180 Law Co. LLC Aiden great video. Now, how hard is it to switch from an LLC to an S-Corp? I just formed a single member LLC last week and after watching this i def don’t want to pay all those taxes so how can would i go about switching?
You have my side hurting 🤣🤣 “you can tell they are business owners because they are carrying briefcases and are thinking about money.” 😂. Funny and informative. I love it!💜
I hired ADP to do my payroll, for a monthly pay schedule it's 70$ + your pay, you do it all online and submit, they also pay the taxes that get withheld for you. It's looking easy so far
This video was so informative and straight to the point. You gave me so much more clarity in 8 min, than a 1 hr video I watched. I cant thank you enough for this info.
This is an amazing explanation. You are truly a lifeline for all of us newbie business owners trying to merge successfully into the business game. THANK YOU!
Thank you for sharing this information. It is helpful to small business owners who are new to business rules and regulations. I have an S Corp and I was unsure about paying myself, but this video answered my question. What you are doing is a blessing!
"You can tell they are business owners because they carry briefcases and are thinking about money" - Here I thought you were going to say they were both guys.
Hi There Aiden, greetings from Arizona! Saw your video today in an effort to prep myself for a llc class I am taking, needless to say it was an awesome ice breaker/ introduction for me! Thanks for sharing!
OMG, you are truly a blessing and for sharing sure amazing knowledge to use newbies!!! Thank you for breaking down how the whole business entity , taxes, LLC, S-Corp works! Thank YOU!
This was so helpful! Thank you for being so concise and to the point 👌 and for shelling out the money for those amazing graphics 😆 really though, visuals always help me learn. Thanks again!
I am subscribing so that I may rent the next door senior vice pres. office. We can share magic markers and cut our graphics designer expenses by 50%....that equates to a PAY RAISE for both of us......think Chardonnay or Merlot ? J K
1) When you're filling out form 2553 do you use your home address or the mailing address for the company. We don't have a physical address for the company, but we do have a mailing address for the company ? 2) Where it says in Part 1,B date incorporated. Do you put the date your LLC started if you're not a corporation?
Hallelujah! This was the simplest and most delightful video I've seen on the subject. I've spent too much time reading dry articles, I wish I had come straight here!
The graphics were priceless!!!😹 Thank you for your transparency! If in the first few months is just paying to set up your business, how would you handle documenting salary/distribution in your files?
If you pay yourself a “member distribution”, is that treated as expenses to the business (ie income to you) and does the business write 1099 for the money you withdraw throughout the year?
Thank you, I have friends in Denver area and will pass your info on to them. I feel like I am stealing from you because of the knowledge you share and the way it is presented! I wish you success!!!
This lady is awesome. I am just starting my own real estate business and I'm in the process of getting my L.L.C. Thank you so much for these vids. Very helpful.
It wouldn't. Self-employment tax is both the employer (you) share, and the employee (also you) share, of Social Security and Medicare taxes. If you receive a payroll from a business, you will have 7.65% deducted for FICA/MCARE and the employer will contribute the same amount. Unlike the LLC, the net income from the S-corporation is not subject to SE tax. There is a push to make it SE income because many people "diddle" the system. It would mean the IRS would not need to keep an eye on "reasonable salary" and the Social Security system would get a chunk of extra money.
I really thank you for this information, you were very clear and precise along with being very specific about how you can use the LLC. and then you gave an example how you use your LLC account which was very very helpful.
Thank you, Aiden! I love that you are sharing your knowledge openly and willing to help others in their business efforts. You have already assisted me in your videos and I'd love to ask you a couple questions. I have just formed my own in-home single-member LLC focusing on personal training and fitness education. As far as I can tell I have every legal area covered except for how to handle taxes. Could you provide insight on what a business in my position needs to do to get started and keep track of taxes throughout the year? Do you think someone who is new to taxes can learn to do it all on their own or would hiring a tax consultant or accountant be inevitable?
