First I'm glad this is not bot talking, I thumb down every bot video. Second, thank you for the insight between investment property LLC snd S-Corp. I might have to give you a call about LLC. God speed.
@@the_creative70 And to add, the 50k number comes from additional costs. With S Corp you have to file payroll so you have accountant and services like Quickbook or ADP doing your withholding and other things. With non S Corp you don't have that expense
Before 2008 experts would say form a corp and elect s corp. Because state laws didnt have any language for protecting members interest. So judges were able to rule how they want. And a lot judges were ruling against them. But now more states provide protection by charging orders. From an expert view i dont why they shifting away from LLCs for protection. When llcs are hybrid entities
Common Legal Designations: Sole proprietor Partnership LLC Corporation Tax Classifications for Legal designations: Single member sole-proprietorship Partnership S-Corp C-Corp LLC’s and Corporations are eligible to be S-Corp or C-Corp tax classification entities depending on what makes sense for them. (S-Corp is not a legal entity but rather a tax classification, please understand the difference)
Excellent content! Thank you 👊🏽 My wife and i own a small biz. I manage day to day. She works full time for company making $130k per year. How should we structure her income within our biz to drive down her tqx liability? And benefit the biz?
His advice is mostly correct but as usual, KD misleads with hopes you will hire him. A LLC or a Corporation is a type of legal entity and has nothing to do with the taxation. If you have a qualifying entity such as an LLC and a Corporation formed in the US, you can ELECT to be treated as an S Corp for TAX PURPOSES. I would also say it is unwise to do so at his suggested $50k level. PLEASE PLEASE find a local CPA that is qualified in providing tax advice and engage them - do NOT look for your tax advice from KD. The stuff he tries to sell as "secret sauce" is VERY VERY basic!
I agree, even just using chatgpt will tell you everything you need to know. I will say payroll and bookkeeping is a beast that is scary. But you can do it. Or find someone local who charges reasonably. My local guy does both for $40 a month.
So Karlton tells you NOT to put real estate within an S-Corp. He is correct since among other reasons, upon death, the ASSET within the S-Corp will not be stepped up to FMV and moving the ASSET out of the S-Corp structure could trigger gain under IRC Sec 311(b) - he is correct. However, for some reason, he does not recognize that if you build a successful business and die with it, owning that business WITHIN the S-Corp is also unwise for the same reason. The successful business within the S-Corp HAS VALUE! This is known as "intangible value". The IRS recognizes this under Section 197. If the successful business is held within an LLC for example, upon death, the business value will receive a step up to FMV and allow heirs to (a) amortize the FMV over 15 years or (b) sell at no or little gain. KD is very inexperienced in long term tax planning. Find someone who has been doing work for decades and can provide long term tax advice. Karlton - am I wrong?
Started with an LLC back in Nov. Took me till Feb to file the S-corp election. It's pretty easy to do, just 1 form. Then use a payroll software like Gusto to handle all the other tax stuff (social security etc...). Pro tips: "paying your self" only 30% is dangerous if your making a lot and could trigger an audit. Also I wouldn't do it till you were making over $80k.
i love your clarity. it is helpful to me because I went to art school, not business school. I am a creative that designs and manufacters sustainable products and I hate math and anythig to do with staring in a computer so i need clear direction. thank you
Carlton, I appreciated the deeper insight in this video vs the others you have done on s corps. My question is this - what happens to the money that stays in the business bank account through the end of the tax year. Ie. 30k salary, 70k distributions and I have 25k in the bank account. How is that 25k taxed?
10-14-2024 I have two questions please. 1) I have a small business called The Rainmaker Consultant Solutions LLC. But I want to start another side craft business. Can I put it under my first LLC? And how? 2) Same thing with mine and my husba0's carpet cleaning business. We plan to expand to include other services such as car detailing, power washing, housekeeping, and more. My husband wants to keep the same name as Ultimate Carpet Cleaning LLC and then add a separate LLC just for the other services. But I say to just changed the name to include everything. Who is right?
I have a Certificate of Organization for my LLC, which was created on 05/30/2024. However, I do not have an EIN, ITIN, or bank account, and I am a foreigner. Is it necessary to close my business, or can I leave it as it is? Are there any tax liabilities or BOI reports that I need to be aware of?
Aren't there annual requirements for an s-corp that a llc doesn't have? Like having meeting minutes each year and keeping that filed? What other things should new business owners take into consideration that may catch up to them if audited?
