LLC vs S-Corp vs C-Corp | Which Business Entity Should You Choose From A Tax Standpoint?
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- Опубликовано: 21 июл 2024
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In this comprehensive video, we delve into the intricacies of LLCs, S Corps, and C Corps, providing invaluable insights to help you make an informed decision from a tax perspective.
Choosing the right business entity is a critical decision that can profoundly impact your tax liabilities.
Whether you're an entrepreneur, small business owner, or considering a new venture, this video is your guide to navigating the complexities of business entities and optimizing your tax position.
Don't let the choice of business entity be a stumbling block. Subscribe for more expert insights on business, finance, and tax strategies.
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Show Notes:
0:00 Intro
1:27 S-Corp Breakdown
4:42 Tax Status & How IRS Treats It
9:44 Using an LLC
14:53 Investing In Your Business & C-Corp
18:17 Outside Interests
23:16 Taxed as a C-Corp
26:51 Future Plans
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Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#llc #scorp #ccorporation #llctaxes
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THANK YOU for detailed C Corp content! More C Corp content please! All the C Corp content on RUclips that I find is exactly as you described: naive. Some of us are already in the top tax bracket with W2 income and have more complex needs/plans. Thank you! More of this please! And more detailed info about how I can make a C Corp work for me and my family, e.g. setting up a Roth 401k for my 5 yr old and getting his growth started ASAP. How would a C Corp work with a WY holding company? How can I get a C Corp to pay for a vehicle that is 90% business use/10% personal use with reimbursements? Detailed C Corp content is sorely lacking, maybe even my comment here has things wrong because it's difficult to find/learn. Thank you again for this video. Great stuff.
Thanks for the ideas.
I second this comment. Insights into a ROBS transaction and implications of owning RE in C corps and exit strategies would be awesome to know. Just watched your turo video on liability and tax -@@ClintCoons 2 thumbs up on both of those videos. Subscribed and plan to watch it all. @thoselog similar ideas as you on starting retirement plans for kids and buying houses to help them get a start on real estate before starter homes price them out. Finally a legit source and I can stop scrolling for awhile. Big Thanks!!
Or pay for their services and get the answers you need now. You seem to have the assets to afford it :) We got their trust package, in the process of filling out the forums. Good people to work with, and no, I don't get paid to say that haha.
This is great, one of the best videos ive watched, thank you for breaking down everything
You are the freaking best!!! I’ve been reading books, studying and have been doing intense research on this, but you are the only one that broke it down to the damn core!!
Thanks.
Love everything 😍 thank you so much of take your time to save businesses and help us with your knowledge. I really appreciate ♥️
OMG! The value of all this information no have words, you clarified everything for me ! This is amazing!
Glad it was helpful!
Thank you for this information! It's so helpful as I was looking to start as an LLC and did not know the difference behind S-Corp or C-Corp. This has helped me in my decision with my start-up. Thanks so much!
Thanks for great analysis in choosing C Vs S Corp. There is also section 199A QBI deduction of 20% for trade related business (Rental income may qualify in some cases) for S Corp and seems like not available for C-corp Which may incentivize to go with S-corp.
This was so good it felt like a master class. Thank you.
Just signed up for your workshop. Love the concise delivery! Thank you.
Awesome, thank you!
Thank you soooooo much it was very detailed information. I almost fell for the other video you mentioned.
Wow great information that no one else had. You are very intelligent for finding the root for being in business and really helping me make the right decision before I make a bad one without the proper knowledge for what I want to do later with the business. This is the best video I've seen by you and from anyone else because no one else touched on these very important topics and why like you have, or maybe because they didn't know to is what I'm thinking. You are the best. Love your work.
Thanks
Thanks so much! Very enlightening!!
Brilliant! Thank you for sharing this information. I was advised to set up LLC-S. Clearly, this is not what I need to do. Thanks so much.
It really depends on your individual situation. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
This is a fantastic breakdown. Seems every other video on RUclips about C corps just rattle on about 'double taxation' with zero understanding of the myriad benefits
Great, great content and explanations. You really hit a lot of nails on the head here. Very applicable examples. Thank you!.
You are welcome
Great video and examples. Very easy to understand. Thank you!
Glad it was helpful!
These are the golden points that most CPAs miss. I always have trouble arguing with them. Bravo for the analogy explained properly ...
Amazing presentation, thank you !
Wonderful content! Thank you!
Best information I’ve heard thus far. Thanks
Glad to hear it!
WOW. THANK YOU! Watching your video helped me to decide what type of business I should open. I have been interviewing several CPAs and none of them could explain what you did in this detailed and well-explained video.
Glad it was helpful!
This video is awesome. Ty!
