This is by far the clearest explanation of this topic I have yet run across. Very well presented, having apples to apples examples in a clean spreadsheet format, as opposed to the random whiteboard scribblings that some others do that are really hard to follow.
If i want to open my own behavioral health/ mental healthy therapy practice and I am a Licensed Clinical Social worker in California can I do a partnership? I am told I cannot do an LLC.
I rearly leave comments but you are great! This is EXACTLY what I have been looking for so long. I graduated from financial university in Europe but now I live in the US and I need to understand your microeconomy regulations work. Your video is just a great example of top notch teaching, it helped my to obtain more clear vision on how to run my own company and what type of entity to choose. I didn't even know about QBID. I'm going to comple your whole course. Thank you again!
☑ I don't leave a lot of reviews, but this video and another one in your list completely lifted the scales from my eyes. I was blind and now I see! You helped me make a decision about whether to go the S-Corp route and saved me from making a huge mistake. Thank you for bringing free content that is completely useful on its own. I have you bookmarked. I definitely want to take your course once I get my business up and running.
Would like to see more of these types of videos where small business owners can get educated on how to understand financials and use them to improve their business
You did a great job, explaining how each entity pays their taxes and what is required but you didn’t explain to me any advantages of what each one offers so you just wasted like an hour of my time and now I’m super convinced on why it’s just good to pay so I wanna do your taxes. Thanks.
Your videos are excellent. You have a dedicated agenda without jibber jabber, clear video and audio, and speaks to people who are not CPAs. I've seen a few other videos and you mention about book royalties may not be taxed as self employment, as it is intellectual property and not a service. I would love to hear more about this topic. I have set up my business as an author as a SMLLC, but was considering being taxed as an S corp if I do exceed $40k.
Navi, this was an absolutely phenomenal explanation compared to everything else I’ve seen on YT. I appreciate the disclaimers regarding QBI and SE deductions, since many people leave these out and don’t mention it. Your clear ability to share knowledge makes me want to use your course. Thank you!
Hi Navi. This video is great. I have tried to find a video with an expatiation like this one you just did and I have not found anything like this. You are great. Thank you so much!!!
Nice explanation, thank you. Just one clarifying question - the SP is eligible for 50% deduction of the SE tax, which I don't see reflected on your spreadsheet.
I’m more than happy to discover this channel. I need to thank you for your time for this, particularly a fantastic watch!! I liked every little bit of it and I have subscribed you to look at new posts all the time.
Appreciate the information and I don't think it's boring at all, exactly what I want to know. You mentioned paying your own taxes at quarters, from what $ account is paying from, personal business account? Appreciate the information
Hi Navi, can you explain why @9:17 the S-corp contribution for medicare & social security would come from the employee earnings rather than the employer earnings?
The amount of social security and medicare taxes paid is derived from the amount of payroll issued. It doesn't have anything to do with the S Corporation's earnings.
Fantastic info and great pacing. This is hard stuff for most people to wrap their head around and you did a great job. The only thing that would make it marginally better and might not be worth the time is to put together some slides you can show occasionally during the presentation, but I understand if it isn't worth it.
Great Video! Thank you. If anyone knows in the S corp case there was 40k of Income and the rest Business Income 60k. The employer paid Medicare and Social security on 40k but didn't pay anything on the Business income of 60k for medicare or social security?
Spot on, exactly what I was looking to learn. Thank you for your time in helping everyone! I am new to forming an LLC and learned a lot through your videos. As an S-Corp, when exactly can you withdraw the "distribution" amount (60k in your example). You pay taxes on 88k anyways - is there a reason to leaving that distribution amount there? At the end of your video, you suggest that over 60k can go to a Roth. What about Pre-tax retirement contributions? SEP IRA not an option for S-Corp?
how does this apply to *Manufacturing* business as a new start up? it would seem that a lot of this advice is geared more towards on-line information sales , and perhaps Real estate. I am in the research phase as i have created my first line of products and am sourcing raw materials and equipment. as the saying goes, Ya Gotta start somewhere...
I'm just seeing your video, which is very informative. Three of my co-worker are going into business together and from your expertise, which one of the formations would be best for us to form?
I'm trying to understand business taxation and this video helped me to understand the differences. I'm a visual person; listening and reading don't help me. Thank you.