From my understanding so far since I'm in the same boat as you: You want to do the mark to market election and keep that on always... You want to do an S-Corp to get around the 15.3% tax burden on the whole pot.. You can still write off expenses just like you would with a LLC.. And you can still create solo 401k's with a match... but I think the match portion of it(?) may be a s-corp thing since you have payroll involved with an S-Corp (expense!) vs no payroll with the LLC (savings!).
@@Qjaack2 You’re correct that I think you’d pay more in taxes but I think the benefit if being able to write off more losses past 3k incase you do have that event occur might make it worthwhile. I guess it just depends how much money we’re talking and one’s intent. For me, I’d like an account to be able to pull money from and spend as needed- so I have to take into consideration the possibility which is always non-zero of a tilt day. But this is when you have multiple streams I suppose under the business and not just the 1 brokerage account. Like if I make $30,000 trading futures but my options account else where has -10,000… I *think*? without mark to market I can only claim -3,000 from that side as opposed to the full -10,000. So paying taxes on 27k which I don’t have anymore instead of 17k which is my true new amount.
I didn't understand your comment about LLCs being best for realestate. I'm a realestate investor with gross income of $150k currently set-up as an LLC and was with you about converting to an S Corp until that brief comment toward the end of the video.
Why do you refer the LLC as if it’s a type of taxation? My understanding is that an LLC is just a hybrid legal entity that you can choose how to tax it, you can tax it as escort or a C Corp. or a partnership or self-employed. That’s my understanding from my CPA but you’re making your video confusing.
@@micahtravel s corp is a tax election status with the irs. That both corps and llcs can use to be taxed. The point for corps was to solve the double taxation problem. For LLCs solve the self employment tax. Forming an entity still comes down to what you trying achieve that hasn't changed.
When you say "swap out" an LLC for and S-corp, exactly what do you mean by that? I ask because and S-corp is not an entity, but rather the way an entity, either and LLC or corporation is taxed. Either entity, if owned by say one person, can choose the S-election, as you and Mark Kohler have jointly discussed on a previous video. So I don't see how one "swaps" and entity for a tax classification. Though you mentioned filling out the S-election form, with the IRS, the framing of the video made it seem as there are two different entities, when there are not.
Why is a LLC more ideal for investement properties ? Specifically fix and flip proeprties. Also, would that LLC be taxed as an s corp or just left as is?
Do not put a property in an s corp because you can’t take distributions in excess of your basis, and if your accountant/cpa knows anything they’ll know this is a terrible idea for this reason especially if you qualify for the real estate professional rule because you’ll always have depreciation expense to offset your AGI and pay zero taxes, but an s corp essentially traps your earnings inside your LLC.
@@monkeybusinesspictures1971 just bought my first investment property haven’t even spoken to a cpa. Doubt I qualify for that real estate professional status. I read that I can only depreciate on rental properties. Can you elaborate on “can’t take distributions in excess of your basis.” What’s my basis? I understand distribution is percentage I’m willing to take as an “employee.” Also, what you essentially saying is an LLC allows me to do with funds as I wish whereas the s corp traps the money I don’t pay myself as an “employee.” Is it really trapped if I don’t plan on using most of that money unless I’m buying another property ?
So I have mine setup as a sole member LLC taxed like an S-corp. This is exactly what your saying right? Or are you saying just become a S-corp company totally
Investing in hedge funds by yourself can be risky due to their complex strategies, high fees, and potential for significant losses. Without expert knowledge, it's challenging to fully assess the risks and returns, making professional guidance crucial.
Hedge funds can be tricky to navigate without deep financial expertise. The complex strategies and high fees involved mean that the risks can be substantial, and it’s hard to fully grasp these without experience. Professional guidance is key to making informed decisions and avoiding potential pitfalls.
The truth is that this is really not as difficult as many people presume it to be. It requires a certain level of diligence, no doubt, which is something ordinary investors lack, and so a financial advisor often comes in very handy. My friend just pulled in more than $84k last month alone from his investment with his advisor. That is how people are able to make such huge profits in the market.
What if I'm a foreigner Solo-member LLC. owner with Net Profit over $50,000? What would be the best way to save myself on tax? BTW, my business is mainly generating money from selling the product that uses IP I own as an individual.
Man it's over a year later and you still don't apparently understand the difference between legal structure and tax classifications. You really should not be giving advice to anyone if you can't even get the most basic information about starting and operating a business my guy.
Consider removing the political memes in your background. Otherwise your videos are spot on and an excellent source of information, space for those of us business owners.
