Ah, I see what you mean. Yep C Corps tend to be impt for particular situations (outside investors, stock options / espp, etc.). Good to add to the list.
@@ElizabethPW As I understand it, a c corp is a legal "person" (taxable) vs. an S corp which is (largely) a pass-through entity (with some reporting requirements). That said, I feel the difference between LLC with c status, vs traditional c corp are hazy at best. I've tried googling around but have yet to find anything.
Well LLCs and Corporations are both legal "persons" but yes a C Corporation pays its own taxes, so it is subject to double taxation. Typically when someone wants a C Corp directly it is for the legal differences, like how it handles outside investor shares. Generally, if someone is looking for outside investors / VC funding, I'd recommend a Delaware C Corp (like via www.clerky.com/) so it is easy for investors.
Great video! I have a question, my sister and I recently opened a pack and ship store (three months open). We both own 50% of it and we have an LLC. How should we file our taxes? As a partnership or s-corporation? Thank you ahead of time!
Thank you for this video! Quick question - I have two LLCs. One is taxed as an S-corp and the other is taxed as a Partnership. I know an LLC can own other LLCs. I also know a "Partnership" cannot be a shareholder of a corporation. My question is, can my LLC taxed as a Partnership be a shareholder/owner of my LLC taxed as a S-corp since they are both LLCs?
Hm I'd recommend speaking to a business tax person / CPA about this, but my understanding is that what people typically do is the "owner" LLC is taxed as an S Corp and the subsidiary LLC is taxed as a passthrough
To raise additional "Private Money", can an LLC take on a private person as a limited partner? (Keeping him/her away from the operation of the business.)
Hello Elizabeth, My question is, I own five real estate properties in California. Currently the properties are all in my Trust. I do carry a lot of insurance however, I was thinking it might be wise to set up an LLC for protection and also tax benefits. What do you think? Thank you. Diane
If you are renting them out to others especially, it may make sense to have them in one LLC (or even one for each). You may have the trust own the LLC(s), too, so it has kind of the same effect. But adding LLCs is a bunch of cost ($800/year franchise fee, to start). And whether the taxes would be helpful depends on how you are managing the properties and also how much $ each makes.
I really enjoyed watching your video. My husband and I opened an LLC. We are going over the form 8832 and form 2553 for a S-Corp. we just purchased in multi family residence with a commercial space. We are unsure if we should claim a individual so proprietor, C corporation, S corporation, or partnership for tax purposes. What do you advice?
Hm it depends on your family financial/tax circumstances, and how much money the biz will be pulling in (and the timing of that income). I'd recommend spending to a tax person or accountant so they can run actual numbers for your specific situation.
My business partner and I have a 2 unit that nets around $600 a month but will need renovations in the future. Neither of us need to pull money out currently so we can continue reinvesting. I what structure would you suggest?
I'm starting a new bussiness as a Real Estate investor and will be in the look out for private money Lenders, what structure should I consider setting up?
Hi Elizabeth my name is Juan and We recently open a small business in California and this Me and my Wife's partnership but We have no employees just yet its me doing the physical work and my wife doing all paperwork and financial stuff. Do you think that We should go for LLC corporation even if We have non employees?
What business should I have If i'm opening up a business with a friend to deliver speech and language therapy in the state of California??? I know that in CA you can not have an LLC for speech therapy services.
Thank you for this concise explainer. I'm setting up an online SaaS business with a partner, and will probably choose to form an LLC for it. Given that the partnership is a 50/50 split, and we are in different states (NY and MA), what would you suggest for which state to form the business in?
It depends upon your other contacts with each state. If you have other physical contacts with each state besides the owner living there (like shipping products from there, a warehouse, employees, seeing clients there) then you'll form in one state and register as a foreign LLC in the other state -- so in some ways you'll end up paying the same fees either way. If there are no physical contacts, them you may be able to just pick the state with the lowest fees.