This information was very informative. You broke it down so that the ordinary guy makes sense of it. The supporting websites tied it all together. I appreciate all the effort you put into your presentation.
Fantastic breakdown, one question. If you have W2 income not related to the business, does the business income get added to the W2 income flow through the tax brackets or do they flow through the brackets separately?
Great video. The social security tax is more nuanced then described. There is a max amount that is held per year. I think you want to max that out as many years as possible to get max social security benefits at the end of the day.
So what can you do with the distribution? What is the purpose of the distribution? Can i spend it right away? Do inpay tax on the amount i take out each time, or is there limitations like i have to take a certain % each quarter? I understand its separated to pay less taxes on the W2 portion but nobody explains the what and why and when for the distribution
I actually had a question. If you are a Sole LLC and you pay taxes on profits as an individual, is there some kind of provision for putting some of that money back into the LLC like an S-Corp? I am guessing you pay the full taxes and you are free to put whatever you want back in the LLC. With your example, $100k profit, you want to take $50k as salary to yourself. You pay taxes on the $100k just like you showed, but whatever is left over from 50K is put back into the company as operating money?
Hi Navi, Great video! I also forwarded to my clients to view. One question, is it okay to take a Payroll and Distributions as an owner of an LLC before becoming an S-corp? I won't be treated as an S-corp until 2025.
Thanks for the video. If I am already maxing out on my social security taxes from my fulltime job , do I still have to pay social security taxes on my side hustle LLC ( Sole Prop ) ?
Hi, If I currently have a 9-5 job and already pay taxes(social security, Medicare, federal and state) from my employer(w2 wage) and later on decide to open a partnership mmllc with my wife(who currently is not working),do I still have to pay social security and Medicare taxes? How about the state and federal? I know my wife needs to since she is not employed.
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This RUclips channel is very informative and effective.
Thank you so much!! Your video was so helpful in gaining a clear understanding of the different business models, how the taxation flows, and the importance of each part. Very Informative, thank you
I feel like I'm missing something obvious here but for an S corp, what is the down side to making the reasonable compensation to yourself as low as possible? Won't you end up paying less in total taxes (social security, medicare, AND federal income tax)?
Question. Even though the individual may be paying less taxes as an s corp due to employer payroll taxes, wouldn’t it still equal the same amount in the end? Because the business (still your income) is paying for the taxes. Seems like the money savings would be the same regardless. Either the employer (myself) pays the tax or I (myself) pay the tax.
Would like to know what is more suitable for only a 1 employee- self owned business in Texas. S corp or LLC? What would be the best option to save in TAX money but also not too liable
Great video! very well explained. had one question. if you do a s corp and using your example .. if john is married.. does he file that 60K held in s corp on his joint filing with his wife or does he file that separately. trying see if you can reduce your combined income bracket in paying taxes by doing an s corp. thank you!
Hello thank you for such a detail video. I have one question. fro the Scorp, if the 40K already paid SEP @ 15.3 % do we still need to add the 40k to the 60k for the Fed taxes why not just the 60K
Yes but they're based on prior year tax due, so it's possible they're not mandatory given your situation. Search safe harbor estimate payments and that's the calculation to determine the requirement.
Agreed. Also, taxation is theft. They literally tax you 2x literally every direction you go. But then they say, no dollar can be taxed twice. It’s bologna
He actually explained it so smoothly in my opinion. Plus he giving good examples with easy to understand numbers and this is my first time learning about business taxes. Only part I don’t completely get is where the $88,000 came from when at first it was $100,000 then the QBID made it $80,000. I’m just confused where the other $8,000 came from.
It's not, since the governments number one mandate is keeping the nation safe. Also a nation has clearly defined borders that requires people to go through a process to enter. Since the USA doesn't have those things currently all federal taxes are invalid and shouldn't be paid.
Thanks Navi Maraj, I enjoyed learning with you. I have some questions though: If a person is a non resident single member LLC(also called as disregarded entity), can he/she no have to pay social security and medicare? Since those benefits is not for foreigner/non resident. If so, how is it done?🌎
Each situation is different. As a general rule of thumb, $50k in S Corp profit would be the minimum to begin considering it. That answer can easily change if you have a W-2 job and a side business.
