How to Pay Yourself in an S Corp | What is REASONABLE Compensation!?

[@LYFEAccounting]

Watch this next: "You're an S-Corp, Now What?" kzbin.info/www/bejne/eaHbYaeYhMqVpQ

[@tyisbeast85]

This is one of the better videos on reasonable compensation, other videos are 20+ minutes long and give way too much detail that aren’t necessary

[@JusDaFactstv]

This video is one of the main reasons you're gonna be my account in the very near future. You're my guy! 👍😎

[@LYFEAccounting]

Man I appreciate this comment so much, you don’t even know 💯

[@JusDaFactstv]

@@LYFEAccounting I'm telling you, you are my guy. I came across your channel a few months ago when I first seriously considered going into business for myself. And by watching your super informative content, not only did I realize that I should do it, but that you were giving me the crucial info on how I could do it. I'm telling you the God honest truth. You and LYFE accounting will be my CPA solution. #FACTS

[@gregdoh]

I should have watched this type of content 8 years ago when I started my business. I've wasted so much money because I was doing things poorly. I've made the gov very happy though. Thank you for the great, easy to understand video!

[@judygaluppo926]

Your videos are more informative and easy to understand than I've heard from any accounting firm so far. I live the 1/3 rule, I'll be using that based on last year's income after expenses. Thank you. Keep it up, I'll be watching :)

[@itsurhomie]

I know a guy who brought in 550k paid himself 600wk and paid only 7k in taxes in Fl

[@johnkincaide9357]

Thanks for the insights and the 1/3rd rule of net profit is a good guide for reasonable compensation

[@BRo-uy1di]

This channel really is the best at explaining!

[@rafaelcamarena5351]

This foo talking all slow and stuff when he explains the most simple thing… thinking we’re idiots or something! That’s me. I’m an idiot. Great video and thank you

[@itstheartofcleaning4673]

dang! finally someone made this easier to understand! thanks dude. keep making videos!

[@Tacticalsquid]

I have a question. So i recently set up an scorp that became established at the end of December 2023. I was self employed all of 2023 and only recently started my scorp due to other people i work with telling me i would pay tons in taxes if i dont. My question is, will i still be able to take advantage of taking a salary/distributions for 2023 even though i never paid myself via payroll or anything like that? Will i be able to take advantage of my scorp tax savings for the 2023 year or is it too late? Thanks.

[@lohiamarks3298]

Cleared up any confusion I had with paying myself thank you

[@jiwonstr]

How do you setup a payroll system for 1-person S Corp? Do I simply set a date in a month to withdraw $$ to my personal account?

[@andrewbahlman7768]

This was a great video and thorough explanation. Thank you all for your hard work getting this info out there.

[@krystalizedhealthadvisors5664]

So glad I found this channel! Great content and easy to understand explanations of very confusing topics. Thanks!

[@garykim313]

What's reasonable is I would rather pay myself at a lower tax rate.

[@Dreamweavernow]

Loved the explanation clear simple and concise

[@sudhamnilaweera3023]

Great video and thank you. What if there’s a net loss. How do you determine the salary? Although the company is not yet profitable, the business is generating revenue.

[@RandoPandaSmiles]

You prob wouldn’t do an S-Election until the business is profitable. Wouldn’t make sense otherwise. Just run it as a Sole Prop until it produces.

[@mrfordf3508]

Very helpful and well presented. Thank you.

[@PrimeShineCleaning]

My tax guy opened up a s corp fir me sinds I am a 1099 truck driver, are you saying I should have opened a llc first and then a s corp ? I make 90k+ a year

[@PRIVATEJAY]

Great video! Very informative.

[@IAMJESSIEMAI]

Thank you for the video. How do you determine your net income is your monthly sales fluctuate?

[@Tarasstelmakh]

Thanks for your advise.

[@LYFEAccounting]

No problem!

[@lnicole2206]

How should we pay ourselves? Is simply writing a check from our business checking account to ourselves sufficient? Also would you recommend this on a biweekly or monthly?. I will be starting an online apparel store and is preparing to launch soon.

[@LYFEAccounting]

Hey Nicole, what kind of entity are you? My answer would depend on that.

[@stephanieho3686]

@@LYFEAccounting same questions for an S-Corp

[@ShirleyCrespo-d7i]

I am also in the same boat as you, how should we pay ourselves. I also have a business partner so how would that work as well ?

[@albertpearsall9495]

i just subscribed and im loving it thanks,

[@sarahgirlsoaps]

Very helpful! Thank you

[@hungnguyenphankhanh3271]

Hi I just have a little question. Can you pay yourself a reasonable salary in form of 1099-NEC? Or it has to be W2? Thank you so much.

[@JaneQPublic]

What if you have a shareholder employee who isn’t you but a family member?

[@ryanwilcox1209]

This is a really good explanation. Does my s corp need to set money aside for taxes? It sounds like it doesn’t. Can you make a video on owners draw and how that is taxed?

[@RandoPandaSmiles]

He explained how owners draw is taxed in this video. Watch again. And yes, you always need to set aside money for taxes.

[@blec.g7522]

thanks. is there any tax software you recommend for small CPA firm? and would you please give step to step guidance from how to prepare tax return to final E-file the return. thank you .

