Tax Benefits of LLC | LLC Taxes Explained by a CPA - How does a LLC save taxes?
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- เผยแพร่เมื่อ 10 ก.ค. 2024
- Here's the truth about LLC Tax Benefits & Advantages by a CPA.
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LLCs are by far the most popular entity type amongst small businesses.
But what exactly are the benefits of a LLC? How does it protect your business? And more importantly, what are the tax benefits of choosing a LLC over another entity?
The answers to these questions may influence the entity structure that you choose for your business, and… how much money you end up paying the IRS.
That's why in this episode, I’m going to explain all of the tax benefits related to LLCs.
Outline:
Intro: (0:00)
LLC Tax Loopholes: (1:15)
Tax Benefit #1 Pass-through Taxation: (2:18)
Tax Benefit #2 S-Corporation Election: (4:20)
Tax Benefit #3 Tax Write-Offs: (5:08)
Tax Benefit #4 Pass-through Tax Deductions: (6:00)
Tax Benefit #5 LLCs are Easy to Set-Up: (7:05)
Recap: (7:48)
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Want to learn more about LLCs? Watch our LLC playlist: • The Best Business Enti...
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Disclaimer: The information provided in this video is for informational purposes only and is not meant to take the place of professional legal, accounting, or financial advice. If you have any legal questions about this video or the subjects discussed, or any other legal matter, you should consult with an attorney or tax professional in your jurisdiction (i.e. where you live).
![14 Biggest Tax Write Offs for Small Businesses! [What the Top 1% Write-Off]](http://i.ytimg.com/vi/5YggWhLeckM/mqdefault.jpg)
![14 Biggest Tax Write Offs for Small Businesses! [What the Top 1% Write-Off]](/img/tr.png)
You guys are the best, simplified, fast, and you include time stamps in the video. very educational and efficient. Bravo!
We're on a mission to be the best accounting/business channel on TH-cam :)
@@LYFEAccounting What incentives would pay me better. by an electric car or by putting panels alone in the house?
I'm a CPA. I'm just gonna play this video for my clients that are starting up businesses. You explained it MUCH more fluidly than me, lol...
I share that sentiment Joe. They still won’t get it though 😂
I’m not a CPA, but I do own a business support service. My clients watch all these videos.
Are you looking for clients? I am looking for a CPA. Reply with your info.
If I want to dissolve my LLC, do I have to still pay the Annual Report? It's getting close to the due date.
As a fellow accountant, this is a simple to understand and clear explanation of LLCs. Keep up the good work!
Great concise video. Covered a myriad of topics pertaining to an LLC, some I didn’t even think about. Very helpful. Keep up the great vids.
Thanks ☺️ we’re just getting started!
Good stuff! Very informative, thanks.
Thank you! Your video was easy to understand and follow! I truly appreciate you taking the time to make this video!
Thank you for making this subject understandable!
Awesome explanation. Clear voice and easy to understand.
Thanks much
Great vid! Very easy to follow and great explanations!
This is an amazing way to explain this.
Very well explained video. Thank you!
This video was so well put together and informative.
Great video, My dude from GSU doing great things!
Go lopes lol
Thank you for posting a very easy way for all of us to understand. BTW, I subscribed.
Welcome aboard and thanks for the support.
Perfectly explained!
The best explanation!!
So helpful. Thanks
Thanks for sharing this good info!
Thanks for watching
Amazing Content! Thanks for sharing!
Our pleasure!
Wonderful video thank you!
Excellent Experience Awesome Awakening Thank You I Subscribed
Awesome video
Definitely helpful! Time to hit the books!
Thank you!
You're welcome!
GM excellent video this CPA did a great job.
Hey, thanks!
Gracias
Thank you for the info!
Awesome stuff 🖖🏾🤓
Great info, straight to the point, very professional
You do a great job in making mundane tax laws exciting to learn about. Thank you
I appreciate that!
You can be a great teacher :). You made things easy to understand. Thank you,
Thank you, concise info!
Glad it was helpful!
Outstanding video well executed covered all of the basics 👌in an easy to understand fashion and covered the tax implications to a T!
Thank you so much 🙂
Awesome video !!
Glad you enjoyed it
Great information and very informative
Glad you think so!
Great video.
Very helpful thanks!
Glad it was helpful!
