Are Owner's Draws Taxable? Common Questions Answered!
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- เผยแพร่เมื่อ 26 มิ.ย. 2024
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Understanding owner’s distributions and their tax implications is crucial for small business owners. In this video, Hannah addresses some excellent questions from our newsletter subscribers about this topic. Learn how distributions can affect your taxes and clarify common concerns to help you navigate these financial decisions effectively.
In this video you will find:
0:00 - Introduction
0:30 - Tax Implications of Distributions
1:15 - Subscriber Questions: How are distributions taxed?
2:29 - LLCs Taxed as S-Corporations
2:55 - First Question: Excess Distributions and Capital Gains Tax
3:20 - Common Mistakes to Avoid
4:03 - Second Question: Owner's Compensation vs. W-2 Wages
4:42 - Different Entity Types and Taxation
5:45 - Tips for Managing Distributions
6:00 - Sole Proprietors, Partnerships, and S-Corporations
8:29 - Basis Calculation
10:53 - Negative Basis Situations
13:00 - C-Corporations and Double Taxation Explained
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Hannah Smolinski is a #CPA and the Founder of Clara CFO Group. Find out more about Clara CFO Group at claracfo.com/
Disclaimer: This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.
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Hannah, your channel does a real service to the public. Good info!
Thanks! I appreciate that statement! I sure hope so! That’s the goal 🙌
Your videos are the best. Thank you for doing them. They are very informative and I have learned a lot from you. Thanks for being vulnerable too. Nobody is perfect!
Ain't that the truth! Thanks for watching and being here!
Can you please provide insight into how to analyze the owners equity section to determine how much money the owner can take out of the business both from a current year and from prior year perspective? Should owners be taking draws every year? Would love to hear you speak on this
Please talk about a business owner having an S-Corp and how it flows onto the personal tax return and how the owners tax bracket is how the S-Corp is taxed, how to reduce tax bracket
Well, you will be in a lower tax bracket if you make less money, but that's not what I generally recommend :) But I think I get the gist of what you are trying to say! I am not a tax CPA, so I won't do many videos about tax strategy. But I can explain some concepts!
Thanks so much for your videos Hannah! So so helpful for business owners who 'do it all' and don't have a finance team! And on a different note, I should have been an accountant.
Ha! It's never too late Julie!!
Thank You😊
Thanks for watching!
Awesome videos ❤
Thanks!
❤❤❤
Hi Clara
I am also following your videos very well and loved 😍. Please try to include us in South Africa where we have different entity types than the one you refer. 😢
Cima enrolled with a start-up company
Oh yes - this only applies to US companies! I hope someone in SA will do videos like this to help SA businesses!
Hi Clara
can you answer my question relating to payroll
what question?
@@ClaraCFO I am using QBO Advanced and recently acquired ADP for Payroll. Both have been connected. Now my concerned is related to Chart of Accounts mapping. My question is that a single expense account named Payroll Tax Expense in QBO is sufficient for all four types of Employer Taxes (SUTA, FUTA, FICA SS, FICA Medicare) in ADP or we need to make 4 separate expense accounts in QBO as the granular detail & reports will be available on ADP. Similar is the case with Employee taxes withheld, is a Single Tax Payroll Liability account in QBO enough for Employee taxes (FI, SI, FICA SS, FICA Medicare) in ADP. Now if we create separate accounts there will be numerous bank feeds to be matched every time payroll is run, also the details will always be fetched from ADP so what's is your expert advise on this? should a single account be linked to ADP or multiple accounts need to be setup.
Open communication
Radical transparency
Harmonious like minded group
🙌
if she made 50,000 profit, & withdrew 60,000, how was that possible? Where did the 10,000 come from?
Did your business have any loans? You could have excess cash from a credit card loan for example
It was most likely cash that was already in the business from prior year earnings. It could also have been from borrowed funds.
@@ClaraCFO If the additional draw was from prior period profit (retained earnings) wouldn't that cash have already been taxed? Also, can you speak more to negative equity? Thank you