate flipping and I have not done a single deal yet. I’m simply trying to set up my LLC, and business name, etc.
@jockojohn3294
4 жыл бұрын
What if I have money already, own a house free & clear, and are using my LLC S corp. to do my daily game playing? I'm retired, not eligible for social security, have my own separate retirement, pay my own medical? How do we keep tax payments away from the thieving fingers of the various agencies?
@circletech7745
5 жыл бұрын
I would like to add to #2 that if you are under 25 (like me) we should expect to get back $0 in social security when we retire. The social security trust fund is expected to go bankrupt by 2034, and I don't see the government bailing out the fund anytime soon. If you think you can retire on social security and are currently under 25, you are kidding yourself. I see #2 as a benefit rather than a drawback because when the government steals my money through social security and never gives it back to me, I end up keeping more of my money in that situation.
@davidjohansson1416
5 жыл бұрын
Very entertaining. As a swede it’s fun to see how you file taxes in the US. Will watch more videos to find out.
@FeedbackWrench
5 жыл бұрын
Thanks for watching, im inclined to tease you a bit as well.... since I'm Minnesotan, surrounded by swedes and norweigens, and I'm like 20% Swede myself.... I'm entertained reading your tax rate. Guardian reports it's as low as 29%, but usually as high as 49-60%,. Ish. That's borderline enslavement. But then again, it's nice to be next to Norway, who print oil money like the Saudis?
@davidjohansson1416
5 жыл бұрын
Depends on which tax rate you are talking about? From my understanding for the equivalent of an c-corp it can be as low as 21.4% here, if you do your accounting right, that's on the net profit without deductions. And tax on dividend payed after that is generally 30% tax for shareholders(you may take out aprox 50/50 dividend/salary from small business). I'd say that the tax on labour is extremely high, but the Realestate tax(there is a cap 800USD but max 0.75% of taxation value =(75% of market value)). And tax on net profit for real estate(in which you reside) is 22%. Capital tax is generally lowish 30%. Sweden is generally less regulation and pro big business. But you are right that for a small business owner, Sweden is not rly that friendly since "employer tax" is 30%ish and other fees for labour other then salary is rly high. But on income less than 30k USD tax i think the tax rate for labourer is around 20%. If you are interested take a look at ekonomifakta.se/Fakta/Skatter and maybe google translate? The deductions are really complicated and It's just a hobby for me so my knowledge there is lacking.
@beblessed3770
3 жыл бұрын
If you have an LLC and you file taxes as an s corp. When you're trying to buy a property, will they only be looking at the salary that you paid yourself too?
@ShinThissell
5 жыл бұрын
Thank you so much!! I learned a lot by you sharing this.
@raphael52
5 жыл бұрын
You either pay the IRS or pay the Accountant along with other fees to implement company entities. Biggest difference. You will get robbed. Just decide who you want to get robbed by.
@FeedbackWrench
5 жыл бұрын
Agreed... But, I've found a solution. Xendoo accounting and payroll is very very reasonable.
@fahad-m62
5 жыл бұрын
How is that getting robbed? Fine maybe taxes but what's wrong with going to an accountant and paying for a service?
@BrianLandis
4 жыл бұрын
@@FeedbackWrench Rob, I'm reading about Xendoo on their website right now after I saw you mention it. My day job is computer programming, but I am helping my wife start a preschool business (that she will also be the director of), and I am looking at the potential of using a firm like Xendoo. Thanks for mentioning it!
@FeedbackWrench
4 жыл бұрын
@@BrianLandis Really quick, I would also encourage you to connect with Shamal of AsnaniCPA.com - wise, moral, good person that's doing great things. worht a call
@phillipalder9045
Жыл бұрын
I wouldn't call it a drawback for getting a mortgage unless you don't have 2+ years of stable, consistent distributions/dividends for Conv. Loans. You will need to prove/provide the current year's distributions and a profit and loss statement. I was in the mortgage business. Just expect to provide over twice the docs. Anyway, if your business is making good money for the last 3 years, you won't have an issue. If you own less than 25% of the business, the qualifications are a tad bit relaxed.
@coachyamyam9666
2 жыл бұрын
This is so much to keep track off.. I have a small business 72k a year and I’m torn as to what to do..
