Small Business and W-2 Job | Does LLC or S Corporation still make sense?

Should your business be taxed as an S Corporation if you also have a job and receive W-2 income? That is the topic of this video. Specifically, I discuss:
1. What taxes you pay as an employee working for an employer?
2. What taxes do you pay as a sole proprietor?
3. What taxes do you pay as an S Corporation?
4. What taxes do you pay when you have a high W-2 wage and you also have a small business taxed as a sole proprietorship?
5. What taxes do you pay when you have a high W-2 wage and you also have a small business taxed as an S Corporation?
Take what you learn from this video and ask your legal or tax professional all of your specific questions. If you want to contact me, my information is below.
If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.
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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation.
© Navi Maraj CPA PLLC. All rights reserved.
#LLC #SCorp #Taxes

[@SophieRaymond88]

Omg FINALLY! A video that gets to the point about when you should convert and when you shouldn’t. THANK YOU!!

[@qcck]

This is the best video ever to explain why NOT having S-Corp make sense! Very clear, up to the point and no BS. Just one question left unanswered: Why higher profit, e.g. $250k, will make sense again? @Navi, is there other video explaining that situation? Thanks!

[@amr493]

Exactly the info I was looking for (W2+1099 situation and when S corp is worth it)! Thank you for the video!

[@atampaarnold]

Thank you for this Video. It helps a lot. I have a High W-2 and right now my Company is Not making much money. It is really making me think twice about electing for an S-Corp when it does make more Money.

[@NaviMarajCPA]

Great - glad I could help!

[@cindywen5236]

Thank you for the info! It's been challenging finding tax information for high W2 earners with a side business. I'm in the process of looking for a tax consultant regarding S Corp election and now I have my answer. You explained it very well!

[@NaviMarajCPA]

You’re welcome @Cindy Wen. Make sure you watch the other videos (if you haven’t already) around when not to have your business taxed as an S Corp to make sure it’s a good fit.

[@JerryLassi]

Yea sir I’m heading out now and will let him know that

[@AHnaturally]

This video is full of answers to questions I had. Thank you for the detailed explanation! ☺

[@NaviMarajCPA]

Keep seeking the truth and you’ll find all of your answers 😉...thanks for watching and happy to hear you are learning.

[@FoundLamb]

Finally someone covered my question!

[@cx525v]

Best video on S corp. It is so helpful. Would you please do another video on the scenario as you mentioned in the video? If W2 is $140,000 and net profit from LLC is over $250,000, how S corp works better? thank you so much

[@theofficialgaro]

Excellent explanation. I want to see you explain the use case for high salary in w2 with an LLC for rental property or S Corp. Explain the user case when LLC is profitable and loosing money.

[@jbubs5370]

Thank you Mr. Navi. Informed when I needed specifics.

[@NaviMarajCPA]

You're welcome - thanks for the comment!

[@noonsaid]

Thank you for these videos. These complex tax rules are very well explained and you answer all my questions.

[@nickdodson7547]

Another big advantage of the s corp is the ability to hire a spouse and max out two 401Ks on the employee and employer side, this could be a major tax saving if you are now deducting 40-80k in 401K. Care to expand on this?

[@miale3593]

But when you have a high pay W2, chances are the 401k is already maxed out? Unless you are talking about a non-working spouse that hasn’t maxed out 401k through their employer?

[@BuiltAboveAllFitness]

I see YOU! Good phone chat about this and great vid

[@Angela-bi5gr]

Thank you for this video. This is exactly my situation and I could not find anyone to clearly answer the question. You did an excellent job explaining this concept for high earners!

[@NaviMarajCPA]

Thanks for the feedback Angela. Glad you found your answer.

[@paktra6629]

Could you maybe do another video with emphasis on tax penalty or benefits from either short term vs. long term trading in the stock markets and whether or not it would make sense to file as an S Corp while having high earning from W2 income?

[@NaviMarajCPA]

Thank you for the video suggestion/request. Honestly, I'm not sure I'll discuss that anytime soon - it is not really an area I specialize in but definitely a hot topic at the moment.