Love the content..Well explained and straight to the point! But, If I plan on growing my business in the future, does owning a holding company outperform the Inc./C-Corp tax strategy and structure?
Excellent information!! We help people to open their Wyoming LLC in less that 24 hours...
I love your content and Tobi's channel! Very insightful! 👌👍 Thank you for the awesome content!
Our pleasure!
Thanks for the video
Invaluable! Great content and very consise and simple!
Welcome
Excellent. Thanks much for sharing valuable insights!
Glad it was helpful!
Great video very informative. You break everything down very clearly
thanks
WOW! This was thorough. Great explaination! ✅
Thanks so much!
So end of story is set up an Inc. or LLC taxed as an C-corp. I've also heard Toby mention an additional benefit of C-corp is the insurance write offs. Good stuff!
Thank you Clint! Very concise and informative with real-world examples and the $$/tax consequences. I watched the 8-hour live webinar on 01/06/24. I learned so much! I love Toby's passion & techniques to legally reduce tax liability. Brilliant!!!! I will schedule a consultation later this month to review my Trusts' structures and Future Investment Plans. I am very impressed with Anderson Business Advisors. Keep up the great work! Continued Blessings, Baron David Carlton
Thank you very much.
Awesome video as usual! Do you have a video about the borrowing from a c-corp strategy yet? Considering forming a holding company for my business activities and loaning myself earnings from the c-corp to buy real estate. How do banks looks at that for mortgages?
If you own more than 25% of the C-Corp the lender will require to see those tax returns and want to do a liquidity test just to make sure there is not signficant losses like you mentioned.
Very good information. Thank you very much.
You are welcome
This is great!!
I believe section 1244 ordinary loss is limited to $50k if single and $100k if married, any excess loss is capital.
Also pretty sure that electing S-corporation taxation allows the owner to deduct any amount of loss, regardless of marital status, in full so long as the owner has basis and isn’t subject to passive loss or at-risk limits (they shouldn’t be if they run the business).
Ya see, that's why I would absolutely call a lawyer. Simple arithmetic of revenue minus expenses is not the full picture. Good stuff. 👍
Thanks
Thanks so much for this! So in the last scenario if it's a business you hope to sell one day and you set up an INC taxed as a C-corp - who are the shareholders from an asset protection standpoint? WY LLC's?
Yes set up as an INC C-Corp with individual as shareholder.
How does the Corporate Transparency Act (CTA) affect anonymity of Wyoming and other similar states offerings? Is there any difference now since everyone must disclose? What about dissolved Llc? Do you have to report even when it no longer exists? What about liability protections? Can you please do an in-depth explanation of how to navigate this new obstacle?
Thank you
It has zero effect on your anonymity. If an LLC is dissolved you no longer have to report on it. andersonadvisors.com/corporate-transparency-act-compliance/
Great info!
Thanks for watching!
Brother amazing video! As the founder of a tech startup focused on AI that is raising 300-400k USD, ROI of around 4-6 months after launching...and as a non-US citizen opening american company in Delaware, living in Europe and having international investors, is C Corporation the right choice for me? We are working with 48 influencers with a total of 10 millions followers, so marketing is piece of cake and not a big chunk of costs (contrary to other startups). My engineering team is top notch. We are capturing Gen Alpha market in Mexico and then expanding to Southeast Asia and Latin America. Please let me know and would love to work with your team in the near future!
This is outside of our lane. Look for a firm that specialized in international taxation.
Thank you!
As a real estate investor filing as an LLC you have me thinking I was given bad business setup info. I'd like to hear more on a C Corp please.
First thank you.
Thank you. We’re trying to figure out what to do… what if you have no real expenses or growth costs and you just provide a service as 1099s. Do you recommend still trying to be treated at a corp?
I never hear anyone talk about the impact of deliberately taking small scorp salary and the impact to later social security PIA amount. You want to achieve a certain level with FICA to qualify for SS and medicare when you retire.
I have had my C corp since 1989, but I eventually want to close it down now that I am retired from the "business" which is no longer active but there are assets within the Corp. Please discuss how/why/when we wind down and close the corporation and the tax ramifications in doing so. Or maybe just "death do us part" and let the heirs figure it out?
To shut down the business you will need to consult with your CPA to determine the tax basis of your shares and the built in gain of any assets in the company. Yes it can be complex depending on the assets of the business.
THANK YOU TEACHER
Helpful
Keep doing Lord's Work brother!!!!
Q: Hypothetically
Business annual revenue is $300K
Annually salary is $50k
Business profit after all other overhead is: $150K
Distribution for ownership (myself is $100K)
If I set up as a S-Corp without showing losses (because my company is profitable and I would like to buy R.E. does my distribution ($100K) taken into consideration with my salary of ($50k).