@juliemaggio1292
6 жыл бұрын
As far as the payroll portion is concerned, being strongly suggested, but not 100% necessary, what if you don't have any employees? I don't have any employees, and I just use square. Would I need to have a "payroll service"? Thanks!
@FeedbackWrench
6 жыл бұрын
If you are an s Corp, you must pay yourself a salary through payroll. Even if you're the only person.
@FireLiteCreations
4 жыл бұрын
Hi Rob, I am thinking of opening a business brokerage account at Schwab for my Sub S Corporation. Do you recommend investing in the stock market through a business account? If so, what are the advantages over retirement and individual accounts? Thanks, Richard
@KapilAnjali
5 жыл бұрын
What is a good tool to work out a reasonable salary for an S Corp
@FeedbackWrench
5 жыл бұрын
uffda - read Mark Kohler advice. He says never less than 33% of your net profit... otherwise, it's a dynamic decision
@tranlam5383
3 жыл бұрын
Great information. Thank you for sharing!
@EdVonBoeckman
6 жыл бұрын
This is all very helpful, however I'm still lost. I'm going to be single owner IT professional under an LLC (single owner) or LLC with S-corp election. S-corp sounds like a lot of work.In your example as LLC with net profit of 100K and the SE taxes of 15K plus, wouldn't the SE taxes be less if If I contributed to a solo 401K as part of the expenses. So given my age of 58, I would be able to sock away 24K, which would lower the net income and SE tax tremendously, true? Also the company/llc match of 20% to 401K would also be an expense, right? My entire goal for structuring a business (instead of w2) is to sock away as much money as possible into a 401K or Roth. After reading 1000 articles I still can't tell if i need to do llc or s corp on election. With an LLC I only have to figure out how to send an invoice to my vendor and setup a business checking account. The taxes are easy, because it will be on schedule 2. Do you have articles on startup costs for both. I'm only planning on doing this business for 3 years tops. Any help would be greatly appreciated.
@marvin7098
6 жыл бұрын
If I make 100k a year Pay myself 36k a year Bussiness expense 30k. I got 34k left ..what I do with straight profit of 34k??.go to saving ?
@FeedbackWrench
6 жыл бұрын
logistically - that's the distribution. whether it stays in your account or you took it out. There's no way to "leave money in the company" or anything like that. What you described is the distribution, which you'll then pay state and federal taxes on at the end of the year. (if you have state income taxes). Great question. And actually, your distributions are often just moneys you transfer out of the company to yourself that didn't go through a payroll...
@marvin7098
6 жыл бұрын
FeedbackWrench Ok ..at end of the year got to tax 36k my salary..and add 34k profit to my salary..that's 60k..and at 15percent ..I be owing 9k..just in taxes?.correct?
@FeedbackWrench
6 жыл бұрын
The salary you will owe 15.3%. the distribution does not pay 15.3%. Then BOTH of those combined PASS THROUGH to your personal tax return where you pay income tax.
@nbookie
6 жыл бұрын
That's why company's generally pay some tax on a "savings" but try to redeploy every penny of available capital to get that "left over" amount down. Redeploying capital means put it into something saves money or grows your assets. At times "saving money" can be paying off debt and then taking on more for new tools, training, assets... It's all strategy.
@benjaminkline4855
5 жыл бұрын
What if you give yourself 50k a year invest 25% of that a year into a 401k. Match that from employer overhead. You would have more on your W-2 gross income to get loans, and have a higher social security.
@AlanHouser
6 жыл бұрын
Great presentation! What software are you using for your slides? Trippy transitions.
@FeedbackWrench
6 жыл бұрын
It's after effects and I use mister horse
@KapilAnjali
5 жыл бұрын
Great video. you mentioned the SS limit on salary. Is this the limit to qualify for benefits such as medicaid? if so where can one find this?
@kevint6569
5 жыл бұрын
I have a question. What about in the case of a small part time business where because of taking multiple 179 deductions for equipment purchases my LLC shows negative income. Would electing S Corp help me to show income because I would be having wage earnings?
@natalyaitu6026
5 жыл бұрын
When you buy a home, BOTH K-1 income and W-2 are calculated! That's not true that only W-2 earnings are evaluated.
@FeedbackWrench
5 жыл бұрын
Agreed.... But lending programs, such as government subsidized, often have certain difficulties right? The point is to be aware that you MAY have some problems depending on what you're doing
@FeedbackWrench
5 жыл бұрын
And the calculations are not always 1 for 1
@thewhiteknight02
4 жыл бұрын
Yup. They used my PL statements,returns, and a letter from accountant.