[@Tatiana0209]

Occasional Trading for individual is considered buying and selling capital assets for yourself and the profit or loss is taxed at capital gain rates (more favorable unless it is a short-term cap gain which would be taxable as ordinary income in your tax bracket). You are considered to be a dealer if you actively trade securities to customers and in this case it would be your active ordinary income because you will provide services. Long-term cap gains are always taxed at reduced tax rates. Not sure about what kind of tax penalty you are referring to.

[@chapelleshow4759]

Excellent video with great information!! Thank you for sharing your knowledge, I needed this information before starting my LLC.

[@deshavel]

SO AWESOME and very easy to understand! Thanks.

[@NaviMarajCPA]

You're welcome and thanks for the feedback!

[@josephalim]

great video made simple. I appreciate your time, thank you Navi.

[@NaviMarajCPA]

Thanks Joseph - glad it was helpful for you.

[@thejster]

Wonderful info! Thank you for explaining this is great detail, with visuals!

[@CIRIHawaiiLLC]

thank you for sharing your knowledge. Question: I have a full-time w2 paying join and a business that has very irregular income. It's a service business. I am able to live off my w2 job (not my business) and I want any income from MY businesses to go back into the business - 100% for training, equipment, marketing, networking, etc. I am not planning on taking any draws for the next year. In this instance, would my business still be liable for quarterly SE filings and SE taxes if there are no profits at the end of the year because everything was re-invested into the business?

[@TheCoryDeeter]

Thank you so much for creating this. I finally found an answer to my question.

[@Pangea100]

Great to get this information! Difficult question coming up: If I am a high W2 earner and have a side hustle with an LLC as a sole proprietor, would I still have the ability to contribute employer profit sharing to a solo 401(k) attached to the LLC?

[@MikeWiker-s1c]

This is great info. Thank you. Question: I have a high paying W2 job and I'm having to use my W2 income to get my LLC off the ground to avoid borrowing. How much of my W2 income can I write off?

[@beautifulmessmedia3521]

Hey great info and very well explained! Thank you!

[@magicthaienglish]

Thank you for the informative video. I really appreciate it.

[@managedbywhitney]

This video saved me! Excellent info!!

[@marialuisaeya7171]

Hi Navi, thank you very much for explaining/breaking down these tax topics for us. Your videos are very informative. Kudos to you for explaining it so well. If Im a self employed loan signing agent with a potential to earn $100k & I am also a landlord with rental properties making $45K profit a year, should I make a separate single member LLC for each & what should the tax category for each of them?

[@richgonzalez7234]

This was a great video. Thanks 👏

[@NaviMarajCPA]

You’re welcome Rich!

[@adriandiaz5688]

As always, great video!

[@CJ-vc1sh]

Best video I've ever watched

[@NaviMarajCPA]

Best comment I ever received!

[@yani7751]

Thank you for this amazing video. What is the best way of reimbursement the miles, tolls, gas, hotel and any other expensives to my employees or deduct them as company expenses?

[@christopherroy8840]

Great Video and breakdown.

[@ryanbeatty6678]

So you would have to make enough where the extra 5% of employer contribution would be greater than the employer contribution of fica taxes?

[@superstarjay3564]

Great videos, my question is what if you dont have w2 income over that much but you want to start a partnership llc. Im in NH so I understand the s-corp is not recognized.

[@NaviMarajCPA]

Thanks for the feedback! If that is the case then the contents of this video are likely not a concern for you.

[@joseluisguerola2676]

For S-Corp election, I think if you reduce the employee salary portion ($57k portion) while having the rest of the $142k as distributions (tax free as long as not exceed stock basis) then could you make the argument that you'll save more money than an LLC election?

[@crazy-neighbor]

Great info, how does this change of my wife is the high W2 earner and I have my own business? Since we’re ful file jointly does this also applied to us?

[@NaviMarajCPA]

Each individual has their own "wage base" regardless if you file married filing jointly or not. Hope that helps answer your question.

[@ric44n]

I got offered a job as a 1099 only, not W2 and the yearly income in roughly $200k. Should I use S Corp? I will be doing the same work for this 1099 job as W2 jobs before.