Also, my w-2 combined with wife is $150K.
If we decide to sell the company, could we change from an S-Corp to a C-Corp for the tax benefits.
Great Explanation BTW. Thanks in advance…
You might consider hiring your spouse and paying her a salary to bump up her w-2 then have her apply for the loan. If you keep what you have in place you can definitely get loans but your S-Corp will need to provide tax returns to the lender if you are going on the loan
I am thinking of creating a company to install solar panels on the roofs of houses. What is the best type of company that I can register in and the best state without taxes?
Yay some useful information about the C corp stuff vs what the internet says.
Is it possible to have a LLC partnership where one member (C corp) takes all the taxes and the second member (Disregarded) able to withdrawal/deposit any money in the business?
Obviously not. Tax fraud all the way.
What you are referring to are "special allocations". Special allocations in a partnership work by allowing the allocation of income, gain, loss, deduction, or credit in a manner that differs from a partner's liquidation value percentage in a particular taxable year. These allocations are determined by the partnership agreement and must have substantial economic effect and not be used to avoid or evade Federal income tax.
Thank you it was helpful info. I would like to know about borrowing from a c corp to buy real estate or borrow to invest in the business, for example I need to buy a van (electrician)
What would you recommend?
Are you thinking about your C-Corp qualifying for a loan or do you plan to have your C-Corp loan you money?
Are you using ScreenFlow (and a tablet) or similar when you project your tablet for writing? Thanks!
I use an IPAd with a program call Flow by Moleskin.
Starting a smog test only shop in California, startup cost is 35-40k and currently work for my boss making 55k a year. Growth is a medium factor since I will only offer one service, location is gold for the only shop being around the city, and new equipment is needed only every 10 years at a low cost under 8k. I do have plans to use my business to buy real estate or start a second small business. Sounds like Inc and c Corp is the right move for me?
That is what I would look at forming based on the info you provided. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
If you have an S-corp and pay yourself and your spouse W2s, underwriters still need the businesses information? They don’t just look at the provable income?
Do both S and C corp able to deduct capital losses , pay self salary and set up for health insurance as employee, deduct home office as an expense and educational expanse? Does gov looks at initial capital investment when setting up as S vs C corp even though the expected return will be small when you started out ie trading business? Would addition 1099 as a contract worker affect your decision( which may not be permanent?)
If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
thank you.
How could I get an appointment to learn more about the topic?
can a company filed with IRS to be treated as "S" Corp to amend its status to "C" Corp?
Hi, To be a partner in an S corp, you must be a resident or citizen. My question is whether a person under temporary protected status could be part of the company?
Sorry this one is outside of my lane.
For #4, can I just form a brand new Inc. that buys the LLC, then sell the Inc. and get the first $10m tax free? I presume that if the Inc. bought the LLC that would be a taxable event to the LLC, so I imagine that if this is in fact doable, it's advisable to do in the beginning when the LLC is not worth much.
To get the best answer tailored to your specific circumstances, I recommend scheduling a free consultation with my team. Visit: aba.link/e2v
how about Ecommerce business ? do we need set up a LLC ? thank you Clint
Yes, that would be the recommended strategy. Most likely treated as an S-Corp for tax purposes.
I talked to your team , they told me there is little risk running ecommerce business , therefore no need set up an LLC. I am confused , maybe you can do a video to give some deeper understanding why Ecoomerce should set up an LLC thank you
Hi Clint
With an Wyoming llc,
Can I open a bank account or brokerage account in any state?
Not looking to do biz in these states
Just access to banking etc.
thank you!
Yes you can
Thank you!!!
what does it cost to set up a new business structure for real estate investing?
If you would like a FREE 45-minute consultation, you can request one here
- aba.link/clintss
QUESTION.REAL ESTATE INVESTOR INC OR C CORP WHICH IS BETTER WAY OR YOUR ADVICE ?
Great question, to assist you further, I highly recommend you request a free 45-minute consultation to discuss this with my team so we can provide you with an answer that is unique to your situation. Visit: aba.link/e2v
Boss i need help, im tryin to get a vending machine also an atm machine, shoukd i start with an llc
Yes. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
(Your 5's give anxiety😊 I'm into handwriting analysis and the way this #5 is written is a red flag. JS😬)
Regardless thank you so much for this S Corp information. Very helpful.❤
Your response has to be one of the most interesting I have received. Thanks for watching. 😄😂
Teacher,
I HAVE A LAWNCARE BIZ, D.B.A, for 2YRSnow. IM READY TO TRANSITION...
IVE ALSO INHERITED LAND FROM my FATHER which PASSED ON. WHICH DIRECTION SHOULD I TAKE with my structure?