There is one that is good for business and the other that is bad for business aka a Commie. It’s America, he can use his freedom of speech to show truth.
![So You’re an S-Corp...Now What? [Essential Tax Tutorial]](http://i.ytimg.com/vi/x-fhR6kSTa0/mqdefault.jpg)
![OhGeesy x Lefty Gunplay - What It Iz [Official Music Video]](http://i.ytimg.com/vi/L0yzW9t2ixk/mqdefault.jpg)
Sign up for the Tax-Free Wealth Challenge! join.taxalchemy.com/join-thechallenge?
Will you do a video about starting a LLC in the cayman islands please ?
First I'm glad this is not bot talking, I thumb down every bot video. Second, thank you for the insight between investment property LLC snd S-Corp. I might have to give you a call about LLC. God speed.
LLC is the Legal entity AND can have an election to be taxed as an S Corp, so it’s not one vs the other.
Exactly, Just said the same thing
Exactly! Plus S Corps don’t make sense until you generate like $50 plus a year.
@@the_creative70 And to add, the 50k number comes from additional costs. With S Corp you have to file payroll so you have accountant and services like Quickbook or ADP doing your withholding and other things. With non S Corp you don't have that expense
Before 2008 experts would say form a corp and elect s corp. Because state laws didnt have any language for protecting members interest. So judges were able to rule how they want. And a lot judges were ruling against them. But now more states provide protection by charging orders. From an expert view i dont why they shifting away from LLCs for protection. When llcs are hybrid entities
Exactly. The LLC is the entity, S-Corp is a method of taxation election. I have 5 businesses that are BOTH!
Common Legal Designations:
Sole proprietor
Partnership
LLC
Corporation
Tax Classifications for Legal designations:
Single member sole-proprietorship
Partnership
S-Corp
C-Corp
LLC’s and Corporations are eligible to be S-Corp or C-Corp tax classification entities depending on what makes sense for them. (S-Corp is not a legal entity but rather a tax classification, please understand the difference)
Excellent content! Thank you 👊🏽 My wife and i own a small biz. I manage day to day. She works full time for company making $130k per year. How should we structure her income within our biz to drive down her tqx liability? And benefit the biz?
His advice is mostly correct but as usual, KD misleads with hopes you will hire him. A LLC or a Corporation is a type of legal entity and has nothing to do with the taxation. If you have a qualifying entity such as an LLC and a Corporation formed in the US, you can ELECT to be treated as an S Corp for TAX PURPOSES. I would also say it is unwise to do so at his suggested $50k level. PLEASE PLEASE find a local CPA that is qualified in providing tax advice and engage them - do NOT look for your tax advice from KD. The stuff he tries to sell as "secret sauce" is VERY VERY basic!
I agree, even just using chatgpt will tell you everything you need to know. I will say payroll and bookkeeping is a beast that is scary. But you can do it. Or find someone local who charges reasonably. My local guy does both for $40 a month.
One of the earliest subscribers. And at the time I wondered why this guy didn't have 10 times more. Glad to see many discover him.
Theres taxes for everything. Gonna eventually have to declare the amount of times I use public restrooms for a urination tax
😂😂😂
So Karlton tells you NOT to put real estate within an S-Corp. He is correct since among other reasons, upon death, the ASSET within the S-Corp will not be stepped up to FMV and moving the ASSET out of the S-Corp structure could trigger gain under IRC Sec 311(b) - he is correct. However, for some reason, he does not recognize that if you build a successful business and die with it, owning that business WITHIN the S-Corp is also unwise for the same reason. The successful business within the S-Corp HAS VALUE! This is known as "intangible value". The IRS recognizes this under Section 197. If the successful business is held within an LLC for example, upon death, the business value will receive a step up to FMV and allow heirs to (a) amortize the FMV over 15 years or (b) sell at no or little gain. KD is very inexperienced in long term tax planning. Find someone who has been doing work for decades and can provide long term tax advice. Karlton - am I wrong?
Started with an LLC back in Nov. Took me till Feb to file the S-corp election. It's pretty easy to do, just 1 form. Then use a payroll software like Gusto to handle all the other tax stuff (social security etc...). Pro tips: "paying your self" only 30% is dangerous if your making a lot and could trigger an audit. Also I wouldn't do it till you were making over $80k.
Helpful info Karlton! You are inspiring!