[@NaviMarajCPA]

In general, yes - an S Corp would be beneficial as it relates to saving money in self-employment taxes. My most recent video may help you understand why: kzbin.info/www/bejne/oJuqh3-NhdWpn7M

[@magnusbrzenk447]

Am I correct in saying that the Federal and State taxes are always calculated AFTER deducting for the FICA taxes?

[@NaviMarajCPA]

Hi Magnus - great question. No, that is not correct. The income taxes and FICA taxes are both based off of the same amount.

[@magnusbrzenk447]

​@@NaviMarajCPA OK, but am I correct that that "same amount" is computed after deducting an amount corresponding to FICA tax? (I'm sure I've heard elsewhere something to that effect).

[@Tatiana0209]

@@magnusbrzenk447 if Fica is business related, then yes. You will calculate income tax after you deduct this business deduction. I think this is what you mean.

[@chumbervic104]

very good information, thanks! Quick question - if I make 142800 on w2 and take 57120 salary from my business then I will be paying FICA on both incomes but what about 85680 distribution? since that is also my income from business so I will only be paying FIT & SIT not FICA, correct?

[@NaviMarajCPA]

That's correct. You will pay FIT & SIT on your distributions...you will not pay FICA on the distributions.

[@vivianaallen3462]

Thank you for sharing! Looking for info but getting mixed answers. As a real estate agent in CA if I am getting paid with a W2, am I allowed to deduct business expenses?

[@NaviMarajCPA]

If you're an employee receiving a W-2 then you cannot deduct any business expenses. These are referred as "unreimbursed employee expenses" and in the past, prior to the passing of the Tax Cuts and Job Act (TCJA) you could deduct a portion but that has been eliminated. This is probably why you are receiving mixed responses.

[@vivianaallen3462]

@@NaviMarajCPA I see thank you, that makes total sense!

[@dsbrioneso]

Thank you! Can I receive an S-Corp payroll and work as a full-time w2 at the same time?

[@whazupmike]

I’m a W2 earner and just started my business which is not making much but have spent a lot to start it. Since I didn’t make much in the sole proprietor business, will my W2 and business income be combined to take advantage of deductions for my business? Thanks for your answers!

[@NaviMarajCPA]

WhazUpMike? Lol...I know your question is simple but there are many scenarios that could affect my response. If you are in business or "open for business" and actively trying to get sales then your business is effectively started and if you end up being in a loss position for 2021, your business losses will offset the income from your W-2 job. Hope this was helpful!

[@whazupmike]

@@NaviMarajCPA thank you for responding. Your answer was a good explanation.

[@wattsobx]

Is that 142k for married filling jointly or just single fillers? This is great info.

[@NaviMarajCPA]

The wage base has increased to $160,200 in 2023 and is per individual regardless if you file as single or married filing jointly.

[@wattsobx]

Thank you sir! Is that straight w2 income or after credits and deductions?

[@thewhiterabbit7402]

Also when you say you get the social security portion back, you are saying that you have to pay it initially? Can you just not pay it at all since you know your W2 job will end up paying it the max?

[@NaviMarajCPA]

Good question…I wasn’t very clear on that. If you’ll be taxed as a sole prop, then don’t pay into it to begin with. If taxed as an S Corp, you’ll pay it but receive a refund when you file your personal tax return. Hope that helps.

[@lordcommander7551]

what happens when you have hgih w-2 income and you business loses money, can you count that against you w-2 income?

[@jasonsignor7237]

Excellent!

[@DevendarReddyMandala]

Thank you for the info. If my business (S-corp) pays 7.65% payroll taxes on my salary then it can be written off as business deductions correct ?

[@henrymitchell7612]

Hello, I am looking for a CPA. I am a Realtor/Investor and I work where I receive a W-2. Right now, my side business is real estate wholesaling , fixing and flipping , and creative investing. Recently, I just created a LLC. Does it make sense for me to switch to a S-Corp ?

[@jaytravel-12]

if I have a scrops and llc can I pay myself as a employer and file a w2 ????