It's probably best to at least consult with an accountant and a bookkeeper in the beginning. They should be able to provide you with some basic information & guidance that might help you do it yourself. But it can still be overwhelming and very time consuming. If you've used programs like TurboTax to do your own taxes before, it is not too difficult to do it as a single member LLC since all the income is taxed as your personal income anyway. It's just an additional schedule that you file with your tax return. But you should be somewhat familiar with taxes so you know what you can & cannot deduct. So while it is certainly possible to do it yourself, it might be easier & smarter to just hand it over to a professional. Save yourself the stress and time! Thanks for watching and for the great question!
Thank you so much for sharing this information! Your video was so informative. I feel like I really learned something. I am glad I held off on registering and opted to learn more instead.
Great video Aiden, I have one question, crossing my fingers you answer. I work full time for a company and will be starting an online business. I don't want to claim extra income into my personal taxes, would an LLC S-Corp be my best bet? Thanks...
If you are a single member LLC, and your business grosses $300,000, when you apply for a loan such as a mortgage, and the bank request your tax return, does it appear that you have a $300,000 salary to the bank?
Sure, as long as you are paying yourself enough to be considered a "reasonable" salary. (That's something you should confirm with your accountant/CPA.) But taking one paycheck a month is totally cool.
I created an LLC (single member) and I’m about to start my business with in a week and this question was troubling to me: How do I pay myself in a single member LLC? Well thanks to you I absolutely appreciate your explanation! Extremely helpful video! Thank you so much!
Thank you so much for all of your insightful information, I'm so glad that i found you and I really appreciate all of your help with the tips, ideas and information. I have a question, are you planning to do any videos on paying state taxes, who has to pay, when and ho?. I live in NJ and just started an LLC, and was wondering what are your thoughts about the subject? I really would appreciate it.
I just figured out why people don't take me seriously as a real business person...I don't have a briefcase. Great vid, still useful in 2020 and super entertaining.
You are great at explaining LLCs. Thank you!!. I am a Nurse working as an independent contractor. I need to form an LLC, and need to be able to understand it better. How long does it take for the LLC to be established, and ready to operate? If I were to add use of independent contractors under my LLC, will I have to do an S-corp?
If it is your first year in business it would be hard to estimate quarterly payments. By your second year, I would definitely pay quarterly tax payments just to avoid any attention from the tax man.
@@mikenotta7079 what if you're seasonal. for example,: i host 2 events 1 in january, another in july...6 months apart. how would i file quarterly taxes in this scenario?
I just started an LLC as a sole proprietor. If I decide not to pay myself do I still pay self employment tax? I'm funding the startup but don't want to mix money with my personal bank account.
Yes, unfortunately. An LLC is considered a "disregarded entity" which means that the profits are taxed as income to the member, even if the member does not take any distributions.
Question... if I form an single member LLC and I elect not to be taxed as a S-corp am I able to switch in a few years and elect to be taxed as a S-corp?
Actually no benefit in leaving it as LLC. No brainier to just file form 2553 and make s-Corp selection to irs. However only us residents can elect as sub Corp.
I'm about to start a micro business from my home as the only employee and owner. What's better S-Corp non S-Corp or a C-Corp. In either of the instant situations listed above will I be able to get deductions for working at home and which one won't get any deductions. I'm completely clueless with taxes. I kno I have to talk to a CA but I want to make sure I register the legal way.
Starting around 6:15, you begin the example of how you do things. But here's what confuses me. If, in an non-SCorp LLC, it's 100% treated like personal (taxable) income (according to your fancy graphic). But you said you pay yourself around 50%, and set aside some of that for taxes. "Whatever is left after that" you use for things like food, clothing, wine, etc... I'm assuming you mean "whatever is left" from the 50% you paid yourself minus whatever you said aside for taxes. But, then, what about the OTHER 50% that you didn't pay yourself? Does it just sit in a bank account untaxed UNTIL you "pay yourself" with it? What about if the money is used to reinvest in your business (buy a new computer to be used for the business, for example?). Is that then treated as taxable income BUT subject to a deduction?