Regardless, to my understanding, you'll need to be an LLC. LLC isn't recognized as a taxable entity, only sole proprietorships, partnerships, and s-corps are. LLC is a legal structure. Furthermore, S-Corp election is almost 50 mind-numbing pages. So! I'd opt for a service like LegalZoom (or similar) to have this done for you, but it costs a few grand. If you're an Uber driver, an LLC taxed as a sole proprietorship (SMLLC) is probably your best bet, and it's pretty (relatively, at least) easy to register yourself! Worth it IMO considering all of the risks you assume as an Uber driver (that Uber doesn't care about). This is not legal or financial advice -- nor should it be taken as such; I am NOT a qualified to give out legal or financial advice.
Hey there, thanks for the video! I'm still a bit confused by quarterly estimated taxes- Let's say a single member LLC has paid Q1 estimated taxes, but realizes afterwards that they may have underpaid for the quarter. Would it be better to make up the difference immediately? Or wait until Q2 and pay more than is estimated? If I understand correctly, the fees from the IRS would only be applied when the annual taxes are reported. Or is it per quarter that the fees are calculated?
This is by far the clearest explanation of this topic I have yet run across. Very well presented, having apples to apples examples in a clean spreadsheet format, as opposed to the random whiteboard scribblings that some others do that are really hard to follow.
Great video! It helps understand the basics I’m going to keep watching at the more complex topics!
If i want to open my own behavioral health/ mental healthy therapy practice and I am a Licensed Clinical Social worker in California can I do a partnership? I am told I cannot do an LLC.
Great Video ! Thanks !
This was excellent and helped me decide to open an s corp vs LLC as an independent contractor
Super clear explanation. Setting the numbers up like that gave me a visual idea of how I should set up the business
I rearly leave comments but you are great!
This is EXACTLY what I have been looking for so long. I graduated from financial university in Europe but now I live in the US and I need to understand your microeconomy regulations work. Your video is just a great example of top notch teaching, it helped my to obtain more clear vision on how to run my own company and what type of entity to choose. I didn't even know about QBID. I'm going to comple your whole course. Thank you again!
Rarely.
@@ashburnconnecttv7860 I wish I had someone who would correct me since I’m trying to improve my spelling. Thank you for noticing!
☑ I don't leave a lot of reviews, but this video and another one in your list completely lifted the scales from my eyes. I was blind and now I see! You helped me make a decision about whether to go the S-Corp route and saved me from making a huge mistake. Thank you for bringing free content that is completely useful on its own. I have you bookmarked. I definitely want to take your course once I get my business up and running.
Same as you. I’m started by own business and this has definitely saved me lots of money before starting.
Very well explained, I’m CPA in Puerto Rico and is very important get an advisory from a CPA.
Thanks! Very educative presentation. The visuals really made it clear. 👏
Would like to see more of these types of videos where small business owners can get educated on how to understand financials and use them to improve their business
Excellent job! You explained very clearly with a clean easy understanding spreadsheet. Really appreciate it.
Outstanding!! I agree with Roger below. You provided the clearest explanation to date!!
You did a great job, explaining how each entity pays their taxes and what is required but you didn’t explain to me any advantages of what each one offers so you just wasted like an hour of my time and now I’m super convinced on why it’s just good to pay so I wanna do your taxes. Thanks.
thanks for being so detailed oriented and having it all clean and organized--and for answering all these important questions.
This is exactly the kind of video I was looking for, super basic but thoroughly explained, thank you!
I'VE WATCHED A LOT OF VIDEOS BUT THIS ONE WAS VERY UNDERSTANDABLE. THANKS
Your videos are excellent. You have a dedicated agenda without jibber jabber, clear video and audio, and speaks to people who are not CPAs. I've seen a few other videos and you mention about book royalties may not be taxed as self employment, as it is intellectual property and not a service. I would love to hear more about this topic. I have set up my business as an author as a SMLLC, but was considering being taxed as an S corp if I do exceed $40k.
Navi, this was an absolutely phenomenal explanation compared to everything else I’ve seen on YT. I appreciate the disclaimers regarding QBI and SE deductions, since many people leave these out and don’t mention it. Your clear ability to share knowledge makes me want to use your course. Thank you!
