I have W2 Income in excess of 100K annually and my wife's W2 income is 36K. We file jointly. My LLC was formed for side work I do related to my full time career and now is also beginning to earn commission from my Real Estate Sales work. My earnings from both the moonlighting and the broker i put my real estate sales through are reported on 1099 but not directly to my LLC. The 1099 are in my name. Struggling to understand how that will impact our tax filings and whether or not to move the LLC to C-Corp tax status as profits continue to grow. No plans to stop working my primary job (W2 Income)
Of all the videos I watched about this subject ,this video was the best , now i understood it clearly, thank you for the information !!! great video !!!
Thank you. This is very informative. I do have some questions. Briefly, I'm a single member LLC. Anyway back to my questions. One, why would I form an S Corp if I can file a form with the IRS to be taxed as an S Corp? Two, if I start a real state company with only myself as the member, should I just choose an LLC instead of an S Corp? Three, what's the process and how simple is it to change my LLC to be an S Corp? Four, Is it too late to go back to the IRS and say, " I made a mistake and should have filed as an S Corp" lol
Thank you so much for the great info! Would you recommend creating a specific business checking account when forming a SMLLC? Or can I just use one of my existing checking accounts as a “business account” and my other checking account as my personal account?
I recommend using a separate business account - actually recommend may be to weak of a word. You really should have a separate account….not just for tax but for legal considerations as well.
thank you sir, I been learning so much from you and think I been making some mistakes that no one suggested me not to do those mistakes. Quick question sir! I have a business LLC and 3 members including me in it. so my question is are we being taxed as the second thing you mentioned? because I am planing to keep it down to single member LLC and i think i am making mistakes right?
Sounds like you created a Multi Member LLC, and by default, a MMLLC is taxed as a Partnership. Paying yourself and the other partners in a Partnership is the same as paying yourself in a sole proprietorship which is the 1st way I mention in this video.
Hello, My SMLLC Fon non us resident is by default a sole proprietor by IRS, which means there is no protection. I wanted to be taxed as disregarded entity separated from the owner to get that protection. Should I fill 8832 myself or I need someone to do it for me?
You're using a payroll service and are paying yourself as a contractor instead of an employee? So you receive a 1099 instead of a W2? That is incorrect. If you're performing services to the S Corporation then you need to be on payroll. If you are a sole proprietorship, you are not an employee or a contractor, so you should not receive a W2 or 1099.
Hi Navi, do you have free excel payroll format , can you please share it with everyone. im a amazon seller and i want to do my own payroll but i dont know how to start with my excel sheet.
A few questions... if you are an employee of your S corp, you're an independent contractor - 1099 not W2, correct? Then, are you paying double tax - income tax on your business profits and then income tax on the paycheck you pay yourself as an employee? I've been watching multiple videos to keep this straight, but may be getting confused here. Thanks for any clarification :)
Hey Gabrielle….I recently put out a video entitled, “Do you get a tax deduction for paying yourself?” Watch that video and let me know if you still have questions. I think it will clear things up for you.
what if i do construction and i have a newly formed LLC S Corp. If i were to get laid off can i still collect unemployment through my construction job?
I'm not sure I have enough information to answer your questions. If you formed a MMLLC and elected to have it taxed as an S Corporation, and assuming both members are providing services and are active in the business....it would be similar to what is covered in this video.
@@NaviMarajCPA how does mmllc will be taxed sir? please explain. or do a video about it. i become your big fan now spending most of my Screen Times on you videos
Hi Navi - Thank you for the great content!! I am learning a lot! Do you have any advice on finding a good CPA and business attorney? How do I know which ones specialize in single member LLC's? Thank you!!
There is a technical answer to this but, without knowing any context, and assuming you’re talking about taking distributions for an S Corp, you can do it as many times as you want but I’d recommend not doing it more than once per month.
curious if you are paying yourself a salary and taxes are being taken out as an employee, why do you also have to pay 15.3% SE tax or is that the payroll tax?
Navi, silly question- can the business account and personal account be with the same bank? Or do they have to be separate for liability purposes? Thanks!
Hi Navi, this is a great video. I noticed you divided the profit between salary and K-1 share as 40% and 60%, respectively. Is there a particular reason for such percentages?
So, the 9grand you saved by having the llc taxed as an scorp, will make you pay tax again from your salary as the employee of your own business? How much?
Hi Navi. So if I have a LLC, and I chose to be taxed as an S Corp. Its mean I need to pay myself an reasonable salary. So can I pay myself in form of 1099-NEC? or it has to be W2?