@karyjimenez2472
4 жыл бұрын
Does taxable S corp also pays federal, state, and Fica tax besides self-employment?? thanks
@MrBulldog73100
6 жыл бұрын
Very informative. Thank you so much. I just hope you compare it also with sole proprietorship.
@PaulVazquezJD
4 жыл бұрын
I can usually get people discounted pricing on access to a payroll system with my company Tax Lab.
@xeemoua5626
6 жыл бұрын
it is $1,300 per quarter to earn one credit for social security, hence one must earn $5,200 to get all four credits for the example you used
@FeedbackWrench
6 жыл бұрын
Good catch.
@danroma6954
6 жыл бұрын
Where can I find more information into the book keeping side of an S-Corp? Do you need to file yearly?
@WallStreetIceCream
4 жыл бұрын
whats better for real estate agents ?
@kingdomdreams4
4 жыл бұрын
If your shopping for a house simply increase your salary the tax year right before shopping around. so plan ahead and you’ll be approved based on your salary increase from that most recent tax year
@rizwanakarizzy8771
3 жыл бұрын
Is it $1300/month or $1300/year to get social security credits
@grigortorosyan3423
5 жыл бұрын
What tools do you use to make these presentations? They’re very easy to follow and I like the flow .. good stuff
@FeedbackWrench
5 жыл бұрын
I primarily use Mister Horse on Adobe After effects.
@fivebooks8498
6 жыл бұрын
Not true about home loans. All your income is considered when applying for a mortgage. I have a restaurant which is structured as an S Corp and I’ve bought several houses. Each time I’ve applied for a mortgage they used both salary and distribution.
@fivebooks8498
6 жыл бұрын
Robert Satrom I’m not sure if my mortgages have been Freddie or Fannie products. I’ve financed several properties and every time they have used all of my income for consideration. I guess there are mortgages that won’t do that. I don’t know. However it has been tough getting approved because they question everything. They want to source every deposit. Once a month I sweep my business accounts and deposit profits into personal accounts. They said they have to source those deposits so I show them my business bank statement. Once they saw my business bank statement they wanted to source all those deposits. That’s insane. There are multiple deposits daily and the source is my customers so how is that gonna work? It takes forever to get approval and it’s like they are trying to find a way to turn down your loan. I finally get approval once I’ve answered every question, supplied them with every document they ask for and basically back them in a corner so they have absolutely no reason to deny the loan.
@kiddaliproducer
6 жыл бұрын
This channel is so good thank you!!! Im still in the planning phase of my first business, I see you recommended LLC to start but how can I raise capital as an LLC??
@FeedbackWrench
6 жыл бұрын
Hmmmm... A little bit different question. Might be a good topic for the next video.
@kiddaliproducer
6 жыл бұрын
FeedbackWrench thatd be helpful!
@sincerethunderstorm9317
6 жыл бұрын
Yes, please do. Will be looking out for it.
@EvanLittle
6 жыл бұрын
I'm not a licensed attorney so consult one for in your state for specific advice but: a C corp is the way to go if you're aiming to be a high growth company and raise capital. This is b/c there are far fewer restrictions on outside investment for a C corp and VCs are familiar with C corp taxation and formalities
@boogerking7411
6 жыл бұрын
What if I'm not registered as LLC or S corp but suddenly earn $100k within a year. Can I register as S corp and write my earnings there? Or will it be taxed as sole prop?
@469dwj
5 жыл бұрын
Doesnt distribution count toward income? 50k salary 50k distribution should go toward mortgage income no?
@FeedbackWrench
5 жыл бұрын
yes, it usually does. the point here is that there are certain mortgage products, lenders and programs that only count certain parts of income and are also more heavily critical of business income when lending. It's still possible, the point is to make sure you talk with a mortgage lender. My full advice is to connect with different lenders, because some specialize in helping self employed, or small s -corps, since their income can look strange.
@lonestarsapper7d
5 жыл бұрын
Distributions are not income it is a reduction of your equity share
@FeedbackWrench
5 жыл бұрын
@@lonestarsapper7d sure, but do they pay income tax on it.... CLARITY, not precision is probably best here.