+Garrett C. I always like to use round numbers to work things out. So let's say that your SM LLC earned $120,000 in a year, or $10,000 a month. Half of that ($5,000) is taken as a distribution per month, and the other half of that (also $5,000) is left in the LLC's business bank account to handle any business expenses, for reinvesting in the business, etc. Of the $5,000/month taken as a distribution, you'd set aside $2,000 (40% of $5,000) for taxes, and have $3,000 (60% of $5,000) left over for the important stuff like wine, chocolate, clothes... If at the end of the year, somehow the $24,000 you set aside for taxes (12 months * $2,000 every month) isn't enough to pay your taxes, that's where the money you left in your LLC's business bank account comes in. Since you set aside half of your $10,000/month in there every month, you should have at most $60,000 (12 months * $5,000 every month) to be able make up the difference. Practically since you'd used part of that to pay for business expenses you won't have $60K available but you'd still have a hefty portion of it. YMMV
jalabi99 omg! Thank you for finally explaining what none of the videos I've watched has explained. They keep saying "leave money is business account" and "set aside money from distribution payments for taxes" but they don't explain that regardless of distribution amount you take, you are going to be taxed self employment for the entire amount. So the amount you withdraw and put into taxes needs to be the same amount as the sum of gross income you made with your LLC business by years end. (However you want to work out the percentage.) Thank you again for the clarity!
Who, me? Nah. Not an accountant, not a tax professional, not a lawyer. I'm just a person who's been looking into stuff like this for so long I can explain certain things pretty clearly now. :) Glad I could help.
Hey Aiden you’ve helped me in soooo many ways! I’ve watched many of your videos but I haven’t yet seen one on paying social security or Medicare tax. Can they be paid quarterly like federal and state taxes? Are these taxes paid on a federal level? Also if I’m paying 100% of these taxes through my business will I also be subjected to these taxes as an individual Asking as LLC /S Corp . BTW I chose to be taxed as an S Corp because to me it sets up an operation system for me that promotes discipline and less attraction to co mingle funds, not necessarily because of my projected high profit gains from revenue. Also I love the idea of separating my personal and business tax rates and deductions. If I have the wrong idea please let me know. Thank you.
Thank you! that was a help. Is there an income number (ball park) at which my (single member) LLC should consider being taxed as an S-Corp (rather than a disregarded entity) due to social security tax savings?
when setting up a business account under an LLC for my first real estate investment - single family house, do you suggest i do an S corp? also, could I set up my mortgage payment to come out of that business account? so I would pay myself 50% monthly
Hi, I want to form an LLC with single ownership for the simplicity of taxes. My wife and I share a bank account and operate as one financially. Will I have to file tax returns separately in order to own a single owner LLC or can we file jointly, including the LLC income, if I technically own it?
Thanks for the info! I have a single member LLC, also in Colorado, and I've been paying myself similarly (the account is called "Owner Withdrawl" in my books). In years past I've put this category under "Expenses," but I think it might actually fit better as a debit account in "Equity." My reasoning for this is that owner withdraws shouldn't be showing up as expenses on my income/expense reports. Does this sound reasonable? I went ahead and subscribed too, you can never learn enough about the legal aspects of running a business!
I always imagined, should I ever start a YT channel, I'd have 'state of the art' graphics as well, so when you pulled out the graphics I was pleasantly surprised. I'll have to watch the SCorp v LLC video because they still confuse me.
Thank you so much for the info I berly started my business like 1 month ago, I'm in the day porter business wich is basically janitorial work for outside shopping centers. And I'm getting a big contract soon so I'm really happy that I viewed your video I have so many other questions I wish to ask but I dont know if you would have time for me.
Sub'd. Found you by searching 'paying yourself in LLC'. I just applied for mine and it will be a single member, non S-corp like yourself. Good vid, you explained it well & are easy on the eyes. :) thx
OMG!! I died laughing when you held that picture up!!