Hi do you have a video for foreigner(non US resident) LLC/S corp taxes? I want to create an LLC for my business in US but I’m not sure how much taxes I need to pay, since I’m not resident nor am I a US person. Thanks 🙏
Hi Sarah, i'm in the same spot, i'm in EU, and i want to sell in US, if u did find something useful could u please share it with me, i will be so grateful
If I take a "distribution" is this the same thing as just cashing out? Like the $60k distribution in this example, it's the same as me putting it into my personal checking account tax free right?
Hi Navi, if I change over my LLC to an S-Corp tax structure from a SP tax structure beginning in 2023, will whatever that distribution amount is, that’s free of the 15.3%, will it be subject to any other state/fed taxes or fees?
Hi Zeeshan. Technically the term would be “non-dividend distribution” for an S corporation. It’s beyond the scope of this video but it is possible for an S Corp to make a “dividend distribution”. This occurs when the shareholder takes a distribution in excess of basis.
IRS requires you to take "reasonable compensation". You can Google that term and you'll begin to understand why you don't want to take a $0.00 salary ESPECIALLY when you're taking distributions.
Great content Navi. I wish I had seen this a few week ago, which could have saved me valuable time, confusion, and frustration. Now it is getting clear. Thanks Navi once again.
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I have W2 Income in excess of 100K annually and my wife's W2 income is 36K. We file jointly. My LLC was formed for side work I do related to my full time career and now is also beginning to earn commission from my Real Estate Sales work. My earnings from both the moonlighting and the broker i put my real estate sales through are reported on 1099 but not directly to my LLC. The 1099 are in my name. Struggling to understand how that will impact our tax filings and whether or not to move the LLC to C-Corp tax status as profits continue to grow. No plans to stop working my primary job (W2 Income)
Great explanation Navi. I learned a lot since I formed my LLC and filed to be taxed as an S-corp.
That’s fantastic to hear!
Thank you sir! Amazing content. This channel is a must for new business owners. Subscribed!!
Thank you for the clear videos and diagrams. You've been answering all my questions!
This is great content. Very clear, understandable. Thank you
Of all the videos I watched about this subject ,this video was the best , now i understood it clearly, thank you for the information !!! great video !!!
Appreciate the feedback Max! Glad you found it helpful.
Bravo. Highly informative, succint, clear and easy to understand. 👏
Thanks, just the brilliant information I've been looking for.
You’re welcome! Glad you got value out of it.
Subscribed! Useful information explained in a clear way. Nicely done. Thank u!
Your videos or so under appreciated!!! thank you
Spread the word for me, DaeQuon. Appreciate the feedback.
Great info and very detailed!!!
Thank you. This is very informative. I do have some questions. Briefly, I'm a single member LLC. Anyway back to my questions. One, why would I form an S Corp if I can file a form with the IRS to be taxed as an S Corp? Two, if I start a real state company with only myself as the member, should I just choose an LLC instead of an S Corp? Three, what's the process and how simple is it to change my LLC to be an S Corp? Four, Is it too late to go back to the IRS and say, " I made a mistake and should have filed as an S Corp" lol
Thank you so much for the great info! Would you recommend creating a specific business checking account when forming a SMLLC? Or can I just use one of my existing checking accounts as a “business account” and my other checking account as my personal account?
I recommend using a separate business account - actually recommend may be to weak of a word. You really should have a separate account….not just for tax but for legal considerations as well.
@@NaviMarajCPA Great answer. Co-mingling personal and business assets may lead to 'piercing the corporate veil'
Thanks
thank you sir, I been learning so much from you and think I been making some mistakes that no one suggested me not to do those mistakes. Quick question sir! I have a business LLC and 3 members including me in it. so my question is are we being taxed as the second thing you mentioned? because I am planing to keep it down to single member LLC and i think i am making mistakes right?
Sounds like you created a Multi Member LLC, and by default, a MMLLC is taxed as a Partnership. Paying yourself and the other partners in a Partnership is the same as paying yourself in a sole proprietorship which is the 1st way I mention in this video.
Great stuff
Thanks Jet!
Navi - Do you also help with setting up Trusts/ Holding companies?
Hello,
My SMLLC Fon non us resident is by default a sole proprietor by IRS, which means there is no protection.
I wanted to be taxed as disregarded entity separated from the owner to get that protection.
Should I fill 8832 myself or I need someone to do it for me?
I use a payroll service and just use contractors payment instead of employee
You're using a payroll service and are paying yourself as a contractor instead of an employee? So you receive a 1099 instead of a W2? That is incorrect. If you're performing services to the S Corporation then you need to be on payroll.