@469dwj
5 жыл бұрын
@@lonestarsapper7d interesting. I suppose but you can still spend it on a mortgage or whatever
@sholao.4525
5 жыл бұрын
Great information. Thank you!
@FeedbackWrench
5 жыл бұрын
Thanks for watching, good luck
@rinat3338
5 жыл бұрын
has any of this info changed with the new tax changes that occurred in 2018?
@mikefilips1219
6 жыл бұрын
What about registering an S corp as a closed corp for the states that allow it? How does that affect the S corp?
@tonyl3450
3 жыл бұрын
I have a s-Corp and doesn’t it protect you from lawsuits.? That’s a plus these days. That’s why One of reason did a s-Corp.
@michaelbutcher6432
6 жыл бұрын
Great video! Looking to start my own 1 man logistics company within the year. Do you only help with S-Corp for Minnesota business. Looking to start a business in Texas.
@FeedbackWrench
6 жыл бұрын
Nope! For taxes and all this, you gotta call the team at Nuance Financial - 952-892-7723 and Nuancefinancial.com - they are awesome!
@JacobBrownacro
4 жыл бұрын
Can I not start an S-Corp unless I make an LLC first?
@misschalktalk
6 жыл бұрын
What if I’m both employed in a company who’s paying for my taxes/medicare AND own online business? Do I have to pay double tax and medicare?
@FeedbackWrench
6 жыл бұрын
Everything that is counted as wages would be, yes. Remember, it's your wages or salary that will be subject to the self-employment taxes of Medicare and Social Security, and the Social Security only up to the Limit. What I usually recommend people do is take a look at using different investment vehicles for their self employment income. a SEP IRA or the solo 401K can be a great option, you'll just want to take a look at the rules in perspective to any other retirement plans you might be participating in
@lindasuebuehler1402
6 жыл бұрын
I think there's a drawback in S-Corps with the owner not being able to deduct their 'company health insurance' as a business expense, isn't there? As a sole member/owner with no employees and just starting out, health insurance not being a federal tax-deductible business expense is a drawback.
@channel9vietnam-usa568
3 жыл бұрын
Can I change to S corporate tax of 2020 if I submit form 2553 on 3/15/21, and extend my tax filing please?
@FeedbackWrench
3 жыл бұрын
That’s how you become a Corp.
@ron6126
2 жыл бұрын
Thank you.
@ThaMidwestBrutha
6 жыл бұрын
So how do u get around the approval of the home loan...like do u increase your salary n thwn drop it back down or do u put a large down payment on the actual home u want...
@FeedbackWrench
6 жыл бұрын
Talk to more lenders. Leader 1 in Minneapolis is a classic case of a lender that's used to weird incomes and businesses. You'll probably pay more in terms of interest rate because your technically a higher risk note.
@Adam-pv4qn
4 жыл бұрын
Super helpful! Thanks
@ThaMidwestBrutha
6 жыл бұрын
Can u elect the S-Corp on an LLC from the start instead of waiting....would this be advisable for startup companies if they dont want to wait.
@brandonadams7581
6 жыл бұрын
I'm not a tax professional and don't know any of the tax rules, but just based off of the information here that is being shared, know that my response is not professional advice. Yes, this is possible, but it seems it may not be much of a benefit if your are not making $100k to begin with (This is based on a case by case basis). According to the previous advice here, if you are making less than $50k stick with the LLC, more than that consider switching to the S-Corp. The SE tax you would pay at 15.3% of $30k-$40k is from $4,590 - $6,120, but there are still ways to offset the business income to reduce the SE tax. Additionally, you still have to pay State (if your state collects this) and Fed tax on the profit portion of $30k-$40k as a LLC. If you are a S-Corp then you can take a reasonable amount of the $30k-$40k as your salary and pay 15.3% of that on your personal taxes and the remainder of the business profit you would only pay State (if your state collects this tax) and Federal. I suggest you use all the tax deductions and benefits available to your business that are available. Like travel, advertisements, mileage, rent, meals (don't know if thats a part of entertainment which has since been ended.)
@ThaMidwestBrutha
6 жыл бұрын
@@brandonadams7581 Thank u 4 this...
@michaelmakela3117
6 жыл бұрын
Disagree with #3 around 12:00 in video. Mortgage Laws are constantly changing. Apply for a mortgage and consult the Loan Officer. HISTORICALLY (last 10 years) mortgage loans TEND to be based on taxable income, so wages, salaries, distributions, dividends, social security, alimony....any type of consistent income is more the key. Talk to a loan officer. Actually talk to 3 of them!!