Solid content as always
i love your clarity. it is helpful to me because I went to art school, not business school. I am a creative that designs and manufacters sustainable products and I hate math and anythig to do with staring in a computer so i need clear direction. thank you
I would NOT blindly follow his advice!
KD - explain why you think that LLCs are best for real estate
Carlton, I appreciated the deeper insight in this video vs the others you have done on s corps. My question is this - what happens to the money that stays in the business bank account through the end of the tax year. Ie. 30k salary, 70k distributions and I have 25k in the bank account. How is that 25k taxed?
same, im trying to understand if you can use that money or if it has to go back into the company
But can you use the 70% (in distributions) for personal purchases or solely company-related purchases?
I just started my S-Corp this year.
Hey!! Thats pretty cool; would you guide me in doing so?
10-14-2024 I have two questions please.
1) I have a small business called The Rainmaker Consultant Solutions LLC. But I want to start another side craft business. Can I put it under my first LLC? And how?
2) Same thing with mine and my husba0's carpet cleaning business. We plan to expand to include other services such as car detailing, power washing, housekeeping, and more. My husband wants to keep the same name as Ultimate Carpet Cleaning LLC and then add a separate LLC just for the other services. But I say to just changed the name to include everything. Who is right?
Is an S-Corp the best route as a Forex Day/Swing Trader?
Great video! Fire brother!
So my current holding company I’m using to pay myself from my LLCs. Should I switch that holding company to an s corp?
Thanks for the great video! I keep getting conflicting information. Do LLCs have to pay quarterly estimated tax?
Why not an LLC filing as an S-corp?
I have a Certificate of Organization for my LLC, which was created on 05/30/2024. However, I do not have an EIN, ITIN, or bank account, and I am a foreigner. Is it necessary to close my business, or can I leave it as it is? Are there any tax liabilities or BOI reports that I need to be aware of?
What is the difference of setting up an LLC and being taxed as a S corp
I wonder if I can do taxes if I’m a urs behind.. and who can I use to fix it ??!! I can up front tho
Aren't there annual requirements for an s-corp that a llc doesn't have? Like having meeting minutes each year and keeping that filed? What other things should new business owners take into consideration that may catch up to them if audited?
Is S-Corps the move for Day Trading? Also Can I write off Expenses still even with an S-Corp?
From my understanding so far since I'm in the same boat as you: You want to do the mark to market election and keep that on always... You want to do an S-Corp to get around the 15.3% tax burden on the whole pot.. You can still write off expenses just like you would with a LLC.. And you can still create solo 401k's with a match... but I think the match portion of it(?) may be a s-corp thing since you have payroll involved with an S-Corp (expense!) vs no payroll with the LLC (savings!).
@@Excalliber100 wouldn’t you be taxed at a higher % with a Market election? Or would it only tax your profits based on the S-Corp tax of 15%
@@Qjaack2 You’re correct that I think you’d pay more in taxes but I think the benefit if being able to write off more losses past 3k incase you do have that event occur might make it worthwhile. I guess it just depends how much money we’re talking and one’s intent. For me, I’d like an account to be able to pull money from and spend as needed- so I have to take into consideration the possibility which is always non-zero of a tilt day.
But this is when you have multiple streams I suppose under the business and not just the 1 brokerage account. Like if I make $30,000 trading futures but my options account else where has -10,000… I *think*? without mark to market I can only claim -3,000 from that side as opposed to the full -10,000. So paying taxes on 27k which I don’t have anymore instead of 17k which is my true new amount.
Do you have a video on C Corp?
Are you a financial advisor
What happens if you are contributing to your business instead of paying yourself for first 2-3 years?
thank you
I didn't understand your comment about LLCs being best for realestate. I'm a realestate investor with gross income of $150k currently set-up as an LLC and was with you about converting to an S Corp until that brief comment toward the end of the video.
Why do you refer the LLC as if it’s a type of taxation? My understanding is that an LLC is just a hybrid legal entity that you can choose how to tax it, you can tax it as escort or a C Corp. or a partnership or self-employed. That’s my understanding from my CPA but you’re making your video confusing.
S I can register as and LLC and deduct taxes as an S Corp?? OR should I just file S Corp? (New start-up)
@@micahtravel s corp is a tax election status with the irs. That both corps and llcs can use to be taxed. The point for corps was to solve the double taxation problem. For LLCs solve the self employment tax. Forming an entity still comes down to what you trying achieve that hasn't changed.
