The Blueprint to Paying Yourself as an S Corp (2024)

[@karltondennis]

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[@MaxPayneEL]

Hey Karlton, my spouse and I were wondering what do you and your mom Karla charge to do LLC formation? And would we get a physical binder with all of the original documents used to file with the secretary of state ? We found some states which require fee yearly or bi yearly ...to some which do not require any payment beyond that of the required filing fee with secretary of state....??? Is that something you can do ? What would you charge ?

[@THEtaxstrategists]

Daily "technical corrections on Karlton's misleading videos" here - #1) 50% of Self employment tax is deductible for Self employed individuals so the real "tax savings" is < 15.3%. Still a valid idea but misleading/incorrect #2) Distributions are NOT taxable (if you have sufficient tax basis). However, ALL of the NET income IS indeed taxable and reported on a K-1 whether distributed in cash or not. #3) KD does indeed point out that the amount paid to non-shareholders IS one of the factors considered in determining reasonable compensation. The IRS will look very negatively if the S-corp shareholder is the SOLE employee and 100% of the revenue is generated from that individual's efforts (e.g. a consultant). KD "firm", do you still believe 30% of net income is adequate in this situation?

[@Wavyysav]

He has yet to reply.

[@t-tradenow]

1st) 15.3% of 60k is $9,180 and not $12,240. 2nd) The owner of the S corp has to match the employee payroll tax, therefore $18,360($9,180x2) so single owner now paying self employment 2x. 3) The $3,060 distribution will be taxed as ordinary income so whatever tax bracket your tax income may be. 4) S corp requires way more administrative work due to by laws compliance in addition to other government compliances such as minutes and having a board. LLC was created to simplify all this so no need to reinvent the wheels.

[@THEtaxstrategists]

Sir - first, thank you for being critical of KD. I think he spreads misinformation frequently. Let me comment on your comments (1) his calc is 15.3% of the net earnings of the S corp AFTER the compensation deduction - $80k* 15.3%. He is NOT technically correct as the payroll taxes paid by the employer is deductible so the net income is about ~$6k less (e.g. 74k) (your#3) - Distributions are NOT taxed. The net earnings (in total) are taxable whether distributed or not.

[@jonmoore4803]

Great video! Would the 1/3rd rule apply to gross receipts, or net after deductions etc?

[@taylorandsontransport]

What if you start a new S-corp and the business and the company has not made any money yet

[@MarkWork-fd5tt]

Great question---have same situation with me only a slight profit

[@THEtaxstrategists]

KD - the savings is closer to $7k. You are forgetting that SE Tax is 50% deductible if the entity is an SMLLC. Also, you are forgetting in your "reasonable compensation" example, that the employer pays half of the payroll taxes and such payment is deductible by the S-corp. The tax benefit of each of these (the 50% deduction for SE Tax or the employer portion of payroll taxes) is dependent on the tax bracket of the individual (ordinary income marginal rate) - Care to reply Karlton?

[@MeganCurtis-qb5xz]

What is a smllc?

[@THEtaxstrategists]

@@MeganCurtis-qb5xz Single member LLC - one owner. When this occurs, the entity is disregarded

[@ommpeter]

Simple and to the point. Thank you brother. Subscribed

[@the_born_again1350]

What about switching a FARM from llc to a s-corp? I have been watching your videoes, but am still unclear if it would benifit my family. The farm is the same as a business, correct? There are different ways taxes apply to farms, so I was curious if it would be benificial. Thanks.

[@dameien]

Thanks for all the information that you give the community

[@Topboycho]

With the reasonable salary do you pay state and federal on top of payroll tax?

[@ssnydess6787]

Hi and thanks for the great video. I have a couple semi complicated questions. Can you please recommend a good advisor? In a nutshell, my S Corp was paid on a 1099 for consulting. I was going to put all my salary into a solo 401K and have my S Corp contibute the max to my plan, leaving any if any profits. Do I have to pay 15% on the salary that is put into the solo 401 K and can I deduct the S corp contribution? Thanks anyone out there with that insight!

[@JuanCarlos-y9i8y]

Should I open an LLC or a S-Corp if I want to build good business credit for a car rental company? And where can I do this?

[@LBrisk01]

An LLC is a legal classification. An S Corp is a tax classification. You can be both, either, or neither.

[@CierraSalleyHinds]

I really don't know what questions to ask but I love these videos! All I know is I'm married, I work a W2 job, I make additional money day trading and I have an LLC. I'm not entirely sure what I can do or how I can structure things to help me save on taxes.

[@THEtaxstrategists]

I would run from KD! Seek tax advice elsewhere

[@tbros0331liffy]

Unless you are making over 1 million, don't worry about SCorp. LLC for day trading will help. Don't worry about S Corp until you start hitting the 7 digit day trade vibe. You'll get there! Semper Fi

[@tbros0331liffy]

@@THEtaxstrategists is all you do is follow this dude and talk smack? Lol

[@uturnmanagement2959]

Great insight this is facts also for brokerage account☺

[@carmenmontilla1371]

There are some benefits on the llc...when I have to switch to s Corp if the llc is 2yrs created and don't have a profit yet.?

[@michaellauzurique559]

Would love to know how to include a 401k in this scenario

[@Glogb3100_records]

Ill got s corporations LLC