@georgebryant23
5 жыл бұрын
As a sole proprietor all your income is subject to s.s. And fica? Payroll tax?
@FeedbackWrench
5 жыл бұрын
Your net. Up to the security limits.
@FeedbackWrench
5 жыл бұрын
Social security and Medicare are self-employment taxes
@Cra2yFac3
2 жыл бұрын
If you’re not a licensed financial advisor, you really shouldn’t be giving investment advice. You could get yourself in hot water with FINRA or the SEC. It’s okay to suggest saving for retirement, but when you’re getting specific by suggesting a Vanguard S&P500 index fund…that could be problematic for you.
@Greg3070
5 жыл бұрын
I'm lost, if you're working for yourself as a corporation and you're trying to buy a house, you shouldn't be technically self employed. You work as an employee for the corporation. If I call it Yahoowhatever, Inc, I am an employee of it. I have bought two homes and no one has ever asked who owns the corporation. It's no different than working for somesmalldudescompany, inc. I'm still an employee and my paystubs show this. Perhaps some lenders ask more questions and some people volunteer too much information, but my last lender knew I owned the company and she just asked if I was paid as an employee. I said yes, and she said awsome, you have a job, That's all I need.
@TheInroad
5 жыл бұрын
Can a corporation buy the house though? ...and the corp owns it all?
@natalyaitu6026
5 жыл бұрын
I would not recommend it. Open an LLC only.
@Ourjourneytohealth
5 жыл бұрын
Do you recommend startint a new business as an s-corp?
@lonestarsapper7d
5 жыл бұрын
I would wait and see how much your revenues will be. Most of the time it takes awhile to build the business up and if your net profits aren’t very high it doesn’t make much sense. Overtime if your revenues grow I would consider the s Corp at that point. S corps are more work and the tax returns are expensive. At some point you will need to conduct a cost benefit analysis to determine if it is right for you
@afgoodcompany4500
5 жыл бұрын
Can you go to an LLC from an S•corp?
@alexjones28
3 жыл бұрын
@@afgoodcompany4500 s corp is a method you choose to be taxed once you form LLC
@2awesome292
5 жыл бұрын
Social security cost vs benefits significantly reduce after you make $932/month and drop off a cliff after you make $5583/month average over 35years (amounts are adjusted by year but that's what it is now}
@FeedbackWrench
5 жыл бұрын
Yeah, I'd much prefer the returns of a Vanguard index fund in a Solo 401k or SEP..... or even a taxable account than social security. Besides that, people don't know about the provisional income limits on the taxation of your social security.... Best to get rental properties and dividend income or muni bonds.
@mendyh9949
6 жыл бұрын
Can you just pay yourself alot for a couple of years, in order to get a large social security?
@FeedbackWrench
6 жыл бұрын
Mendy H well, yes and no. The problem is that there is a diminishing returns on benefits per income increase... Which means you're usually better off taking your tax savings and investing. Seriously - social security benefits returns are dismal... So it's seldom worth paying a high tax in order to attempt to drive the benefit up. What we usually think is that you should use the cash to live debt free, invest in real estate and low cost etf mutual funds from places like vanguard instead. Buy some duplexes from theduplexdoctors.com and get some passive rental income
@otamaki277
6 жыл бұрын
Do you have a video that explains sec 351 for bookkeeing purpose?
@ckn711
4 жыл бұрын
Thank you!
@joebonsaipoland
5 жыл бұрын
$500/month? Wtf? How can you pay yourself a salary if you business is loosing money?? Makes no sense!
@fred66665
4 жыл бұрын
joe, There is a time to pay for advice and listen to it. If you aren't earning money there has to be a reason for that. A good bookkeeper or Accountant should be able to assist you figure that out. There is a movement within bookkeeping right now towards moving to standardized billing and it's usually based on the amount of transactions or revenue generated by the company this provides Bookkeepers with a steady flow of income. There are cheap options out there that farm out your bookkeeping to AI or to a kid in India you can get it done for $7.00 an hour but what value does that give you? Essentially this a consultation advertisement video but it provides value to those who need bookkeeping services (plus). I charge much less than this company and so do a lot of others but the average base rate for bookkeeping services across America is around $45 an hour. If you continually loose money you need to make a choice, hire someone to figure it out for you or close the business and cut your losses. The key dangers for business is stunted growth or excessive debt. If everything you make is going on payments or you don't have enough funds to increase growth it's possible that you may need to make a change.
