Hey Karlton! I just wanted to say that I really like the style of this particular video. It was a lot easier to follow than some of your other flashier videos. I'm brand new to learning tax saving strategies and this pace was really good for me. Thanks for your videos and great content!
Thank you so much Karlton, first of all, for all your knowledge, and second for making realized what I can do in my life that I really enjoy, and get paid for it
Absolutely outstanding video I really appreciate the fact that you took your time to explain it so well. I am subscribed and I look forward to watching more videos and educating myself thank you
That's why I transfer a percentage off the top of every deposit into a high interest rate savings account for taxes later. And it hurts! Life is so expensive.
You almost lost me when you started talking about the guy at the party who smells, but I stuck with it and I’ve experienced an unlock. I finally understand this aspect of the LLC vs S.Corp concept.
Question on owners draw. Since it’s not taxed on the actual draw amount and only on the profits of the business, can’t this be leveraged to draw money in excess of profits via using loans? For example: 1) LLC has $10k in profits expected for the year. This means the owner would be taxed on $10k of income (profits) if no additional revenue or expenses occurred. 2) Business takes out a loan of $10k. 3) Owner takes draw of $20k, since there was $10k of profits and $10k of excess cash in the account from the loan. 4) Owner still only pays taxes on $10k since that is the only profit from the business, and the excess draw of $10k originating from the loan is just “tax free money” Is there any restriction on withdrawing more than your actual profits for the year?
Just to clarify, as an LLC my company makes 100K and I take 40K in distribution, I will pay 15.3% SE tax on the 40K AND the 60K remaining that passes through to me. If I change my status to a S-corp and take that same 40K as a W2, I only pay the employee’s 1/2 of the 15.3% SE tax. Who pays the employers 1/2 and who pays the SE tax on the remaining 60K that passes through?
If I am a W2 employee to a firm that contracts me out to work for a client, can I still create my own LLC that gets paid from my current employer? If yes is the assumption correct that all of the tax rules stated in this video would still be true, up to the point of being a s-corp type LLC?
Doesn’t the 15.3% self employment tax just become the employee and employer portion of payroll tax? Then the corp pays taxes at a higher rate? And I would pay both?
Karlton, thinking about buying VIP. Question...I paid myself $60k via W2 in an Scorp LLC, and took a $15k distribution in Q4 (the business netted -$2000 in 2023 after ITDA). Should I have taken more or less as W2 or should I have made that Q4 distribution a W2 deductible event?
the wages have to be "ordinary" for your job. You can't pay yourself $40k as wages if you are a lawyer. The amount has to be higher than $40k to be the wages a lawyer would earn.
So what is the tax percentage on the remaining 60k as an S corporation? I get that the 40k being taken out as “payroll” is taxed at 15.3%, so what’s the remaining 60k tax rate?
All of the profit ($100k) is subject to income tax. The advantage here is the $60k does NOT have to pay the self-employment tax (the 15.3%), so you save $60k * 15.3%, or $9,180!
My question now is if I’m employed making $250K / year and my LLC makes $150K do I still need to switch to S-Corp coz my initial employer already paid the maximum employment tax?
What about the federal tax rate though?! $60,000 taxed at a federal rate of 22% is $13,200. $40,000 taxed under self-employment tax of 15.3% is $6,120. This creates a total tax liability of $19,320, which is more than the 15.3% tax rate of $100,000. ($15,300). Solutions I am finding so far is increasing your payroll by more employees or distribution, if your expenses can no longer be increased. Is there anything I am missing? This would make a self employed LLC more beneficial than an S -corp, right?
Am i missing the fact that you have to pay a SE tax on $100,000 and Federal taxes on it as well?! This would make the tax liability on $100,000 with a regular LLC of $15,300 AND $24,000 (24%), which is $39,300.
Switch your LLC to be taxed as a s-corp benefits: deductions and lower self-employed tax. Using the 2553 form.
Hey Karlton! I just wanted to say that I really like the style of this particular video. It was a lot easier to follow than some of your other flashier videos. I'm brand new to learning tax saving strategies and this pace was really good for me. Thanks for your videos and great content!
Thank you so much Karlton, first of all, for all your knowledge, and second for making realized what I can do in my life that I really enjoy, and get paid for it
This was honestly one the most informative videos I've seen yet. You're the man!!!
Thank GOD for you and Mark !!!!
I often watch yall dual lives together
Who is Mark?
@@lolabrownphd Mark Kohler
Brooo. I was needing this information so bad . Thank you
Absolutely outstanding video I really appreciate the fact that you took your time to explain it so well. I am subscribed and I look forward to watching more videos and educating myself thank you
That's why I transfer a percentage off the top of every deposit into a high interest rate savings account for taxes later. And it hurts! Life is so expensive.
What bank do you use for this. What percentage is considered high
@@acartman2 MVB and it's not that high but compared to Chase's 1%, 4 to 5% is much better.
I use an insurance policy as my savings account
🤔 interesting. I like this
You almost lost me when you started talking about the guy at the party who smells, but I stuck with it and I’ve experienced an unlock. I finally understand this aspect of the LLC vs S.Corp concept.
What's the advantage of going as an LLC, why not do the whole structure as an SCorp?