I know right!!😆😅🤣😂
@@miekam9675 Same! I wil say...it's so much easier learning from graphics, even if they are stick figures with briefcases!
8 minute video saved me a semester in college ;) thank you
And it costs much less a semester's tuition! :-)
HAHAHAHAHAHA!! NICE!
Yes great video, love the sense of humor added.
for real. fuck school
180 Law Co. LLC Aiden great video. Now, how hard is it to switch from an LLC to an S-Corp? I just formed a single member LLC last week and after watching this i def don’t want to pay all those taxes so how can would i go about switching?
haha "you can tell they're business owner because they're carrying briefcases and they're thinking about money"
Just like I can tell a welfare baby by the color of its skin, right?
That alone made me like the video
@@pantherplatform .. Yup 😂 black and brown= welfare babies
@Rollo Larson &
Panther Platform .. the HECK do welfare babies have to do with business people holding briefcases!!? knock it off, people
Oh, OK! I'll sign up for some college courses tonight, so that I can see this thread clearly.
You have my side hurting 🤣🤣 “you can tell they are business owners because they are carrying briefcases and are thinking about money.” 😂. Funny and informative. I love it!💜
girlllll.... i like the normal people talk and killer graphics. but seriously thank you for this non 'super serious' explanation. this helps.
but seriously, what forms do i need to fill out on either the biz or personal end?
I hired ADP to do my payroll, for a monthly pay schedule it's 70$ + your pay, you do it all online and submit, they also pay the taxes that get withheld for you.
It's looking easy so far
This is good stuff, how do I know? The Attorney did not bill me for this video.
this saved us all $250
THAT'S funny!
We're gonna have to have a talk with the company that did those graphics...
JasenStl I think they are over charging me... :-)
+The Law Office of Aiden H. Kramer, LLC hello i have a question can i have multiple business under one llc
nets1984 within one llc umbrella you can run multiple business as DBA.
LOL
This video was so informative and straight to the point. You gave me so much more clarity in 8 min, than a 1 hr video I watched. I cant thank you enough for this info.
I am SO happy to hear that 🥰 You’re welcome, and thank you for watching!
lmao wow you fooled me...I was literally prepared to witness some amazing graphics.
Alex Charles lol me too that was hilarious
Alex Charles
We must have watched different versions of this video. Those graphics were amazing!
Maybe she should have done it topless
Thumbs up for the great Graphics..
dirtypimpbird Seriously, even I took the screen shot the graphic. xoxo
They were VERY expensive!! She's not just smart and informative, she's funny too!
"You can tell they're business owners because they're carrying briefcases and thinking about money." HAHAHA this was gold!
"You can tell they're business owners cause they're carrying brief cases and they're thinking about money"
lmao Subscribed!
This is an amazing explanation. You are truly a lifeline for all of us newbie business owners trying to merge successfully into the business game. THANK YOU!
I have watched several videos on this and your video is the only one that really breaks everything down in simple terms. Thanks
Thank you for sharing this information. It is helpful to small business owners who are new to business rules and regulations. I have an S Corp and I was unsure about paying myself, but this video answered my question. What you are doing is a blessing!
"You can tell they are business owners because they carry briefcases and are thinking about money" - Here I thought you were going to say they were both guys.
Hi There Aiden, greetings from Arizona! Saw your video today in an effort to prep myself for a llc class I am taking, needless to say it was an awesome ice breaker/ introduction for me! Thanks for sharing!
Waits to appreciate expensive graphics: ya know what? 😂😂😂 (you’re great!)
This was perfect!!!!!
I joined because I appreciate the information, you're down to earth, and freakin' funny! I look forward to learning more from you!!
Ummmm, You're ridiculously adorable and super helpful!
OMG, you are truly a blessing and for sharing sure amazing knowledge to use newbies!!! Thank you for breaking down how the whole business entity , taxes, LLC, S-Corp works! Thank YOU!