@14:34 shouldn't the filing status be married filing jointly since you're adding the spouse's income? That would change everything below that.
Hi Navi. This video is great. I have tried to find a video with an expatiation like this one you just did and I have not found anything like this. You are great. Thank you so much!!!
Nice explanation, thank you. Just one clarifying question - the SP is eligible for 50% deduction of the SE tax, which I don't see reflected on your spreadsheet.
Great job explaining this! I have used this video to help so many people understand these differences!
Best video online. Please keep up with the visuals of your explanations. It helps visual learning a ton.
We are thinking about converting from a LLC to an S Corp. This was extremely helpful. Thanks!!
I’m more than happy to discover this channel. I need to thank you for your time for this, particularly a fantastic watch!! I liked every little bit of it and I have subscribed you to look at new posts all the time.
Appreciate the information and I don't think it's boring at all, exactly what I want to know. You mentioned paying your own taxes at quarters, from what $ account is paying from, personal business account? Appreciate the information
This was so helpful. Its my first video from you and i'm definitely gonna try to binge watch the rest of your videos. good job brother!
Hi Navi, can you explain why @9:17 the S-corp contribution for medicare & social security would come from the employee earnings rather than the employer earnings?
The amount of social security and medicare taxes paid is derived from the amount of payroll issued. It doesn't have anything to do with the S Corporation's earnings.
Excellent video! Thanks for being so precise with your explanations. You are really taking the stress out of the entire process.
I am from the Philippines and want to understand more about this topic. Thanks for the knowledge.
By far the best explanation on youtube. And the excel layout helps tremendously.
Glad it was helpful!
Fantastic info and great pacing. This is hard stuff for most people to wrap their head around and you did a great job. The only thing that would make it marginally better and might not be worth the time is to put together some slides you can show occasionally during the presentation, but I understand if it isn't worth it.
Thank you - this is exactly what I was looking for in the way of S-Corp tax savings explained and broken down!
new LLC and this is exactly what i need to know, i am going to the s corp after watching this video.
Excellent explanation. Big big thank you for clarifying the differences and giving a detailed example for us!
Best video on tax differences !! thank you for taking the time to do this video 👏🏻👏🏻👏🏻👏🏻
Great Video! Thank you. If anyone knows in the S corp case there was 40k of Income and the rest Business Income 60k. The employer paid Medicare and Social security on 40k but didn't pay anything on the Business income of 60k for medicare or social security?
Spot on, exactly what I was looking to learn. Thank you for your time in helping everyone!
I am new to forming an LLC and learned a lot through your videos.
As an S-Corp, when exactly can you withdraw the "distribution" amount (60k in your example). You pay taxes on 88k anyways - is there a reason to leaving that distribution amount there?
At the end of your video, you suggest that over 60k can go to a Roth. What about Pre-tax retirement contributions? SEP IRA not an option for S-Corp?
This is a great question. I would like to know this as well.
Navi, you do an excellent job teaching the layman !
😊
Whether or not you take the money from q C corp do you have to pay the taxes on your personal return? The dividends?
how does this apply to *Manufacturing* business as a new start up? it would seem that a lot of this advice is geared more towards on-line information sales , and perhaps Real estate.
I am in the research phase as i have created my first line of products and am sourcing raw materials and equipment.
as the saying goes, Ya Gotta start somewhere...
Hi Navi, can you please share the tax estimate Excel file template?
I'm just seeing your video, which is very informative. Three of my co-worker are going into business together and from your expertise, which one of the formations would be best for us to form?
can you please upload that excel sheet and can you do a video comparing C Corp
I'm trying to understand business taxation and this video helped me to understand the differences. I'm a visual person; listening and reading don't help me. Thank you.
Thanks for the video. Nice Fastback in the background ;). I once had a 66' Coupe.
My favorite comment by far!!!!
This information was very informative. You broke it down so that the ordinary guy makes sense of it. The supporting websites tied it all together. I appreciate all the effort you put into your presentation.
Thanks so much for the feedback. Appreciate you!
Fantastic breakdown, one question. If you have W2 income not related to the business, does the business income get added to the W2 income flow through the tax brackets or do they flow through the brackets separately?
In another video I saw the guy said only SCorps get the QBID so I’m glad I found your video
Does S Corp have to have salaried employee? My rental property is created as an S Corp and Management company is managing all.