Hello! I’m looking into turning a hobby into a business with friends. I’ve watched a few videos of yours and they have been so hopeful! Thank you! One question if you wouldn’t mind - we are a group of 4 who play pickleball together and are starting to run tournaments and leagues. Sounds like we should start an LLC but a (maybe further down the track) goal is find investors so we can open our own small pickleball facility. Can you switch from an LLC to a C-corp at any point? We have another tournament we are wanting to plan and I figure we should form an LLC in these beginning phases but should/can we switch to c-corp once we really get serious about finding investors and a location for our next big business move? Thanks again!! Fellow Californian here!
Yes you can switch later. It is a hassle but doable. Only makes sense if you are going to run as a loss or minimal income for a while and are not going to make the switch for some time.
Also people should realize that an LLC is still self employment for tax purposes. Only changing the tax status will change that (like electing Corp status) Sooo many people think just opening an LLC will change that but it doesn't C Corps are nice because it's completely separate from you and there's many ways to avoid the "double tax"
Well you could have an LLC where your S Corp owns part of the LLC and the partner owns the other part. But it would not be a wholly-owned subsidiary bc the partner owns part of it
My husband and I formed and LLC for a one chair salon studio he is renting. He cuts the hair and I will be handling the marketing. Which would be the best tax option for our situation?
Really depends upon how much profit he is making, the business expenses, and your overall family tax situation. For many people it is good to start out as just a sole prop pass-through and then later get the S Corp once they are making more money. But you may want to talk to a tax person to have them run the numbers for you specifically.
Amazing explanation. Thank you so much!
welcome!
Outstanding clarity! Would be great if you would elaborate on traditional c corp vs LLC taxed as c corp. Great presentations Liz!
Ah, I see what you mean. Yep C Corps tend to be impt for particular situations (outside investors, stock options / espp, etc.). Good to add to the list.
@@ElizabethPW As I understand it, a c corp is a legal "person" (taxable) vs. an S corp which is (largely) a pass-through entity (with some reporting requirements). That said, I feel the difference between LLC with c status, vs traditional c corp are hazy at best. I've tried googling around but have yet to find anything.
Well LLCs and Corporations are both legal "persons" but yes a C Corporation pays its own taxes, so it is subject to double taxation. Typically when someone wants a C Corp directly it is for the legal differences, like how it handles outside investor shares. Generally, if someone is looking for outside investors / VC funding, I'd recommend a Delaware C Corp (like via www.clerky.com/) so it is easy for investors.
If you have a one-owner business instead, here's the video for you: ruclips.net/video/5ClAJYWTLRA/видео.html
Great video! I have a question, my sister and I recently opened a pack and ship store (three months open). We both own 50% of it and we have an LLC. How should we file our taxes? As a partnership or s-corporation? Thank you ahead of time!
Very helpful ! To the point and concise !
Glad it was helpful!
Great explain content and guide
Glad you think so!
How to convert partnership to lvl and change name
Thank you for this video! Quick question - I have two LLCs. One is taxed as an S-corp and the other is taxed as a Partnership. I know an LLC can own other LLCs. I also know a "Partnership" cannot be a shareholder of a corporation. My question is, can my LLC taxed as a Partnership be a shareholder/owner of my LLC taxed as a S-corp since they are both LLCs?
Hm I'd recommend speaking to a business tax person / CPA about this, but my understanding is that what people typically do is the "owner" LLC is taxed as an S Corp and the subsidiary LLC is taxed as a passthrough
Please make a video about how to form a S corporation
Hi - I have this video on how to create an S Corp ruclips.net/video/el6uoZ6vKWc/видео.html also an updated one will be posted next week
To raise additional "Private Money", can an LLC take on a private person as a limited partner? (Keeping him/her away from the operation of the business.)
Yes an LLC can have limited partners
Hello Elizabeth, My question is, I own five real estate properties in California. Currently the properties are all in my Trust. I do carry a lot of insurance however, I was thinking it might be wise to set up an LLC for protection and also tax benefits.