This was so helpful! Thank you for being so concise and to the point 👌 and for shelling out the money for those amazing graphics 😆 really though, visuals always help me learn. Thanks again!
I am subscribing so that I may rent the next door senior vice pres. office. We can share magic markers and cut our graphics designer expenses by 50%....that equates to a PAY RAISE for both of us......think Chardonnay or Merlot ? J K
1) When you're filling out form 2553 do you use your home address or the mailing address for the company. We don't have a physical address for the company, but we do have a mailing address for the company ?
2) Where it says in Part 1,B date incorporated. Do you put the date your LLC started if you're not a corporation?
Great advice. You really have a very fresh approach to your videos. They keep the viewer engaged .
This is still helpful in November 2019. Lol. Thanks!
This was FANTASTIC!!! Thank you for this video, and may money flow your way in abundance!
Hallelujah! This was the simplest and most delightful video I've seen on the subject. I've spent too much time reading dry articles, I wish I had come straight here!
Amazing. I love to hear that!! 🥰 Thank you
The graphics were priceless!!!😹 Thank you for your transparency! If in the first few months is just paying to set up your business, how would you handle documenting salary/distribution in your files?
You've cracked me up a few times. Well done!
What's the contact information for that graphic design company? Impeccable work!
I just stumbled upon this and find your videos to be very helpful!
If you pay yourself a “member distribution”, is that treated as expenses to the business (ie income to you) and does the business write 1099 for the money you withdraw throughout the year?
No, a member distribution is not a deductible expense for the business and wouldn't need to issue you a 1099.
Thank you, I have friends in Denver area and will pass your info on to them. I feel like I am stealing from you because of the knowledge you share and the way it is presented! I wish you success!!!
It's not stealing if I am giving it away! :-) Thank you so much for watching!
This lady is awesome. I am just starting my own real estate business and I'm in the process of getting my L.L.C. Thank you so much for these vids. Very helpful.
Great information. Thanks for sharing!! :)
Lmao meanwhile i was totally waiting for the expensive graphic designer illustration 😂 good one!
I love this video. Lol thank you so much for this super clear information with lovely graphics
If the S corp reasonable salary is payroll with deductions withheld, why would it trigger self employment taxes?
It wouldn't. Self-employment tax is both the employer (you) share, and the employee (also you) share, of Social Security and Medicare taxes. If you receive a payroll from a business, you will have 7.65% deducted for FICA/MCARE and the employer will contribute the same amount. Unlike the LLC, the net income from the S-corporation is not subject to SE tax. There is a push to make it SE income because many people "diddle" the system. It would mean the IRS would not need to keep an eye on "reasonable salary" and the Social Security system would get a chunk of extra money.
I really thank you for this information, you were very clear and precise along with being very specific about how you can use the LLC. and then you gave an example how you use your LLC account which was very very helpful.
Thanks so much for watching and for the kind words. So glad to hear you found it helpful!
I agree
Hahaha! Gorgeous, mega-smart and has a sense of humor too. Wow! Love these videos. Thanks.
So glad to hear it. Thanks so much for watching and for the comment!
You explain like a teacher...in a very simple manner no complexation...method...💖💖💖💖💖💖💖💖💖💖💖💖
Thank you, Aiden! I love that you are sharing your knowledge openly and willing to help others in their business efforts. You have already assisted me in your videos and I'd love to ask you a couple questions. I have just formed my own in-home single-member LLC focusing on personal training and fitness education. As far as I can tell I have every legal area covered except for how to handle taxes. Could you provide insight on what a business in my position needs to do to get started and keep track of taxes throughout the year? Do you think someone who is new to taxes can learn to do it all on their own or would hiring a tax consultant or accountant be inevitable?
It's probably best to at least consult with an accountant and a bookkeeper in the beginning. They should be able to provide you with some basic information & guidance that might help you do it yourself. But it can still be overwhelming and very time consuming. If you've used programs like TurboTax to do your own taxes before, it is not too difficult to do it as a single member LLC since all the income is taxed as your personal income anyway. It's just an additional schedule that you file with your tax return. But you should be somewhat familiar with taxes so you know what you can & cannot deduct. So while it is certainly possible to do it yourself, it might be easier & smarter to just hand it over to a professional. Save yourself the stress and time! Thanks for watching and for the great question!
