Sole Prop, LLC, S Corp, C Corp & Partnership | Legal & Tax Differences EXPLAINED
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- Опубликовано: 10 июл 2024
- In this video, I break down complex legal and tax distinctions between various business entity types, including Sole Proprietorships, LLCs, Multi-Member LLCs, Partnerships, S Corporations, and even C corporations. By the time you finish watching, you'll have a solid grasp of the legal protection these entities offer and how they impact your tax liabilities. Whether you're an aspiring entrepreneur or an experienced business owner, this knowledge is crucial for making informed decisions that can shape your business's future.
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🌐 Website: navimarajcpa.com/
📋 Enroll In My Course - Small Business Taxes: From Knowing Nothing to Savings Thousands: navimarajcpa.com/learn/
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FileYourBusiness.com: www.fileyourbusiness.com/
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ZenBusiness: bit.ly/zenbusinesscoupon
📒 Video Time Stamps and Resources 📒
Income Tax Calculator: www.ameriprise.com/financial-...
Federal Income Tax Brackets: www.nerdwallet.com/article/ta...
State Income Tax Rates and Map: taxfoundation.org/publication...
2023 Capital Gains Tax Rates: www.nerdwallet.com/article/ta...
00:00 - 00:30 Intro to Legal & Tax Differences For Business Entities
00:31 - 01:30 Summary of Legal & Tax Concepts You Will Learn
01:31- 02:08 Intro to Navi Maraj CPA
2:09-2:37 Difference Between Legal Entity Types & Tax Classifications
2:38-2:59 Legal Entity Types
3:00-5:12 Tax Classifications
5:13-7:10 S Corp Tax Election
07:11-7:47 NOT an Attorney Disclaimer
7:48-8:42 Sole Proprietorship Liability
8:43-10:25 Limited Liability Protection Explained
10:26 -11:47 3 Ways to Form a Business Entity
12:00-12:58 What is a PLLC or Professional Corporation
12:59-14:43 Overview of Tax Forms and Due Dates
14:44-15:47 Tax Penalties and Late Filing Fees
16:40-18:15 Introduction to Business Taxes
18:16-22:48 What Taxes do Sole Proprietorships Pay?
22:49-25:20 What Taxes do S Corporations Pay?
25:21-27:23 What Taxes do Partnerships Pay?
27:24-32:18 What Taxes do C Corporations Pay?
32:31-33:09 Adjustment to Gross Income (AGI) for Self-Employment Tax Paid
33:10-34:13 Resources to Calculate Your Own Taxes
#BusinessTaxes #LegalEntities #Taxation #CPAInsights #NaviMarajCPA #Entrepreneurship #SmallBusiness #FinanceTips #TaxPlanning #TaxStrategies #SoleProp #LLC #Partnerships #SCorporations #CCorporations #TaxClassification #LiabilityProtection #taxeducation
Great info, Navi. It was well explained. Just also remember the management structure of your LLC, match up the correct operating agreement, consider separately your business and personal credit sooner when going from a sole prop to LLC, and finally, your CPA may likely not believe you will hit the numbers you project, so don't be surprised if they come back with the SM LLC disregarded, and goods news is you can make a late S election if needed.
8:46 mins in and I'm already liking how you're breaking this down. Now I'm all ears.
Hi Navi, just discovered your channel. This is one of those moments in time when a door opens up and it reveals a source of knowledge and inspiration. This is exactly what I need to know as I am starting my own business. So thank you for presenting this information in such accessible and engaging way.
Excellent! never understood these for more than a year now. Now I can say I do understand the differences.
Thank you, thank you this is very informative and very well explained 🙏🙏
You’re welcome! Thanks for the feedback.
Hi Navi,
You are doing some great work by enabling us. I am thankful to you for this great content and information.
Excellent! I ‘m so glad I ran into your channel. Thank you!
Thank you for being very detailed. You explanations are so easy to understand. You are a good teacher. Just Subscribed!
This is exactly what I was looking for
Thank you so much! You have been so much more helpful than the people I hired! And I’ve made some recent better decisions because of you.
Hey Navi, not sure if I’m missing something, but at 24:00. When talking about taxing the S corp. I believe it was supposed to be 60,000 x 6.2% = 3,720$ for the Social Security. I’m not an expert at all. Just wanted to check. Thanks for the great video!
I noticed the same thing.
Hi, I am not an expert either, but I have been doing a lot of digging into this topic recently, so I think I understand what he was talking about. When you are an S corp, only the "reasonable compensation" is taxed. So both the employer (you) and the employee (also you) are taxed their respective halves of the FICA tax (6.2%) on that amount. The 60,000 is "profit" and is NOT taxed. This is how an S corp can avoid paying more taxes. I hope this helps!
Thank you 🙏🏽
I appreciate your videos because you are really very explicit and I learn a lot of things, thank you very much, I have a question, if I am a day trader and I trade propfirm accounts but on these propfirm accounts I trade them on the name of a Ilc I created, so is all this information on the different tax deduction methods you say, is it also valid for such an activity of mine? Knowing that I carry out an activity on the stock market.