Great video. The social security tax is more nuanced then described. There is a max amount that is held per year. I think you want to max that out as many years as possible to get max social security benefits at the end of the day.
So what can you do with the distribution? What is the purpose of the distribution? Can i spend it right away? Do inpay tax on the amount i take out each time, or is there limitations like i have to take a certain % each quarter? I understand its separated to pay less taxes on the W2 portion but nobody explains the what and why and when for the distribution
I actually had a question. If you are a Sole LLC and you pay taxes on profits as an individual, is there some kind of provision for putting some of that money back into the LLC like an S-Corp? I am guessing you pay the full taxes and you are free to put whatever you want back in the LLC. With your example, $100k profit, you want to take $50k as salary to yourself. You pay taxes on the $100k just like you showed, but whatever is left over from 50K is put back into the company as operating money?
Hi Navi, Great video! I also forwarded to my clients to view. One question, is it okay to take a Payroll and Distributions as an owner of an LLC before becoming an S-corp? I won't be treated as an S-corp until 2025.
Do you have a link to that spreadsheet? Amazing video, I watched it at 1.5x speed and didn’t need to rewind it was that straight forward ❤
what type of corp (S, C, LLC) would be best as I am starting to do more and more day trading.
Thank you for this clear concise breakdown. Really made it all make sense. Thanks!
Thanks for the video. If I am already maxing out on my social security taxes from my fulltime job , do I still have to pay social security taxes on my side hustle LLC ( Sole Prop ) ?
14:42, didn't you forget to click "married filed jointly" ? Shouldn't that lower the taxes for a married couple?
Hi,
If I currently have a 9-5 job and already pay taxes(social security, Medicare, federal and state) from my employer(w2 wage) and later on decide to open a partnership mmllc with my wife(who currently is not working),do I still have to pay social security and Medicare taxes? How about the state and federal? I know my wife needs to since she is not employed.
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This RUclips channel is very informative and effective.
Thank you for this information! You simplified a very confusing topic.
Best video on tax differences.
Thank you so much!! Your video was so helpful in gaining a clear understanding of the different business models, how the taxation flows, and the importance of each part. Very Informative, thank you
Thank you for helping with taxes and your visuals were spot on , also keeping taxes interesting.
I feel like I'm missing something obvious here but for an S corp, what is the down side to making the reasonable compensation to yourself as low as possible? Won't you end up paying less in total taxes (social security, medicare, AND federal income tax)?
Question. Even though the individual may be paying less taxes as an s corp due to employer payroll taxes, wouldn’t it still equal the same amount in the end? Because the business (still your income) is paying for the taxes. Seems like the money savings would be the same regardless. Either the employer (myself) pays the tax or I (myself) pay the tax.
Man i need me a powerball jackpot because this is exhausting 😂😂😂 great video
Would like to know what is more suitable for only a 1 employee- self owned business in Texas. S corp or LLC? What would be the best option to save in TAX money but also not too liable
All was good but I have a question related to 60/40 rule. I think 60 will be owners compensation and 40 will be shareholder distribution.
Very informative. Thank you! How do you switch from an LLC to S Corp?
Great video! very well explained. had one question. if you do a s corp and using your example .. if john is married.. does he file that 60K held in s corp on his joint filing with his wife or does he file that separately. trying see if you can reduce your combined income bracket in paying taxes by doing an s corp. thank you!
Can you share your comparison worksheet?
Hello thank you for such a detail video. I have one question. fro the Scorp, if the 40K already paid SEP @ 15.3 % do we still need to add the 40k to the 60k for the Fed taxes why not just the 60K
Thank you so much. This knowledge is invaluable and I better understand Sole vs. LLC and not as freaked out!
Great to hear! Thanks so much for the feedback and glad you're understanding things better.
@@NaviMarajCPA❤❤❤
Thank you so much! Extremely helpful!
As sole owner LLC, are the quarterly payments mandatory?
Yes but they're based on prior year tax due, so it's possible they're not mandatory given your situation. Search safe harbor estimate payments and that's the calculation to determine the requirement.
what is a best for freelance photographer , maybe turning it into a small visual production house ?
Would you say that 40% of profit would qualify as a "reasonable salary" form the IRS perspective?