Most important part... thanks for this
How did yall file for the startup cost for the new business.
oh its wraps, preciate the sauce big dawg
Thank you. This makes sense. Very clear.
Question on owners draw. Since it’s not taxed on the actual draw amount and only on the profits of the business, can’t this be leveraged to draw money in excess of profits via using loans?
For example:
1) LLC has $10k in profits expected for the year. This means the owner would be taxed on $10k of income (profits) if no additional revenue or expenses occurred.
2) Business takes out a loan of $10k.
3) Owner takes draw of $20k, since there was $10k of profits and $10k of excess cash in the account from the loan.
4) Owner still only pays taxes on $10k since that is the only profit from the business, and the excess draw of $10k originating from the loan is just “tax free money”
Is there any restriction on withdrawing more than your actual profits for the year?
new subscriber just watched your video from 1 yr ago with Mark Kohler good stuff!!!
Yes u can do both
Incredible! I will absolutely join the next event!
Thank you my friend. Solid information.
If i am getting paid by W2, then i have to pay fed and state tax too .
Yes, but the amount you have to pay is lower when you file as a s-corp.
What do you think of aged shelve LLCs and Corporations?
Just to clarify, as an LLC my company makes 100K and I take 40K in distribution, I will pay 15.3% SE tax on the 40K AND the 60K remaining that passes through to me.
If I change my status to a S-corp and take that same 40K as a W2, I only pay the employee’s 1/2 of the 15.3% SE tax. Who pays the employers 1/2 and who pays the SE tax on the remaining 60K that passes through?
I had this exact same question
You pay the whole 15.3% on the $40k PLUS your regular income tax. The $60k passes through as a distribution from the company, so no SE tax.
You hit the spot I want to know. Thank you.
Then how much do you pay in business taxes? On the remaining 60K
Does karlton help with opening an LLC?
Thank you sir!: That made sense!
I appreciate it!
This has been created 5 months ago. When will the next one will be so i can attend
What about guaranteed payments paid to partners? How does that work
If I am a W2 employee to a firm that contracts me out to work for a client, can I still create my own LLC that gets paid from my current employer? If yes is the assumption correct that all of the tax rules stated in this video would still be true, up to the point of being a s-corp type LLC?
LLC, Scorp is safe when you will divorce? Or need to do something to protect it?
Can you have two LLC under 1 S-Corp? Are filing Taxes separately better than joint?
I'm watching this and wondering how it's tax free distribution if you are required to make estimated tax payments?
If you go back he stopped and said “tax free at that point” you still going to pay taxes for earning that money at the end. On April 15th
You're awesome bro straight up😊
if i switched to an s-corp and now im a w2 employee why do i have to pay a 7.65 as an employeer??
Joined membership today
Doesn’t the 15.3% self employment tax just become the employee and employer portion of payroll tax? Then the corp pays taxes at a higher rate? And I would pay both?
So confused. Previous video I watched advised against an s-corp.
This was fire! 🔥
Karlton, thinking about buying VIP.
Question...I paid myself $60k via W2 in an Scorp LLC, and took a $15k distribution in Q4 (the business netted -$2000 in 2023 after ITDA). Should I have taken more or less as W2 or should I have made that Q4 distribution a W2 deductible event?
the wages have to be "ordinary" for your job. You can't pay yourself $40k as wages if you are a lawyer. The amount has to be higher than $40k to be the wages a lawyer would earn.
So what is the tax percentage on the remaining 60k as an S corporation? I get that the 40k being taken out as “payroll” is taxed at 15.3%, so what’s the remaining 60k tax rate?
All of the profit ($100k) is subject to income tax. The advantage here is the $60k does NOT have to pay the self-employment tax (the 15.3%), so you save $60k * 15.3%, or $9,180!
My question now is if I’m employed making $250K / year and my LLC makes $150K do I still need to switch to S-Corp coz my initial employer already paid the maximum employment tax?
What about the federal tax rate though?!
$60,000 taxed at a federal rate of 22% is $13,200.
$40,000 taxed under self-employment tax of 15.3% is $6,120.
This creates a total tax liability of $19,320, which is more than the 15.3% tax rate of $100,000. ($15,300).
Solutions I am finding so far is increasing your payroll by more employees or distribution, if your expenses can no longer be increased. Is there anything I am missing?
This would make a self employed LLC more beneficial than an S -corp, right?
Am i missing the fact that you have to pay a SE tax on $100,000 and Federal taxes on it as well?!
This would make the tax liability on $100,000 with a regular LLC of $15,300 AND $24,000 (24%), which is $39,300.
Beautiful video!
TD Ameritrade no longer exists it was bought out
This is good info.
How can I get a hold of your company
Awesome recording.
Awesome
I'm assuming so I think s
And if I am not an American resident/citizen, what is my alternative to the S-corp?
You may get more views from video like this, Back to the Basics !!!
agreed!
Thinking about it.
💪🏾🙏🏾
I got it yes yes😂
If you're going to say pay yourself as an employee I'm not going to watch.
nobody cares
Why not? What's wrong with that
@@lovedrae4633 it creates a taxable event
You hit the spot I want to know. Thank you.
You hit the spot I want to know. Thank you.