@kellyinterrante7745
6 жыл бұрын
Good advice except for using a chap index fund and using a qualified plan for retirement. Taxes will bite you in the butt. Check out other options.
@FeedbackWrench
6 жыл бұрын
Kelly Interrante how so?
@le_th_
4 жыл бұрын
An S-Corp isn't something one can become; an S-Corp is a tax election.
@johnnyfuentes888
7 жыл бұрын
Thanks for the vid, helps a lot.
@FeedbackWrench
7 жыл бұрын
+Johnny Fuentes glad we could help. Let us know any other ideas you might have
@thankyou3806
5 жыл бұрын
"ELIGABILITY" should be "ELIGIBILITY"
@FeedbackWrench
5 жыл бұрын
Thanks for the watch and catching it....
@ramstafar
4 жыл бұрын
Stop correcting grammar . There are more important things to discuss
@thankyou3806
4 жыл бұрын
@@ramstafar please go discuss them elsewhere then and stop telling others what to do. This was a submission to correct of their material. One imagines it took some time to produce and that they probably want to correct as it affects their image. Thank your for your attention, but it’s unwarranted.
@JeanEstevez
7 жыл бұрын
Honestly dont like the fact thats hes being negative about it talking about retirement and mortgage at any given point if your company star doing better im thinking you can raise your salary and all of those problems wouldn’t even matter anymore im staring my own company as at scorp i think is worth because at the beginning is when you need to save more money Other than that great channel and very educational Thanks
@FeedbackWrench
7 жыл бұрын
+Paintball Life hey just so you know? I’m not being negative - I actually built a business helping people convert to S Corps at Nuance financial in Minneapolis. An S Corp. is absolutely necessary for basically everybody that earns good profits… This video isn’t meant to be negative on S corps, it’s meant to help people understand some of the catch 22’s that exist. I’ve talk to people trying to retire after being an escort for 30 years, and they never understood that their retirement benefit was going to be nearly half and they never invested into the markets. My goal in this is for people to understand some of the things you need to be aware of - I’m definitely not negative on S corps. In fact, I am ecstatic about S corpse and I think that there are hardly ever a good reason for someone not to be one if they make profits that are higher than about 30,000.
@FeedbackWrench
7 жыл бұрын
+Paintball Life and by the way - your perspective is 100% correct. I really like that you called out the fact that the benefits far outweigh the costs or negative factors. I’ll take a look at your channel here, and it would be fun to see or hear more about your business.
@FeedbackWrench
7 жыл бұрын
+Paintball Life thanks for watching! Have a great Saturday!
@JeanEstevez
7 жыл бұрын
FeedbackWrench yeah i understand your point but im just giving my opinion im new into companies corporations and all but i think is a matter of realizing that in a business it could go well and it could go bad so we as business owners gotta be prepared and save money but like a said great channel very educational you have help me thank you and have a good day too good luck with your business
@mlee9049
6 жыл бұрын
FeedbackWrench - Hi, why does the profits ideally need to be greater than $30k for s-corp election? I have a new side business that netted about $21k for the year and my total taxes as a sole proprietor seems high. My business operates online and I don't have a ton of deductions that I can use. Even though the net income is below $30k it looks like an S-corp would of substantially lowered my self-employment tax. As a result, I don't understand your general rule for S-corp election (net profit > $30k) and would greatly appreciate further clarification :)
@mrplummer1988
6 жыл бұрын
invaluable information, thank you
@itsallgoodbro9080
4 жыл бұрын
Great video
@FeedbackWrench
4 жыл бұрын
Thanks YA BEARDED MUTT!
@s1u8n
7 жыл бұрын
what's the pro/con of hiring a lawyer to incorporate S corp vs legalzoom?