What do you think? Thank you. Diane
If you are renting them out to others especially, it may make sense to have them in one LLC (or even one for each). You may have the trust own the LLC(s), too, so it has kind of the same effect. But adding LLCs is a bunch of cost ($800/year franchise fee, to start). And whether the taxes would be helpful depends on how you are managing the properties and also how much $ each makes.
I really enjoyed watching your video. My husband and I opened an LLC. We are going over the form 8832 and form 2553 for a S-Corp. we just purchased in multi family residence with a commercial space. We are unsure if we should claim a individual so proprietor, C corporation, S corporation, or partnership for tax purposes. What do you advice?
Hm it depends on your family financial/tax circumstances, and how much money the biz will be pulling in (and the timing of that income). I'd recommend spending to a tax person or accountant so they can run actual numbers for your specific situation.
My business partner and I have a 2 unit that nets around $600 a month but will need renovations in the future. Neither of us need to pull money out currently so we can continue reinvesting. I what structure would you suggest?
In Maine
Well in a perfect world an LLC is great for real estate. The issue is that it can be complicated if the property has a mortgage on it
I'm starting a new bussiness as a Real Estate investor and will be in the look out for private money Lenders, what structure should I consider setting up?
Hi Elizabeth my name is Juan and We recently open a small business in California and this Me and my Wife's partnership but We have no employees just yet its me doing the physical work and my wife doing all paperwork and financial stuff. Do you think that We should go for LLC corporation even if We have non employees?
Assuming you don't have special circumstances, the LLC would probably work well
What business should I have If i'm opening up a business with a friend to deliver speech and language therapy in the state of California??? I know that in CA you can not have an LLC for speech therapy services.
Then you get a Professional Corporation
@@ElizabethPWAwesome! Thank so much!
Thank you for this concise explainer. I'm setting up an online SaaS business with a partner, and will probably choose to form an LLC for it. Given that the partnership is a 50/50 split, and we are in different states (NY and MA), what would you suggest for which state to form the business in?
It depends upon your other contacts with each state. If you have other physical contacts with each state besides the owner living there (like shipping products from there, a warehouse, employees, seeing clients there) then you'll form in one state and register as a foreign LLC in the other state -- so in some ways you'll end up paying the same fees either way. If there are no physical contacts, them you may be able to just pick the state with the lowest fees.
Hello! I’m looking into turning a hobby into a business with friends. I’ve watched a few videos of yours and they have been so hopeful! Thank you! One question if you wouldn’t mind - we are a group of 4 who play pickleball together and are starting to run tournaments and leagues. Sounds like we should start an LLC but a (maybe further down the track) goal is find investors so we can open our own small pickleball facility. Can you switch from an LLC to a C-corp at any point? We have another tournament we are wanting to plan and I figure we should form an LLC in these beginning phases but should/can we switch to c-corp once we really get serious about finding investors and a location for our next big business move? Thanks again!! Fellow Californian here!
Yes you can switch later. It is a hassle but doable. Only makes sense if you are going to run as a loss or minimal income for a while and are not going to make the switch for some time.
Also people should realize that an LLC is still self employment for tax purposes. Only changing the tax status will change that (like electing Corp status)
Sooo many people think just opening an LLC will change that but it doesn't
C Corps are nice because it's completely separate from you and there's many ways to avoid the "double tax"
Yes you can have an LLC that is taxed as a sole prop, a partnership, an S Corp, or a C Corp. It is very flexible.
Would this work:
Create a S Corp with myself only and investor.
Followed by…
Create LLC under S Corp with a partner who’s working in shop with me.
Well you could have an LLC where your S Corp owns part of the LLC and the partner owns the other part. But it would not be a wholly-owned subsidiary bc the partner owns part of it
My husband and I formed and LLC for a one chair salon studio he is renting. He cuts the hair and I will be handling the marketing. Which would be the best tax option for our situation?
Really depends upon how much profit he is making, the business expenses, and your overall family tax situation. For many people it is good to start out as just a sole prop pass-through and then later get the S Corp once they are making more money. But you may want to talk to a tax person to have them run the numbers for you specifically.