Good info thanks 👍
Thank you very informative
I'm really happy to view this tutorial❤️ , I love it on here and thanks to everyone on telegram
Also thanks to@slimrado
Thanks For the information
Bad C corp tax example. If you pay yourself W2 wages, those are expenses for the C corp, so they reduce the C corp income. The double taxation for C corps is generally via dividends which, if qualified, may be taxed on your personal income at a lower rate than "active" income. If all of your S corp income is "active", there's very little net difference between the C corp and S corp taxation structures. The S corp shines for non-active (captial gain) income which can be taxed (only once) at the long term capital gains rate (if these non-active profits are taken out at least a year after the capital is added to the LLC).
Yeah I am appalled that he missed that. As a CPA....
Thank you for the information
You bet!
Great content
Thanks for the vid
You bet
Thank you.
Appreciate it bro
Appreciate YOU for watching.
Great info!! Subscribing !!
Thanks for the sub!
I love the content. The reason I don't LLC is because as a sole proprietor, I want to see what is going to happen. Then and only then will I explore an LLC. Don't want to spend more than I have to. "Measure twice cut once."
Same here
Not sure I understand you on this. How wouldn't you be able to see what will happen in an LLC? You're still getting your cash, you're just reducing liability?
Great information
Thank you, Steven!
Well done video.
Thanks for the visit, just curious, which part did you find most valuable?
I clicked like video. LLC are legal tax loops holes, there I fixed it :)
GREAT video 🔥🔥
Thanks! 😃
Good info! Just started my business but I’m a little misinformed on the tax aspects of it all
Keep watching our videos and you will be in good shape. We appreciate the support.
Hey, great video! I did not know about the 20% deduction law.... I am gonna have a word with my accountant...
You're not alone. We're about to release a video about that next week, please share it with your accountant
Interesting example!
Glad you thought so
Banks in Virginia have introduced a Minority Business Fund program. To qualify, start-ups must get Minority Business Enterprise Certification. Can a LLC be registered and MBE certification obtained at the same time from the Virginia Department of Small Business and Supplier Diversity ?
Good info
Glad you think so!
A great entity for people just starting out
Lovvvveeeeet!!!!!
Love from India 🇮🇳
Good information. Something to think about though, the music sounds like a heartrate machine in a hospital. I had to turn it off, making me nuts.
Can you explain pass through tax deductions better please. And what qualifies
In the pass through vs non pass through example why wouldn’t the owners w2 pay be an expense for the business, and therefore not taxed at the business entity level?
Wages are deducted on a C Corp. Not sure why he brought that up since it moves taxes from the 1120 to 1040. I expected him to bring up dividends since that creates double taxation.
Excelent video, thumbs up!
Thank you! Cheers!
Thanks
Welcome
I got an L.L.C last year because my oldest wanted to work. We filed taxes on the L.L.C this time . What is my part? I did personal taxes but do I do business taxes now since she filed ?
Very informative I’m just starting my home business and I’m on a fixed income at this point and have purchased some equipment and products to run the business but it’s a little challenging finding the help I need but what’s the best entity I should go with LLC or S-Corporation I also have my EIN number and my Business Authorization Certificate of Registration
Will you have any employees?
S Corp is a tax status, not a business structure. LLC and C Corp are business structures.
It would be a good idea to define what an LLC is before saying much , otherwise its a nice video👍
so your w2 income is not a deduction to your c corp?????
Do you recommend for a new virtual assistant a llc or sole proprietor?
I don't own a C corp. business. BUT, doesn't that business C corp. get to deduct payroll expenses as a regular business expense (legal business deduction) in determining net profit? Please someone answer that question...thanks! In my S-corp. business I do deduct all W-2 expenses including the matching social security expenses, and SUTA and FUTA tax as a regular business deduction. Any profit on the S corp is reported on a K-1, then gets reported on the Schedule 5 for Supplemental income which in turn is reported on Form1040. I'm never double taxes an an S corp owner.
Do Iwe have to pay tax every quarter,and we are the manager and sole owner no membership
great video, jus wonderin if I could get an opinion tho.. I got a newly started clothing brand and I was wondering how important is it for us to register the llc?
Very. We recommend registering any business you start.
When I first started my business it was a sole proprietorship. I applied for an EIN number to pay sale taxes. I just switched over to an LLC. I applied for a new EIN number for the same company. How do I cancel or get rid of the old EIN number?
You don't.