[@therealsaint3075]

I needed a car loan from a car dealership and I needed to bring in my w2s last week and that got my stressed out asf till I came across some great comments about deelscafe💯💯.

[@ShibaSoftware]

I am in this awkward position. I have already generated 132k in W2 income this year. I am considering converting this same W2 contract to a C2C contract for the next 4-6 months in part because C2C pays $10/hour more. I am also considering taking on a 2nd contract that is either W2 or C2C. Is it better to convert the 1st contract to C2C and take on a 2nd C2C contract, or take on 2 W2 contracts that would each pay $10/hour less on W2?

[@albert16705]

If I work for the railroad and pay into railroad retirement and not social security will my LLC have to get taxed for social security? and does it cap off at a certain amount with the railroad retirement? Thanks for the videos they help a lot.

[@haydenkress]

Hi Navi, thanks for the great info! If I am considered a high income earner yet my son wouldn't be considered a high income earner, how would the self employment taxes work in that case? Would I be void of the additional social security taxes but will my son have to pay that? Not sure if that makes sense but would an LLC still make more sense over S-Corp then? looking to start in Amazon FBA.

[@NaviMarajCPA]

Hi Hayden….because your question is pretty specific and I would have follow up questions, I won’t be able to answer you here. If you would like, you can schedule a Q&A session on my website.

[@EmmanuelOnitheoneandoni]

🤑🤑🤑

[@jejehere6533]

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[@NaviMarajCPA]

Never drink moldy coffee.

[@yutoliho]

wait.. you didn't answer the question if high income W2+LLC make sense.. so if S-corp doesn't make sense are you saying LLC would be better?

[@jesonsan7312]

The answer is on 12:20 . Thank you Navi for explaining this. I did not realize that there is a SS cap for the employee, but not the employer. BIG thank you !

[@benjaminbranson9816]

Can you do videos on what if your spouse is a W-2 income earner and you are an S-Corp?

[@kashyappujara317]

Thank you, Navi. Lots of my questions get answered. First, I understood where self-employment tax 15.3% came from. Second, LLC works better with High paying W2. Would you suggest what other tax benefits one should look for with (high W2 + LLC)? Thank you!

[@writegarry]

How does a Single Member S CORP employee document income via W2 for compensation received from capital gains from trading as a business under a Single Member S CORP/ TTS status

[@NaviMarajCPA]

Hi @writegarry. Honestly, I've never had to deal with that scenario before since my clients aren't active traders. That said, when "shopping" for a CPA/tax preparer, be sure to ask those specific questions and if they don't know the answer, they probably aren't the accountant for you. Thanks for watching - sorry I couldn't be more helpful on this occasion.

[@Tatiana0209]

If you received compensation, it cannot be capital gain.

[@shoaibrao8811]

Very very helpful video. I am a physician on W2 with a 1099 side gig contract. I was about to elect my LLC to be taxes S-Corp. After watching this video, I realized that S-Corp election would actually cost me money(which I was never told by my CPAs who provided me consultations with a fee).

[@scottgier5709]

Thank you for this excellent explanation. This is exactly what I needed to see .

[@NaviMarajCPA]

You’re welcome @Scott Gier...glad you found it helpful!

[@sirreginaldlee3576]

Same

[@santiagomariaalexe9463]

Thank you. Can you kindly make a video on the scenario where one has a high W2 income but also a S corp profit beyond $250k or whatever amount that would justify having a S Corp.

[@thunderthumbz3293]

Thanks for the content. What if you ain't living the high life and are a low wage w-2 earner ($40k) and have an LLC where you earn about 12k profit. It seems like you are suggesting going the standard llc sole proprietor tax route is best?

[@NaviMarajCPA]

Yes, based on that limited information - being taxed as a sole prop is likely best. Please keep in mind that this is not individualized tax advice. Thanks for watching!

[@thewhiterabbit7402]

If my W2 income pays the maximum social security tax ($8853.60 with the employer paying the other half) then the only tax I would have to worry about for the 1099 would be the 2.9% Medicare tax, and then whatever my federal taxes are depending on which income taxes bracket I fall into. Am I understanding this correctly?