Ok when you pay yourself where to place this in the form schedule c?
Thank you so much for sharing this information! Your video was so informative. I feel like I really learned something. I am glad I held off on registering and opted to learn more instead.
I figured I should comment since the "comment total" is at 666. Great video, btw. My attorney charges me $800 every time I look at him.
Thanks for the clear information and the light-hearted presentation!
do ppl in other countries have to go thru all these shenanigans? lol I just wanna make money man sheesh lol
P B I’m no business guru but I think it’s possible to dislike both red tape and illegitimate businesses.
Thank you! Yes short and concise. Very helpful
Great video Aiden, I have one question, crossing my fingers you answer. I work full time for a company and will be starting an online business. I don't want to claim extra income into my personal taxes, would an LLC S-Corp be my best bet? Thanks...
TY!!! I've been wondering about this. Excellent information. #HumanRace 🙏
When she was talking about the graphics.. Internally I was saying.."oh please let it be stick figures" that was just awesome.. made my day
This was so helpful!!! Thank you for this.
If you are a single member LLC, and your business grosses $300,000, when you apply for a loan such as a mortgage, and the bank request your tax return, does it appear that you have a $300,000 salary to the bank?
+Jodie Wilson, IANAL or anything but I would guess that the answer is "no." The $300K isn't a "salary", it would be "income".
I just ran across this. Nobody seems to know (laywers think they know, but won't tell me without paying them first)
No, your income is whatever you pay yourself. I highly doubt you paid yourself all 300,000, so that would not be considered your income.
My god, thank god for you. This has been an issue for me. I'm an s corp. I cut myself a check once a month. Is that cool?
Sure, as long as you are paying yourself enough to be considered a "reasonable" salary. (That's something you should confirm with your accountant/CPA.) But taking one paycheck a month is totally cool.
lol wine, great video, thanks!
SHOES x 2 times means you have between 6 to 24 shoes :-) lol
I created an LLC (single member) and I’m about to start my business with in a week and this question was troubling to me: How do I pay myself in a single member LLC?
Well thanks to you I absolutely appreciate your explanation! Extremely helpful video! Thank you so much!
The graphic design really helped me to understand better😩😂😂 A+
Thank you so much for all of your insightful information, I'm so glad that i found you and I really appreciate all of your help with the tips, ideas and information. I have a question, are you planning to do any videos on paying state taxes, who has to pay, when and ho?. I live in NJ and just started an LLC, and was wondering what are your thoughts about the subject? I really would appreciate it.
I just figured out why people don't take me seriously as a real business person...I don't have a briefcase. Great vid, still useful in 2020 and super entertaining.
Boom! 😂 Thanks for watching!
Holy crap, this video was so informative. Keep it up. You got yourself a new sub.
You are great at explaining LLCs. Thank you!!.
I am a Nurse working as an independent contractor. I need to form an LLC, and need to be able to understand it better.
How long does it take for the LLC to be established, and ready to operate?
If I were to add use of independent contractors under my LLC, will I have to do an S-corp?
i’d like to to know the answer to this question as well 😁
As a single member LLC, should I pay taxes quarterly or once at the beginning of year? Is it up to me? Thanks
If it is your first year in business it would be hard to estimate quarterly payments. By your second year, I would definitely pay quarterly tax payments just to avoid any attention from the tax man.
@@mikenotta7079 what if you're seasonal. for example,: i host 2 events 1 in january, another in july...6 months apart. how would i file quarterly taxes in this scenario?
Shes so cute
I just started an LLC as a sole proprietor. If I decide not to pay myself do I still pay self employment tax? I'm funding the startup but don't want to mix money with my personal bank account.