When you say "swap out" an LLC for and S-corp, exactly what do you mean by that? I ask because and S-corp is not an entity, but rather the way an entity, either and LLC or corporation is taxed. Either entity, if owned by say one person, can choose the S-election, as you and Mark Kohler have jointly discussed on a previous video. So I don't see how one "swaps" and entity for a tax classification. Though you mentioned filling out the S-election form, with the IRS, the framing of the video made it seem as there are two different entities, when there are not.
Can a s-corp have a smllc, say in Nevada, as owner?
That's why it's IRS government officials etc now
When are you making the video for the BOI
You're friggin' impressive! Thanks for the tip!
Tax treaty smh is headache these days no bs especially when you elect California as a taxpayer and a lot of people don't understand that
We just started our S-Corp this year and I am so glad we did.
Why is a LLC more ideal for investement properties ? Specifically fix and flip proeprties. Also, would that LLC be taxed as an s corp or just left as is?
Do not put a property in an s corp because you can’t take distributions in excess of your basis, and if your accountant/cpa knows anything they’ll know this is a terrible idea for this reason especially if you qualify for the real estate professional rule because you’ll always have depreciation expense to offset your AGI and pay zero taxes, but an s corp essentially traps your earnings inside your LLC.
@@monkeybusinesspictures1971 just bought my first investment property haven’t even spoken to a cpa. Doubt I qualify for that real estate professional status. I read that I can only depreciate on rental properties. Can you elaborate on “can’t take distributions in excess of your basis.” What’s my basis? I understand distribution is percentage I’m willing to take as an “employee.” Also, what you essentially saying is an LLC allows me to do with funds as I wish whereas the s corp traps the money I don’t pay myself as an “employee.” Is it really trapped if I don’t plan on using most of that money unless I’m buying another property ?
@@monkeybusinesspictures1971 so would an LLC taxed as an s corp or c corp be the better route?
@@monkeybusinesspictures1971 so would an LLC taxed as an s corp suffice?
Should I bother transitioning my LLC to an S-corp if I am already paying the max SS tax from my W-2 job?
No.
What if you aren't confident you'll make over 50k every year?
Facts, learned this last year
So I have mine setup as a sole member LLC taxed like an S-corp. This is exactly what your saying right? Or are you saying just become a S-corp company totally
Can I still do the Home Office deduction with an S-Corp?
Yes
Remember this when it comes to voting
Investing in hedge funds by yourself can be risky due to their complex strategies, high fees, and potential for significant losses. Without expert knowledge, it's challenging to fully assess the risks and returns, making professional guidance crucial.
Hedge funds can be tricky to navigate without deep financial expertise. The complex strategies and high fees involved mean that the risks can be substantial, and it’s hard to fully grasp these without experience. Professional guidance is key to making informed decisions and avoiding potential pitfalls.
The truth is that this is really not as difficult as many people presume it to be. It requires a certain level of diligence, no doubt, which is something ordinary investors lack, and so a financial advisor often comes in very handy. My friend just pulled in more than $84k last month alone from his investment with his advisor. That is how people are able to make such huge profits in the market.
What if I'm a foreigner Solo-member LLC. owner with Net Profit over $50,000? What would be the best way to save myself on tax? BTW, my business is mainly generating money from selling the product that uses IP I own as an individual.
It literally says you have to be US resident
Great information!
Great video!
But you can achieve the same thing by taking the S-corp election in your first 2 years with forming your LLC.
YEP! You on it... All my Co's are S-Corps
This didn't age well - Karlton's video "NOT to OPEN an S Corp!" Geeze - ruclips.net/video/cVdXE-u3Bng/видео.html
I see why people scam cause wtf ….
I hit the like button before the video starts because I already know that I'm about to receive value
Bro, help me scale my business? Smh
Man it's over a year later and you still don't apparently understand the difference between legal structure and tax classifications. You really should not be giving advice to anyone if you can't even get the most basic information about starting and operating a business my guy.
Drop
The
Political
Stuff
Don’t watch it then if your feelings are hurt. Freedom to choose whoever he wants to support. You don’t like the truth don’t watch.
Your Videos are so confusing comparing two things that aren't in the same category
Consider removing the political memes in your background. Otherwise your videos are spot on and an excellent source of information, space for those of us business owners.
If you a sleepy joe supporter just say that
Yeah, he used to be politics-free, and it was better. Bad move.
There is one that is good for business and the other that is bad for business aka a Commie. It’s America, he can use his freedom of speech to show truth.
It's the younger video editors most likely. It's popular and important to keep attention throughout the video.