If you are a sole proprietorship, you are not an employee or a contractor, so you should not receive a W2 or 1099.
Hi Navi, do you have free excel payroll format , can you please share it with everyone. im a amazon seller and i want to do my own payroll but i dont know how to start with my excel sheet.
A few questions... if you are an employee of your S corp, you're an independent contractor - 1099 not W2, correct? Then, are you paying double tax - income tax on your business profits and then income tax on the paycheck you pay yourself as an employee? I've been watching multiple videos to keep this straight, but may be getting confused here. Thanks for any clarification :)
Hey Gabrielle….I recently put out a video entitled, “Do you get a tax deduction for paying yourself?” Watch that video and let me know if you still have questions. I think it will clear things up for you.
what if i do construction and i have a newly formed LLC S Corp. If i were to get laid off can i still collect unemployment through my construction job?
Good education. Thanks
But if in the same example. 2 people owned this business and want to file tax as an S corp. would it be the same?
Thanks
I'm not sure I have enough information to answer your questions. If you formed a MMLLC and elected to have it taxed as an S Corporation, and assuming both members are providing services and are active in the business....it would be similar to what is covered in this video.
@@NaviMarajCPA how does mmllc will be taxed sir? please explain. or do a video about it. i become your big fan now spending most of my Screen Times on you videos
Hi Navi - Thank you for the great content!! I am learning a lot! Do you have any advice on finding a good CPA and business attorney? How do I know which ones specialize in single member LLC's? Thank you!!
Thank you.
How many times can you make a k1 distribution?
There is a technical answer to this but, without knowing any context, and assuming you’re talking about taking distributions for an S Corp, you can do it as many times as you want but I’d recommend not doing it more than once per month.
What about the corporate tax of 21%, form 1120S? SMLLC has to pay that when formed as S Corp?
21% tax you are referring to is for C Corporations, not S Corporations.
curious if you are paying yourself a salary and taxes are being taken out as an employee, why do you also have to pay 15.3% SE tax or is that the payroll tax?
Navi, silly question- can the business account and personal account be with the same bank? Or do they have to be separate for liability purposes?
Thanks!
Hi Navi, this is a great video. I noticed you divided the profit between salary and K-1 share as 40% and 60%, respectively. Is there a particular reason for such percentages?
How do I pay myself when my LLC is a member of my Limited Partnership (LP) along with myself, my wife and another LLC as General Partner?
Hi Navi, I'm working for an IT Service Company Full-time, if I start a LLC and do IT Consulting Business, will this be moonlighting ?
So, the 9grand you saved by having the llc taxed as an scorp, will make you pay tax again from your salary as the employee of your own business? How much?
Hi Navi. So if I have a LLC, and I chose to be taxed as an S Corp. Its mean I need to pay myself an reasonable salary. So can I pay myself in form of 1099-NEC? or it has to be W2?
Hi do you have a video for foreigner(non US resident) LLC/S corp taxes? I want to create an LLC for my business in US but I’m not sure how much taxes I need to pay, since I’m not resident nor am I a US person. Thanks 🙏
Hi Sarah, i'm in the same spot, i'm in EU, and i want to sell in US, if u did find something useful could u please share it with me, i will be so grateful
If I take a "distribution" is this the same thing as just cashing out? Like the $60k distribution in this example, it's the same as me putting it into my personal checking account tax free right?
Good
Hi Navi, if I change over my LLC to an S-Corp tax structure from a SP tax structure beginning in 2023, will whatever that distribution amount is, that’s free of the 15.3%, will it be subject to any other state/fed taxes or fees?
I got it, sorry, I rewinded it back to 13:43 and I saw what I missed! Thank you!
Is Distribution = Dividend?
Hi Zeeshan. Technically the term would be “non-dividend distribution” for an S corporation. It’s beyond the scope of this video but it is possible for an S Corp to make a “dividend distribution”. This occurs when the shareholder takes a distribution in excess of basis.
How may I contact you ?
My website has various ways you can contact me. The website is www.navimarajcpa.com.
So wouldn’t you want to maximize ur k-1 distribution and pay urself less so you maximize ur tax obligation? Can’t you just take a 0 salary?
IRS requires you to take "reasonable compensation". You can Google that term and you'll begin to understand why you don't want to take a $0.00 salary ESPECIALLY when you're taking distributions.
My guy Navraj..your music go hard bro..lol one of the hardest rappers out of Canada
Great content Navi. I wish I had seen this a few week ago, which could have saved me valuable time, confusion, and frustration. Now it is getting clear. Thanks Navi once again.
Awesome information! Thank you.
You’re welcome Skipper!