Yes, unfortunately. An LLC is considered a "disregarded entity" which means that the profits are taxed as income to the member, even if the member does not take any distributions.
Unless of course you can show a bunch of business related expenses and avoid paying taxes on the full amount XD
Thank you very much for the very helpful video. Also, I am a very expensive graphic designer and if you need help with graphics just let me know. :)
hows the weeed there! oh yea great vid
+GAINGREEN33 ha! I don't partake but I've heard rumors that it's pretty good. Thanks so much for watching!
Thanks for the informative video. Very helpful! :)
I really appreciate your knowledge and transparency! Thank you very much!
Great Video I appreciate it , just starting my marketing agency this has been very helpful, Question Can I go from one to the other at anytime?
Question... if I form an single member LLC and I elect not to be taxed as a S-corp am I able to switch in a few years and elect to be taxed as a S-corp?
Yes you can.
Actually no benefit in leaving it as LLC. No brainier to just file form 2553 and make s-Corp selection to irs. However only us residents can elect as sub Corp.
I'm about to start a micro business from my home as the only employee and owner. What's better S-Corp non S-Corp or a C-Corp. In either of the instant situations listed above will I be able to get deductions for working at home and which one won't get any deductions. I'm completely clueless with taxes. I kno I have to talk to a CA but I want to make sure I register the legal way.
Starting around 6:15, you begin the example of how you do things. But here's what confuses me.
If, in an non-SCorp LLC, it's 100% treated like personal (taxable) income (according to your fancy graphic). But you said you pay yourself around 50%, and set aside some of that for taxes. "Whatever is left after that" you use for things like food, clothing, wine, etc... I'm assuming you mean "whatever is left" from the 50% you paid yourself minus whatever you said aside for taxes.
But, then, what about the OTHER 50% that you didn't pay yourself? Does it just sit in a bank account untaxed UNTIL you "pay yourself" with it? What about if the money is used to reinvest in your business (buy a new computer to be used for the business, for example?). Is that then treated as taxable income BUT subject to a deduction?
+Garrett C. I always like to use round numbers to work things out. So let's say that your SM LLC earned $120,000 in a year, or $10,000 a month. Half of that ($5,000) is taken as a distribution per month, and the other half of that (also $5,000) is left in the LLC's business bank account to handle any business expenses, for reinvesting in the business, etc.
Of the $5,000/month taken as a distribution, you'd set aside $2,000 (40% of $5,000) for taxes, and have $3,000 (60% of $5,000) left over for the important stuff like wine, chocolate, clothes...
If at the end of the year, somehow the $24,000 you set aside for taxes (12 months * $2,000 every month) isn't enough to pay your taxes, that's where the money you left in your LLC's business bank account comes in. Since you set aside half of your $10,000/month in there every month, you should have at most $60,000 (12 months * $5,000 every month) to be able make up the difference. Practically since you'd used part of that to pay for business expenses you won't have $60K available but you'd still have a hefty portion of it.
YMMV
jalabi99 omg! Thank you for finally explaining what none of the videos I've watched has explained. They keep saying "leave money is business account" and "set aside money from distribution payments for taxes" but they don't explain that regardless of distribution amount you take, you are going to be taxed self employment for the entire amount. So the amount you withdraw and put into taxes needs to be the same amount as the sum of gross income you made with your LLC business by years end. (However you want to work out the percentage.) Thank you again for the clarity!
+aangita glad I could help.
You are so awesome because I was confused, as well. Do you live in Pennsylvania or the tri-state area? Are you an accountant? Thanks!
Who, me? Nah. Not an accountant, not a tax professional, not a lawyer. I'm just a person who's been looking into stuff like this for so long I can explain certain things pretty clearly now. :) Glad I could help.
OMGGGGG I am so happy I found you, so funny and clear when explaining all this extremely complicated and boring stuff.
I see you arent wearing a ring, can we get some coffee one of these days?