Hey there. Check out this video on reasonable compensation to help you with your question. ruclips.net/video/8pDD-DzjF4Q/видео.html
extremely clear about all three categories. thank you.
Great video! Quick question, is the 40k w-2 salary for john a tax deduction/expense for the Scorp?
Taxes should not be this confusing…
Agreed but hope I was able to make it a little easier for you.
Agreed. Also, taxation is theft. They literally tax you 2x literally every direction you go. But then they say, no dollar can be taxed twice. It’s bologna
He actually explained it so smoothly in my opinion. Plus he giving good examples with easy to understand numbers and this is my first time learning about business taxes. Only part I don’t completely get is where the $88,000 came from when at first it was $100,000 then the QBID made it $80,000. I’m just confused where the other $8,000 came from.
@@TengoWiskeyFoxtrotHow?
It's not, since the governments number one mandate is keeping the nation safe. Also a nation has clearly defined borders that requires people to go through a process to enter. Since the USA doesn't have those things currently all federal taxes are invalid and shouldn't be paid.
Thanks for this... I will like to know if this is also available for business registered by a non US resident?
Thanks Navi Maraj, I enjoyed learning with you. I have some questions though: If a person is a non resident single member LLC(also called as disregarded entity), can he/she no have to pay social security and medicare? Since those benefits is not for foreigner/non resident. If so, how is it done?🌎
At what income level does S Corp better? If less than 50k should we do S-Corp?
Each situation is different. As a general rule of thumb, $50k in S Corp profit would be the minimum to begin considering it. That answer can easily change if you have a W-2 job and a side business.
Great video...very informative. Do you have recommendations for a payroll company for beginner in NYC?
Can a partnership be done under an s-corp if so using this does each person each get $40,000
Okay...but what if you were a C-corp yet still a (Single Member) business? Then what? Would you be paying that (split) tax by yourself?
Thank you so much, Navi! This video is GOLDEN!!!
The s Corp required to have payroll but itin holders cannot have payroll so they should themself by check and do schedule c?
Great video! You do a nice job explaining a complicated topic. Thanks!
Great explanation! Thank god I came across this video. Looking forward to watching the rest of your information. Thank you!
Where can people go to learn to prep taxes in Southern California ??
can you also make a video on MICHIGAN state sales taxes?
Thank you so much... this is very helpful. I am a freelancer and I need to learn more about US taxes.
I started an LLC partnership and I find it very difficult to find helpful information, most of it seems to be S corp or sole proprietor. Thanks!
As a Uber driver in New York can I open a business account without a LLC or s corporation just by being a sole proprietor???
Regardless, to my understanding, you'll need to be an LLC. LLC isn't recognized as a taxable entity, only sole proprietorships, partnerships, and s-corps are. LLC is a legal structure.
Furthermore, S-Corp election is almost 50 mind-numbing pages. So! I'd opt for a service like LegalZoom (or similar) to have this done for you, but it costs a few grand.
If you're an Uber driver, an LLC taxed as a sole proprietorship (SMLLC) is probably your best bet, and it's pretty (relatively, at least) easy to register yourself! Worth it IMO considering all of the risks you assume as an Uber driver (that Uber doesn't care about).
This is not legal or financial advice -- nor should it be taken as such; I am NOT a qualified to give out legal or financial advice.
As far as I know, yes - you can. Exception would be if New York has some funky laws I don't know about.
Fantastic content, I will absolutely 100% come back
So the employer ss and Medicare is taxed on the 40k compensation not the 60k?
So basically if I’m a single member LLC, in a state with no state income tax, I should be saving roughly 15% for taxes ?
Thanks for the helpful video. Do you have your own accounting firm?
Are the due dates for quarterly taxes the same for a sole proprietor/LLC and an S-Corp owner? They are different, correct?
Hey there, thanks for the video! I'm still a bit confused by quarterly estimated taxes-
Let's say a single member LLC has paid Q1 estimated taxes, but realizes afterwards that they may have underpaid for the quarter.
Would it be better to make up the difference immediately? Or wait until Q2 and pay more than is estimated?
If I understand correctly, the fees from the IRS would only be applied when the annual taxes are reported. Or is it per quarter that the fees are calculated?