I HAVE CLIENTELE AND WOULD LIKE TO HIRE a few neighbors as EMPLOYEES. ALSO, SOME OF THE CUSTOMERS WOULD LIKE TO SELL THERE PROPERTY OVER TO ME in the neighborhood. IM INTERESTED IN setting up for future growth. What should I structure like?
INC AND C CORP?
LLC as S-Corp for biz and a separate LLC for the real estate but it is best if you set up a consult to look at your situation in detail. If you would like a FREE 30-minute consultation, you can request one here
- aba.link/30minSession
So, can I sell my S Corp to my new C Corp? What happens to the vehicles that are currently being depreciated over 5 years? What is the best structure for trucking company if I'm planning to rent my own equipment to owner operators and want to limit my liability for their actions? Should I do my trucking operations under C Corp and what would be better to have my trucks/trailers titled under? I've heard from some people from Delaware that it's better to create multiple LLCs under that C Corp and to have equipment titled under those LLCs in groups of five or something. But I wonder how they can't come after my C Corp's LLCs if they owned by it?
Whoa. Do you have any bonding requirements that require you have a minimum level of assets in your company?
@@ClintCoons No
@@waltmiller You would not want to sell an S-Corp to a C-Corp. 2 options here 1. Set up a new C-Corp to run the business and have the existing S-Corp lease the vehicles to the new C-Corp. 2. Convert the S to a C for federal tax purposes. Before you proceed with either option discuss the tax ramifications with your CPA
@ClintCoons Thank you. I'm just concerned about tax event in case of conversion.
What if you started as an LLC taxed as an S and then convert to a C corp? Both Inc and tax status.
Yes you can convert but you must do so at the first of the year.
I would like to speak with you about setting up a business.
So, I gather this is an indicator that a c-corp, regardless if you're a start-up or a long-standing big hitter. It sounds safer and more beneficial due to it being a separate entity and its tax benefits?
The C-Corp gets audited, not you. The C-Corp gets taxed, not you, and the C-Corp being a separate entity, and you being the employee, makes it safer?
Question's:
1. If you start a C-Corp, who is the owner if it is its own entity?
2. Does a C-Corp have to be reported for Child Support reviews or just your income made as a paid employer?
1. You would be the owner if it is your company
2. Not the corporation but any funds you receive will be reported.
I wanted to ask, I plan on opening investment firms, where raise funds to invest in diverse businesses. And want to include every investor in the entity, but they don't manage anything I do the investment but I wanted them to be included formally in the entity, which is better Corp(C) or LLC, and it easy to meet requirents for C corp since I am the only one who manages it.
Typically an LLC is used in this type of structure.
@@ClintCoons thanks buddy that's very helpfull
LLC vs S corp: isn't this kind of a moot point? We are an LLC with S corp "treatment" with IRS.
Is there a case to be an S corp instead? Or is there even an option in some states?
No that is my point. The S-Corp versus LLC is not even a consideration because the S-Corp is a tax status and the LLC is an entity type.
@@ClintCoons Thanks. Guess I was lazy in not listening to the whole video LOL.
And there's some benefits for C corp when expensing certain benefits .
Yes on the fringe benefit side such as medical reimbursements.
Hi, if husband is a W2 employee and make about $250k per yr. If the spouse wants to get 1099 job. Potential for her to make about $300k. Should the spouse make SCorp or LLC for her 1099 income. Thank you
Absolutely and a solo 401k if she has no employees.
Maybe these CPA's aren't smart enough to service other types of companies?
We've discovered most CPA's only care about tax returns and hardly ever, usually never, use timely financials throughout the year to make sure their client is PROFITABLE.
They treat bookkeeping as not important. Only tax time is important, hence: journal entries. We've even seen more than one CPA journal entry the BANK account!
Well stated.
That was a goodone ' thank you
I would like to speak with you about setting up a business. How do I call you?
If you would like a FREE 30-minute consultation, you can request one here
- aba.link/clintss
Changing to a C Corp instead of an S Corp
👍
But if you earn such a high W2 income and can still qualify for a decent mortgage even after pass through loss, wouldn’t it be still better to set up a s corp ? Thanks
Possibly. Best to run an analysis of your situation to determine what is best.
Love your vids!
Hypothetical: Tech startup that will probably not make a profit in the first 4 or 5 years. Ultimately looking to attract investors and sell for tens of millions of dollars somewhere down the road. What is the best entity to start as? Could it start as an LLC then transition to a C-Corp or is it best to start as one thing and stay as that?
Start as an INC not an LLC and tax as a C-Corp.
😮
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Mark Kohler lol
Hell yea... thorough and clear, handwriting is complete ass cheeks but thanks lol
😂
Your writing is terrible! Takes away from the video 🤦🏾♀️