How to use an S Corporation to save thousands in taxes? | Realtor and Small Business Edition

[@tssafarina1]

Thanks. I was trying to figure out why an LLC treated as an S Corp made more sense then the default Partnership/sole Proprietorship.

[@NaviMarajCPA]

And now you know! 🙂

[@zachreinke]

Can you cover what makes sense for a landlord to form, income that may be considered passive? Thanks so much for taking the time to cover these topics!! The examples really help!

[@NaviMarajCPA]

Hi Zachary! Yes, I will put together the passive income/landlord video...it’s actually going to be the 4th video in my series regarding the reasons NOT to have an S corporation. Thanks for watching and for the feedback!

[@zachreinke]

@@NaviMarajCPA thabk you for taking the time to make these!! I think they’re a huge value add for the community!!

[@lisali137]

Very informative video! I wish I knew this earlier! I’m a real estate broker and have a single person LLC. Will contact you to see how I can choose to be taxed as S Corp.

[@NaviMarajCPA]

Thanks Lisa. I saw you scheduled some time on my calendar so we’ll chat soon.

[@therupleteam4091]

In Texas, can only a Broker file as a S-corporation since a broker can not pay an individual agent’s llc. You have to be a broker in order to receive commission

[@sergeis5517]

I might be missing something but this strategy doesn’t seem to take QBI 20% deduction for real estate agents into consideration. So it seems like forming an LLC with S corp tax election will not save you money because you’d be loosing QBI deduction on your salary part. You’d probably need to make at least 120k/ year with your distribution of 70k and salary of 50k to save maybe a 1-2 grand on taxes considering that you LLC would also incur extra work and expenses such as payroll and filing. Yes if you make 150k+/ year then an LLC with S corp will be a good choice. Navi please clarify. Thanks

[@GamersInControl]

Thanks for the great information

[@NaviMarajCPA]

You’re welcome...hope it was helpful!

[@georgebaltakianrealestate4189]

Very helpful, thank you.

[@NaviMarajCPA]

You're welcome George....glad it was helpful for you!

[@GriffinStructuresInc]

Hi Navi. Thanks for the great content. You mentioned the this math doesn't work if the business is a "side hustle." Can you expand on that comment in more detail? Are there certain income brackets that change how the math works for calculating the side hustle?

[@NaviMarajCPA]

I think this video will help you answer those questions: kzbin.info/www/bejne/h3e8d3qcfbSoras

[@sonai4u]

So the federal income tax is the same on the distribution as well? Is it only the 15.3% that you are saving until the 168K - the reasonable salary? I thought tax brackets are different on distribution for s corps

[@eric_denmark]

Hi Navi. Can we schedule a meeting? I’m realtor here in KY and am looking to do this but would love to speak directly with you if possible. Thank you!

[@LivinginHoustonTX-Adrian]

I am in Texas and need your services. Can you help structure my Realtor business like this or guide me in the right direction? Are you licensed in Texas?

[@smart123735]

Hi Navi, Do you have to get the 1099 from the main company in the name and EIN of S Corporation to show under the S corp? or even if it is in the name and SSN of the realtor, you will be able to show income and expenses under the S corp?

[@NaviMarajCPA]

It is recommended to provide a W-9 to the company issuing you the payments so that when you receive your 1099, it is in the name and EIN of your S Corporation. If the company won't re-issue the 1099 to your S Corporation then you may have to claim the income on a Schedule C and nominee it to your S Corporation. Google "nominee income" and you may find some guidance on this.

[@smart123735]

@@NaviMarajCPA Thank you so much for the information. Iam clear on this.

[@guillermoespinosa9579]

I see you in the background of your video that you have your boar of accountancy diploma which leads me to believe that you are in Florida. I'm in the Tampa area and would like to connect with you regarding my small business. If you are in Florida how do i get in touch with you?

[@NaviMarajCPA]

Hi Guillermo...you are correct. If you would like to get a hold of me you can visit my website which is www.navimarajcpa.com and then use the online calendar to schedule an intro call. Thanks for watching!