@FeedbackWrench
7 жыл бұрын
You know, an attorney will probably give you much better pro-active advice - although it may lead to them wanting to bill you for more. One thing that business owners rarely start to unbox is what happens when: You die, you retire, you get disabled, or when your partners face those situation. Besides the contingency planning, an attorney will also make sure to craft documents in a fashion that they've learned is most beneficial. I'm no lawyer, but my understanding is that the documents are all somewhat boilerplated - where even the attorney is using templates from software and then modifying them. But an experienced, GOOD attorney should help you build documents that cover things they've learned along the years matter. MY ADVICE - if you have partners, or if you're business is significant, talk with an attorney but interview 3-5 - focusing on their approach..... you can smell a weasel when you get perspective of multiple ones. IF YOU are a single owner, your business doesn't have buildings or complex problems - legal zoom is probably a good way to save money. I WOULD also approach the attorneys by saying "i'm considering getting my documents and company setup with legal zoom - can you provide great value?" Setting up the company and filing the paperwork is easy, it's the additional documents that you'll want such as mentioned in the video.
@BLAMBERRY
6 жыл бұрын
The only benefit is a real handshake.
@granjmy
6 жыл бұрын
I strongly suggest that you research Legalzoom's customer complaints via Consumeraffairs. com, Sitejabber. com, etc. Lots of very angry customers talking about poor service, unapproved credit card charges, long delays, wrong advice, emails/phone calls not returned, and so on. I just found this out today.
@TheMundavi
6 жыл бұрын
very informative, thank you!!!
@FeedbackWrench
6 жыл бұрын
Thank you! We're glad it helped. We REALLY appreciate the likes and shares. Have a great day!
@edwardcottman743
6 жыл бұрын
Why are speeding through this video so fast? I am trying to make notes.
@FeedbackWrench
6 жыл бұрын
Paus it :) good luck
@jashroy
7 жыл бұрын
I really dislike government... and I hate entitlement programs
@iloveamerica1966
6 жыл бұрын
I like public infrastructure.
@MegaZedlav
6 жыл бұрын
There has to be balance, I wouldn't use an S Corp most of my income in real estate. Government gives to many corporations welfare right now. That has to change, I have learned there has to be balance...
@daveknott4563
5 жыл бұрын
great content, I have clarity now.
@GabrielRodriguez-um8fi
6 жыл бұрын
Okay so the new tax law has been changed, any changes or any better changes has been made since the recording of this video?
@FeedbackWrench
6 жыл бұрын
Not concerning anything in the drawbacks - there's been an addition of a 20% deduction of the DIVIDEND income (business income) which is sweet. That means you take 20% of the dividend, multiply by .20, and then you'll not pay state and federal taxes. If you live in a high tax state, your state is no longer able to finance it's hiigh taxes with federal deductions fully - as there is a limit on the amount of state taxes and property taxes you can deduct federally. Also, entertainment expenses are no longer a deduction . Also, all the tax brackets have been lowered, so that business owners SHOULD see a reduced rate. But as of these drawbacks, they still stand for the most part.
@GabrielRodriguez-um8fi
6 жыл бұрын
Oh okay cool, i live and my business is in Georgia. Any additional benefits since I'm living in a low tax state?
@FeedbackWrench
6 жыл бұрын
not that we can think of right now - except that you'll keep more of your money! What kind of business you in?
@GabrielRodriguez-um8fi
6 жыл бұрын
Nice. I own an IT Company.
@blazayblazay8888
5 жыл бұрын
Can a multi member s Corp pay the owners a salary?
@FeedbackWrench
5 жыл бұрын
You must pay salaries if they are participating in the business and it must be done as a reasonable salary and you would have to then do the distributions in proportion to ownership percentages.. you have to take a salary
@blazayblazay8888
5 жыл бұрын
FeedbackWrench thank you for the quick response!
@kennethm.380
5 жыл бұрын
Great video. Thx
@FeedbackWrench
5 жыл бұрын
Appreciate the feedback
@salvatorepuccini4261
5 жыл бұрын
You can create an LLC and file as an s corp.
@FeedbackWrench
5 жыл бұрын
That's what I'm saying to do in this. They are both llc's
@perfectDOE
5 жыл бұрын
how is SSI benefits a drawback when you just said SS is broke?
@FeedbackWrench
5 жыл бұрын
It's just something to be aware of. just because something has a drawback doesn't mean that it's bad. I'm simply trying to call attention to things that people often don't think about. I've talked to far too many retiring electricians And trades business owners that are all mad because their accountant screwed them over and they never invested for retirement. My point is that you need to be investing to make up the difference in social security that will not be there. Don't be e fooled, standing there when you can no longer work and you have nothing..
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