Thank you for such informative vids that are packed with jewels.
With a MMLLC taxed as a S-Corp, would it be split as partner 1 & 2 with 40k each & 120k in the MMLLC?
Would the S.S & Medicare tax be against both partners (40k) salary as well as the employee Corp (40k)?
Thanks for your great video, it would be great to have a video explaining taxation for non residentes doing business in the US as LLC
You’re welcome. I don’t specialize in assisting non residents so I won’t be able to produce a video like that.
I just discovered your channel at the right time! I’m am a single member LLC taxed as an S-Corp. This year has been challenging financially and I am dissolving the business as of 2023. I have quarterly sent in my 941’s and form 5080, sales, use and withholding claiming zero . Now at the end of the year if I 1099 myself the $1500 that I did pay myself through my business, do I still file the 940 claiming zero?
I’m just here to get notified when there’s an answer to your question, I would like to know as well
Amazing!....>!!!!
How are the 60k distribution on the s-corp taxed?... without it we can't make a fair comparison.. thank you
Hi Navi,
Do you have video on PLLC / PC?
There simply is no double taxation for a C corporation and the shareholders. The C corporation is a separate legal entity known as a fictitious person. A shareholder receiving dividends should look at the payment as a gift given from one person to another (save for not receiving the exemption of taxes on the gift allowance).
That’s not how it works
@@timhill7577 That is EXACTLY how it works. A corporation is a fictitious person.
For a C corporation, that "person" is taxed on its earnings. Money distributed to other persons is also taxed separately as personal income. Each person, whether real or fictional, is taxed only once on income.
While any money distributed to shareholders of a C corporation is not actually a gift, under the Internal Revenue Code (IRC) it works in much the same way, but without an exemption for a portion of the distribution.
All the claims of "double taxation" are made by people who seemingly do not understand the status of corporations as a separate legal entity.
Of course, it is easy to avoid this "double taxation" by electing to be taxed as an S corporation, thereby having all earnings passed through to the owners who then pay taxes at their personal tax rate (though the company may not actually issue enough funds to cover the taxes due).
What about right offs in expensing? does corporate Secor have more advantages less chance of audit?
Thank your for this video. Very informative and easy to understand. I would like some advice on how to file a local business with my sibling in California. What would you recommend?
You’re welcome and thank you for the feedback. Unfortunately, I can’t make a personal recommendation for you. Sounds like you are forming a partnership since you’re doing business with your brother. Please consult with someone before forming a business entity and making any tax elections - especially since you’re in California.
Hello Navi ,
Thank you for all the valuable information you share with us. Is there a way we can get the chart of tax liability that you show on your video? Thank you 🙏🏻
You’re welcome. Could you clarify what you mean by “chart of tax liability”? If you haven’t already, check the description as I provided some links to the resources used to make this video.
Why you did not mention QBI deduction. If its there then not much difference between Sole Prop and S Corp. Please clarify. Thanks
I posted this on one of your older videos but it may be more applicable in this video.
I have a SMLLC taxed as an S-Corp. I use this SMLLC as my holding company for all my IP, trademarks, etc. I wanted to start a new operating LLC taxed as a Partnership to save on Social Security/Medicare taxes. Is it legal (in the eyes of the IRS) to have my SMLLC/S-Corp to be one of the Partners along with me (under my personal name) in this LLC/Partnership? (Example: Partner 1 = SMLLC/S-Corp and Partner 2 = Me). I would be the only "human" in this operating LLC/Partnership. Appreciate your thoughts on this.
I am looking for a cpa/tax attorney to change me from sole proprietor to s corp with llcs under a living trust
Hello,
Regarding the multi member LLC you are getting K1’s. It’s a bit confusing for the calculation purposes. It seems to me it supposed to be same as S corp.
Please, clarify if you have a chance. Thanks
For the S-Corop, if you do an owners draw on the 60k, will that be taxed on your 1040?
Which corp do u suggest for c store with gas station s or c???
Really depends on your unique facts and circumstances. A case could be made for every tax classification discussed in this video.
Hi Navi; Can you make a video about Representatives and brokers? They controlled my company over 20 years. I revoked my company representative 2 years ago but still he is continuing control the management and never pay for my assistance. So what’s your advice?
Dang! I wish I would have known about incfile, tailorbrands etc... I actually just began doing everything myself with the help of RUclips and chatgpt. I formed a domestic liability LLC, got the registered agent, virtual office, registered with the state, got an EIN... etc... you think I should start over or keep going? I feel like I do know what I am doing even though I am new to all this!
What about the situation where someone makes 100K+ in w2 income and has a side hustle that makes another 100K. Considering that SS and Medicare taxes are already paid from the w2 income, What's the best entity tax wise to form?
ruclips.net/video/1kufkdonBEU/видео.html&ab_channel=NaviMaraj%2CCPA
This is misleading. You can save money with an s corp but usually at higher dollar amounts where the main saving is Medicare. At the lower amounts you really just wind up paying service providers for compliance and introduce risk that the IRS will deem your salary insufficient. There’s a calculus to that salary and $40k is very low. Benefit differential here decreases as salary increases.