[@khaskin18]

Do you HAVE to distribute funds as K-1? What would happen if, in this example you've provided, I left the $40k in the LLC bank account? Would it be subject to corporate taxes?

[@NaviMarajCPA]

For an S Corporation, any profits you leave in the business account will still be subject to federal and state income taxes. You may want to watch a video of mine called How S Corp Taxes Work to understand this a little better.

[@khaskin18]

@@NaviMarajCPA gotcha! Thanks, Navi! Your videos are great btw!

[@Throttl.Therapy]

What is the way to look at this if this is my side hustle? I have a w2 in addition to my Realtor income.

[@IamRoxy1]

I set up my S Corp last year in July (I'm a Realtor) and I think everything was done correctly, from what I can tell. Now I have to file a Zero return 1120S, is this something I can do on my own? I ended up not having any income/expenses charged to the S Corp after creating it (slow end of year!) I did my Franchise Zero tax report already, but just unsure how to go about doing the 1120S

[@NaviMarajCPA]

Hi again Roxy - you can probably contact one of the online tax filing companies (e.g. TurboTax) and explain your situation and they will you through it - hopefully for free.

[@IamRoxy1]

@@NaviMarajCPA I actually ended up figuring out how to do it, but thank you!

[@Mstern-jo8ks]

does NY acknowledge S corps?

[@NaviMarajCPA]

New York has some specific rules to navigate when making the S Corporation election. The majority of New York acknowledges S Corp elections, but, not using (the Federal) IRS Form 2553, There is a State version of that form that needs to be completed in the State of New York. Also, New York City does not acknowledge S Corporations.

[@tomd6053]

What changes with the s corp taxes when you have a W-2?

[@adamarrison8685]

Is a k-1 considered a stock distribution?

[@NaviMarajCPA]

In general it is not considered a stock distribution for S corps.

[@danielaclary2157]

Thank you for the info. I am a Real Estate broker and MLO I’m trying to start doing my own RE and Mortgage, I haven’t been making much at all and have no other income. Since I’m starting do you think it would be good to state as a sole proprietor? Or would it be better start as a corporation? Or any other option?

[@NaviMarajCPA]

Hi Daniela...you're welcome. I can't provide individualized tax advice via this medium, but, in general, you may want to look into forming a single-member LLC which will continue to be taxed as a sole proprietorship and then, when you're making more money, have your single-member LLC taxed as an S Corporation. Please watch my other video regarding the legal and tax differences between the various legal and tax classifications and it may clear things up for you.

[@jyotibalabrahmbhatt2931]

Hi Navi, i am in NC have SM LLC. Can i elect to file as SCorp for 2021 taxes?

[@NaviMarajCPA]

Yes - you can go back as far as the date the LLC was formed. So assuming formed on 02/15/2021 you could be an S Corp from 02/15/2021 through end of the year (and future years of course).

[@cooperwilliams2433]

how do you change from 1099 to corp taxed as s corp lets say aug 1 2020

[@NaviMarajCPA]

Hi Cooper - thanks for the question. Watch the "Should I form an LLC, PA, S Corporation?" video on my KZbin channel to obtain a better understanding of my response. I have linked it below. Assuming you are taxed as a sole proprietor currently (you have not formed an LLC or C Corporation), you would first form an LLC or C Corporation in the state in which you conduct business. You would then apply for an Employer Identification Number (EIN) through the IRS. Afterwards, you will make the S Corporation election by utilizing Form 2553 and submitting it to the IRS. Lastly, you will complete a new Form W-9 and submit it to your brokerage so that they will issue your 1099 at the end of the year correctly. Please be careful if you're going to navigate this on your own. Real Estate Professionals have to not only establish the business entity correctly, but, they also have to make sure they are doing it in accordance with their state's real estate commission. I see many people make mistakes with this when attempting to do this on their own. Here is the link to the video: kzbin.info/www/bejne/rKTVp3l8lNSom7M

[@cooperwilliams2433]

@@NaviMarajCPA thanks