[@NaviMarajCPA]

You got it! 👍🏼

[@robinandrobins]

The high salary you are referring to, is that also applicable to two low incomes W2s (Spouses income adds up to 143K) when filing taxes together along with a side hustle income? I am debating between starting an LLC or an S-Corp.

[@kandeeljavid3386]

Thanks Navi! Very well explained. Would it be worth filling for S corporation if the business is a loss with negative profit with high income W2?

[@NaviMarajCPA]

Hi Kan. Tough to answer without knowing the specific details but off the top of my head I can't think of many benefits to being an S Corp vs. being taxed as a sole prop if you have a loss.

[@sakisonu]

Thank you for the info! Your all video is very informative. I have question on SSN Tax working on two W2(Full time) job. Keeping your example same, What if i have two W2 full time job with Salary $142,800 in each company. Both Company1 and Company2 withheld SSN tax. How much i will get refund after filing tax return? Is it 6.2%(employee) only or 6.2%(Employer) + 6.2%(Employee) of company2 ?

[@NaviMarajCPA]

It would be 6.2% employee only.

[@EtienneUnfolds]

Hi, I've been trying to wrap my head around this, even hired an online tax advisor but am still not sure what's best. So I have a high. W2 ($120k) + ($100k revenue side gig), they are recommending an S-corp for the side gig but I think that's not what you are saying. You are recommending a sole proprietorship for a side business right?

[@channelingcarisa]

You did a wonderful job explaining this and breaking this down. I finally get it. Thank you!! 😊

[@NaviMarajCPA]

That's so great to hear! I love when viewers are finally able to understand a concept.

[@esheetpatel6923]

Hi Navi, Thank you for making me understand how all this works. It took me four of your videos to finally understand how all works. Thanks for going extra step with color coding. It make so much sense now. Can you please make sure my understanding is correct below. Thank you again. If I have $100k in W2 and $100k in business income it would make more sense to open my business as LLC enity S-corp tax classification, correct? Because if I do sole proprietary I have to pay social security on $42k out of my $100k business income and multiply it by social security tax rate 6.2% and have to doubled it for employee and employer plus I have to add medicare tax on my 42k at 1.45% and then increase it to around 2% on rest 58k. But if I open S-corp and take 40% whick is 40k than I will only pay social security tax and medicare tax on 40k two times for employee and employer and then deduct the employee part when I do my taxes. Is this correct understanding?

[@NaviMarajCPA]

Sounds like you’re understanding everything correctly! 👍🏼

[@BurmeseUSA]

the salary base is only for one person earner? what about marriage joint? cos me and my husband have almost 140,000 yearly together and have Multi-member LLC formed with just two of us. your reply is appreciated.

[@jskcbe1]

Hi Navi, Can I call you? I have more W2/s and an LLC also making 120k per year. will you be able to help?

[@NaviMarajCPA]

Hi Satheesh. If you would like, you can visit my website and book a Q&A session with me and tackle your questions.

[@talkandeattv]

just discovered your channel and im already on my 3rd video. its like you have a video for all the questions I’ve had for YEARS

[@lavoqueen9531]

My salon is small business, only me working. I have a LLC, and have to pay for the payroll $100 a month, I also have W2 . I can’t get a PPP LOAN because I don’t have 1099. So what should I need to do?

[@BurmeseUSA]

after watching this, I understood that Social security tax from W2 side will be refunded, so we all should be earning more upto or over the salary base, right? otherwise, we wont get back at all.

[@dtuliao]

Thanks for breaking this down in plain English...If I elected to change my LLC to an S Corp and my profits fluctuate from year to year and doesn't seem to be worth it, can I change back to an LLC?

[@NaviMarajCPA]

Yes, but don't make a habit of switching back and forth. The IRS doesn't like it and it is a pain in the butt.

[@xocolifestyle]

Thank you! Quick question...in this scenario...is the 142800 for each or is the W2 and Sole Prop be combined?

[@ab8273]

Thank you Navi. Very informative and easy to follow. What about in a case where there is a high earning W-2 (around the 145k) in conjunction with a low income generating LLC (5-7k)? Does it still make sense to tax the llc as a partnership?