The IRS cannot cancel your EIN. Once an EIN has been assigned to a business entity, it becomes the permanent Federal taxpayer identification number for that entity. Regardless of whether the EIN is ever used to file Federal tax returns, the EIN is never reused or reassigned to another business entity. The EIN will still belong to the business entity and can be used at a later date, should the need arise.
If you receive an EIN but later determine you do not need the number (the new business never started up, for example), the IRS can close your business account.
You were doing good up until the example of double taxation. A c corporation would be able to deduct the wages it pays to its owner, in most cases, and therefore the C Corp would only pay taxes on $60,000. If you had used the dividend as an example, then you would have been spot on.
What do you mean a c corp would only pay taxes up to 60,000? So what the c corp pays you (the owner) pays taxes only up to 60,000? And then all money paid to you beyond that is not taxed/ no taxes are taken from it?
Yeah Doc, I’m lost on that too. Thought the owner got 50,000 out of 100,000. I think money taken out prior to taxes would help except when paying employment tax of up to 40% and C Corp needed to pay health and welfare?
Is there a video to the Passive business owner LLC?
Can I start off as llc and later change to s corp for the tax benefit
Um, the corporation gets to deduct the wages it pays you before it pays Corp tax. You're thinking of dividends.
Question, i just created an llc for a new biz. Should i file an 8832?
The LLC doesn't run business in the US, and the sole member is not resident. Does have to pay taxes in US? Thanks
Very affirmative thank you deeply I appreciate your efforts to share this.
Can I establish LLC with my SSN instead of tax id number for LLC..
What's the benefit and disbenefit of doing so please..
If you will pay any employees, you will need a Federal I.D. Number.
Its simple to apply for LLC entity via IRS portal...You will be assigned to have Federal EIN#. SSN is for individual income tax
In your calculation for C corporation i wonder if i understands correctly. If your company make 100.000$ and pay you 40.000. Should your company be taxed on 60.000$ ? Instead of 100.000k ? So even you are taxed twice but your icome are devised into 2 smaller tax bracked. Would it be a benefit over pass-though tax ?
Pass through taxation benefits are at the state level or the federal level??
How do I get a personalized tax program
If the LLC owner deducts x amount money each month. Do they have to record the withdrawals on the Schedule C form or SE form?
What about filling taxes with a music business LLC, can I write off almost everything
You can write off all reasonable and necessary expenses. You should check out our video on how to write-off almost anything!
salute General
Salute!
Excellent video , question can an lllc be created and work with crypto?
It can!
Tax write-offs aren't an advantage (of an LLC)---you can do all the described organization as a sole proprieter (SP). Ditto Pass-through Tax Deductions. And SP's are the easiest to set up---just file a Schedule C. Really, the two main advantages of an LLC are (1) it's harder for people to sue you, and (2) you may be able to convert income to long-term capital gains (if business profits exceed the reasonable wage you need to pay yourself for active work).
Convert income, from the LLC? This sounds interesting. I'll need to research this.
How much does it cost to setup LLC?
Excellent info as always Sherman, thanks !! My office is at home, and I drink cofre every morning: could I write off a capuchino machine ?
Thanks for watching, Ram. If it is ordinary and necessary for the business it can be written off.
@@LYFEAccounting thank you !! Have a great weekend
Is that 20% QBI tax deductions passed with the Jobs Act a one-time deduction or eligible for businesses yearly?
Yearly!
Does the IRS still consider Disregarded
Is there any chance I could know which states to move to form an LLC (for affordable taxation) ?
Great video tho 👊🏻
Montana
Don't need to move to generate an LLC. Just go thru a Registered Agent in that state.
Series LLC for apartment buildings?????
💯
Where to start llc in California? I got varies offer from 800 usd to 3000 usd to set up.
It doesn’t cost that much to get registered. Usually $25 to 125 depending on the state
@@FoodShowFan California is $800.
@@ItsDan123 thank you so much
Good 👍🙏
🇮🇳🌈
Thank you! Cheers!
I created my LLC in July 2021as a single member. I wasn't aware that I had to file an ECE with the IRS and it had to be done within 75 days of formation until today! I was told that i don't want my LLC to be automatically classified as a Disregarded Entity. The problem is I'm not sure what classification I should elect. I would like to pay as little self employment tax as possible.
Did you ever figure this out? I’m in the same situation
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@@luvchyld86I'm going to classify as a S Corp
How does an LLC affect my filing taxes when filing with my spouse? They have a regular w-2 paying job. Right now we file married filing joint.
How is it a loophole if it's the law?