[@josephalim]

I'm thinking of forming a holding company/s Corp to hold investments like stocks in other companies. It's not much so the income will be peanuts to begin with. What would I pay myself then since it's just me as an owner? I would appreciate your insight and advice.

[@Chandler890]

do you still pay if you have no capital in bank or loss?

[@hotterbob8550]

I need to know actually how to pay myself. Write a company check then pay payroll taxes online?

[@islord999]

Good evening mr Sherman, I have a question for you. I switched to an s Corp because my cpa suggested it. Say my business makes 150k take home 80k salary. I’m trying to buy a nice house. What income will they count? Personal or both? What am I actually worth? Thank you 🙏

[@galyamakeupartistry]

I have the same question

[@lejendmerchant6472]

Can you do a video on distributions for an S-Corp? And how it relates to this video? My accountant told me that everything I pay myself can be classified as a shareholder distribution. And thus can avoid being paid a “wage” and owing SE taxes.

[@stephengardner5791]

Text his Admin for support

[@LYFEAccounting]

That's pretty advance and specific, you should consider working directly with us once we offer our services again

[@asmoov]

@@LYFEAccounting when will that be I’ve been on the wait list for quite a while

[@ass2mouthallday]

You have a bad accountant.

[@governmentprocurementsolutions]

Your acccountant is going to land you in federal prison. Get a new accountant.

[@b.l.wilson9724]

What if the company only makes $20k/year can it still be an S Corp?

[@The1SimLash]

So S Corps would pay distributions quarterly? Those distributions go on the shareholders k1?

[@realmikeevans]

Can I start to run payroll while waiting for IRS to get back to me after I sent the S Corp form?

[@adilusa]

pretty useful information. like from me! thank you

[@Calvin1247]

Nice video. Can i pay myself as a 1099 contractor?

[@knowbloc]

so how does the money actually get from the business bank account to mine? HOW do I pay myself? my bank will not provide me with paperwork showing how much I withdrew for the previous years taxes, so how do I pay myself? Do I need to purchase a payroll app??

[@chrisfitforever]

Get a payroll service like gusto

[@raymondayala5355]

Yep. Gusto and Square have the best payroll services for 5 employees or less. Quickbooks and ADp are for more employees

[@theodorecarbajal2975]

Can you do my taxes for my small roofing business llc

[@Chandler890]

in the example, isn't the full $150k subjected to federal & state income tax?

[@governmentprocurementsolutions]

No because it is not income if you dont pay it to yourself and it's sitting in a corporate bank account. Doesnt become income until you distribute it. However, you do still need to pay sales taxes for your state and federal.

[@shaungorham1568]

Great, Pennsylvania.

[@marcusude8071]

When do you think you guys will be back to accepting new clients?

[@LYFEAccounting]

We're finishing up some HUGE programs here that will likely release in mid-Q3 & will accepting new clients shortly afterwards!

[@tonyatoomey5244]

So I started my own home-based Real Estate business last year. I pay myself a commission similar to what I was as an agent so the business can keep the difference. Can’t I just 1099 myself as other brokers due to real estate agents?

[@raymondayala5355]

You can but it’s not the best option as you need to take a salary since you’re an “employee” of the company. Independent contractors are NOT employees.

[@governmentprocurementsolutions]

For an S-Corp, you need to file a W2 for yourself otherwise you are not technically an employee and not paying employee wages or withholding properly.

[@ricardotabios1999]

Nice.👍

[@SD-dm7lg]

Wait, so is it pay yourself what you would pay someone to do the same job Or Pay yourself 1/3 of what the company makes?

[@governmentprocurementsolutions]

A bit of both really because it's such a personal decision. The CEO of McDonalds (a huge corp) should be compensated at the millions because its a huge responsibility. The CEO of an Etsy shop could get away with 50k because its not nearly as much risk and it all depends on your gross earnings.

[@SD-dm7lg]

@@governmentprocurementsolutions I'm grossing between 400-500k but just pay myself 50k per year. I don't want to flag the IRS, but if I were to pay someone to do my job, 50k is fairly "reasonable" The thing I'm concerned about is, I brought a partner onboard and now we're projected to increase gross by 50%. I want to leave my salary at 50k per year.

[@asmoov]

If you put your self on a salary can you you just pay yourself once per yr for the 50k instead of using a payroll company?

[@alexmendoza6168]

Yes you can

[@keenan7192]

what if you dont make revenue or net income? wouldnt need to pay a reasonable salary, correct?

[@noneofyourbusinessgoogle]

Correct, and there's no need for the S Corp status since the main benefit of the S Corp vs Single Member LLC is to reduce the amount of Self Employment tax

[@lalardh9976]

Ty

[@josebetancourt4082]

Ok good video ….but how pay my self …. I thought you will talk about steps.

[@sydneyclausen2602]

personally ive heard 50% of profits in a one person S Corp

[@flyingdutchmanindustries5877]

You said at the end what you should have said at the beginning. WAY TOO MUCH EMPHASIS ON WAY TOO MANY WORDS. Don't take that too critical. A more natural presentantion would feel more like a personal conversation. ;)