[@NaviMarajCPA]

I’m that scenario there would be no reason to elect S Corp status for the LLC.

[@ab8273]

@@NaviMarajCPA thank you 😊

[@sabrinajohnson4052]

Thank you! This was a very helpful!

[@alandypenny6529]

Great information, thank you for taking the time provide this to us.

[@NaviMarajCPA]

You’re welcome Alandy! Glad you found it helpful!

[@EZ2Follow]

Very well explain brother Jazakallah khair

[@knickle1643]

I understand that when you have multiple W-2 jobs, each individual employer would be unaware of when they no longer need to withhold FICA social security - but in your example, couldn't you just NOT withhold the employer side of the social security considering that you know you're beyond the wage base? That would mean you're not withholding any FICA social security on the S-Corp, so you don't even need to wait to get the employee portion refunded back and the employer portion isn't lost forever

[@NaviMarajCPA]

In theory this sounds great but I don’t think you can actually execute this the way you are thinking. Very rarely is someone exempt from paying FICA tax.

[@knickle1643]

@@NaviMarajCPA after reading through some less than thrilling IRS documentation, I agree. Unfortunately the US tax system's underlying assumption of 1 person = 1 job does not scale very well at all. In theory, I think the right judge or jury might look at my proposed strategy as following the spirit of the law, but it does indeed seem to venture outside of the letter even if you're withholding FICA up until the point that you reach the wage base.

[@benjiebarker]

2:00 did he say you should or shouldn’t have passive income in an s-corp?

[@NaviMarajCPA]

Generally, you should not have passive income in an S-Corp. There is a separate video I created on this topic on my channel.

[@sarmakuppa]

Hi, I have a question. If anyone can answer, it would be great. I have opened a single member LLC last year. I am planning to file the business taxes as s-corp for 2022. I have not payed myself a salary nor took a 'draw' before Dec 31st, 2022. Is it too late to pay myself a salary and take a draw and show it towards 2022 business taxes? Your response is greatly appreciated.

[@NaviMarajCPA]

Hi there....your question may seem rather simple, but it is a quite complex answer. You should know that if you are an S Corporation, you are not required to take a salary aka reasonable compensation if you also didn't take any draws aka distributions from the company. If you want to learn more about this, please watch my most recent video on what to do if you didn't issue payroll - I think it will help you with your understanding.

[@sarmakuppa]

@@NaviMarajCPA , thank you Navi. Exactly addressed my question in that video. Hats off...

[@serenac4852]

This is the most clear video I saw on this topic. Thank you. One question though: how does QBID come into play here? Say I have 100k of profit as sole proprietor, I get 20% QBID so all my taxes (including state/fed income tax) will be based on 80k. If I elect S Corp and pay myself 60k, then I only get QBID on the 40k K1 profit, so my tax basis for state/fed income tax will be on the 90k (50k W2 + 40k K1) which could wipe out the savings on FICA tax, am I thinking about it right?

[@NaviMarajCPA]

Hey Serena...you're on the right track. Using your numbers which one save you more money? ($40,000 K1 x 15.3% = $6,120) or an additional $12,000 tax deduction ($20,000 QBID with sole prop vs. $8,000 QBID with S Corp) based on your federal and state income tax rates. Note that there is a lot more to consider which it comes to the Section 199A deduction so I am just using your assumptions in the above response. Also, this is not individualized tax advice.

[@NaviMarajCPA]

Hey Serena!...this week's video being released on 08/27/21 @ 5PM EST will cover the QBI Deduction.

[@purplediamond3028]

Hi Navi, Which would make the most since for someone working a full time job making less then $50,000 & has just started a small business an LLC or S Corp?

[@NaviMarajCPA]

Need more details but in general an LLC taxed as a sole proprietorship until the business is making a consistent $50k plus in profit per year. The start considering making the S corp election for the LLC.

[@purplediamond3028]

@@NaviMarajCPA thanks for your reply

[@oelscott2460]

What if you are a low wage earner, but have a high amount of profit in an LLC?

[@NaviMarajCPA]

Hi Oel. In that scenario you may want to look at the benefits of making the S Corp election for your LLC. I’ve got other videos on my channel that discuss those benefits.