+TheManFromTheMoon I appreciate the invitation, but I will have to kindly decline. But thanks for watching! :-)
Thanks for answering, somehow I felt you would. I really appreciate the videos! They have helped me a lot :3
+TheManFromTheMoon dude is the thing at the end of ur sentence a penis or What...?
***** oh! is that so? no wonder all the girls reject u creep, sorry ass...lmfo
*talking like that.
you know it was funny ;)
Hey Aiden you’ve helped me in soooo many ways! I’ve watched many of your videos but I haven’t yet seen one on paying social security or Medicare tax. Can they be paid quarterly like federal and state taxes? Are these taxes paid on a federal level? Also if I’m paying 100% of these taxes through my business will I also be subjected to these taxes as an individual Asking as LLC /S Corp . BTW I chose to be taxed as an S Corp because to me it sets up an operation system for me that promotes discipline and less attraction to co mingle funds, not necessarily because of my projected high profit gains from revenue. Also I love the idea of separating my personal and business tax rates and deductions. If I have the wrong idea please let me know. Thank you.
Great video !! Do you have a video explaining the pros and cons of each of those llc formats ?
You are a LIFE SAVER!! Simplistic and easy to understand. I love the "High End" graphics as well. Lol.
Aiden Love
Good information! Outgoing, funny and smart ! Thanks:)
Thank you!! 😊 I'm glad you liked it
I'm a new subscriber! Thank you for creating this channel. So very helpful!
Excellent video. Very informative and fun! THANK YOU!!
Cutest little drawing I ever did see lol
Thank you! that was a help. Is there an income number (ball park) at which my (single member) LLC should consider being taxed as an S-Corp (rather than a disregarded entity) due to social security tax savings?
+Ron Jones Good Question, Just Guessing but I would Say anything over 20k, SE taxes are high
when setting up a business account under an LLC for my first real estate investment - single family house, do you suggest i do an S corp? also, could I set up my mortgage payment to come out of that business account? so I would pay myself 50% monthly
I dont pay myself so idk how to even do my taxes and no one talks about that :( i appreciate this video though!
Hi, I want to form an LLC with single ownership for the simplicity of taxes. My wife and I share a bank account and operate as one financially. Will I have to file tax returns separately in order to own a single owner LLC or can we file jointly, including the LLC income, if I technically own it?
Very good question because I was wondering the same.
Thank you for the information, I like how you explained it, two thumbs up!
Thanks for the info! I have a single member LLC, also in Colorado, and I've been paying myself similarly (the account is called "Owner Withdrawl" in my books). In years past I've put this category under "Expenses," but I think it might actually fit better as a debit account in "Equity." My reasoning for this is that owner withdraws shouldn't be showing up as expenses on my income/expense reports. Does this sound reasonable? I went ahead and subscribed too, you can never learn enough about the legal aspects of running a business!
I always imagined, should I ever start a YT channel, I'd have 'state of the art' graphics as well, so when you pulled out the graphics I was pleasantly surprised.
I'll have to watch the SCorp v LLC video because they still confuse me.
I'm a VISUAL LEARNER, and I think you are one brilliant VISUAL TEACHER! 'couldn't thank you enough! haha
Thank you so much for the info I berly started my business like 1 month ago, I'm in the day porter business wich is basically janitorial work for outside shopping centers. And I'm getting a big contract soon so I'm really happy that I viewed your video I have so many other questions I wish to ask but I dont know if you would have time for me.
Thank you for these amazing videos!! I have a question, can you change the status from NON SCORP to SCORP at any given time?
Great video, the graphics were very comprehensive and you were great at explaining this issue. You are a great help, thanks.
Yes girl, wine and shoes are necessities!! Great info and great graphics😊
I think we can all agree on that one. 😊 Thanks so much!
The graphics! 😂😂😂 Great video, though.
Sub'd. Found you by searching 'paying yourself in LLC'. I just applied for mine and it will be a single member, non S-corp like yourself. Good vid, you explained it well & are easy on the eyes. :)
thx
Thank you for your time!! Very helpful.
ROFL, That was some Awesome Graphic, love it.