[@oelscott2460]

@@NaviMarajCPA Hmm... can I hire you?

[@NaviMarajCPA]

@@oelscott2460 I’m flattered by the opportunity but I am temporarily putting a pause on taking on new clients until after the tax preparation season is over.

[@oelscott2460]

@@NaviMarajCPA thanks. I appreciate your commitment to your clients. Sure after tax season let’s reconvene.

[@belindaochoa2743]

Hi, I came across this while browsing for videos regarding S-corp. I am glad I clicked on it, and I wanted to thank you for explaining things in simple terms. That said, I have now subscribed to your channel and liked this video.

[@Joe-zz3vx]

Hi Navi, great video thanks. How about if you have an s corp but your wife makes over that 143k and you file jointly. Does that make the s Corp savings null and void ?

[@NaviMarajCPA]

I’ll answer you this way, the wage base is per individual. Does that help?

[@Joe-zz3vx]

@@NaviMarajCPA Thanks!

[@jessieherrera3336]

The exact thing I was looking for. I've always thought about how sad I am I never elected s-corp while having w2. I have maxed out my social security portion several times and now see why the self employment taxes aren't really a thing when you max that out. Also the savings from not having to have complicated taxes.

[@davidli3742]

Hi Navi, thanks for the video. What if you make 150K as a contractor but have no side hustle. In this example, I would be the contractor who gets paid through my S-corp. How does the wage cap of 137K affect this? Thanks

[@esasif]

Great job explaining a concept that can be quite confusing. Thank you - very helpful!

[@NaviMarajCPA]

Thanks for the feedback Erez! Glad it was helpful for you.

[@huseyintaskiran9389]

Hi Navi, this video is very informative, thank you . One question though; I have hi w2 income (about $120k). We file our tax jointly with my wife. Now she is planning on opening up her business herself (not partnership with me). We will still file jointly. When calculating SE tax from that business (sole prop) do we include my w2 or not ?

[@NaviMarajCPA]

Great question Huseyin - the "wage base" I refer to in this video is per individual even if you file a joint tax return. So you getting paid a high wage via W-2 has no impact on the SE taxes your spouse will have to pay for her business.

[@huseyintaskiran9389]

@@NaviMarajCPA Thank you, very clear again.

[@SuperToby3]

Do you file all of them together

[@jacksonlewis8940]

Hi Navi, great video. This will be an important issue for my wife as she decides whether to have her SMLLC taxed as disregarded or S Corp. Question: could you point me to a link or somewhere in the tax code that verifies what you said about S corp owner-employees still owing the employer portion of Social Security (on reasonable compensation) even after they've reached the wage base from W2 income? I believe you, I just haven't been able to find anyone else talking about this. Thank you!

[@SkS13003]

Briefly got the gist of it but for me specifically, if my W2 is about 110k and starting a new business, no revenue yet no knowing how much it’ll profit.. would you say to stay sole prop and write off losses for startup? Or can I switch to scorp once I pass the 40k profit?

[@bigjimstream]

Thanks for the vid. The primary reason people elect to file taxes as an S-Corp is to avoid paying employment taxes which max out at 21,840 in this example. If you have already paid those employment taxes via a W2 job then there is no advantage in filing your business taxes as an S-Corp. It's really no more complicated than that. Why don't you do a video on the financial benefits of moving to a state with zero income tax? Florida for example :). Now that is saving money!

[@slim624]

I have had an LLC s-corp but took a $150,000+ job. My business will do between $5k-$15 per year as I take on projects I want to work on. I’m in the process of closing out my payroll account with the company I’ve been using. Would I file paperwork to convert my LLC back to being taxed as a sole proprietor or am I safe to just take owner draws and not take a payroll?

[@joshua3196]

Do you have a video for persons with high W2 income and small business with >$300k profit? I'm curious about when s-corp makes sense for them.

[@TheOccasionalGentleman]

Is there some sort of calculator that makes this make sense? Like if I'm earning 110-130 w2 and expect my side business to only earn 20k wouldn't the S corp be better?