Do any of you have an LLC with an S corp conversion have you thought about converting your LLC to an S corporation
Well this videos for you
I'm gonna break it down and you need to know the basics of this because it's an important tax strategy that can save you thousands
Now my name's mark Kohler I'm a CPA attorney best-selling author radio show host and I love
Helping my clients save money. I love the American Dream
I love small business and I've got to go through some important points here and I'm going to use the whiteboard
To help you on this LLC S corp thing now
I've got other videos on my youtube channel on
When to convert an S corp and when to do this and how to manage your S corp several videos, you'll find very helpful
Please get a bowl of popcorn and some diet coke and start working through them. But if you have an LLC and
Considering an S election or doing done it already. That's what we need to talk about now first
Important point never forget this LLC's do not save taxes. That's right
Some of you may have just fallen off your chair
Some of you might be very upset by this a limited liability company LLC s do not save taxes they give you asset protection
Now you can get a tax ID number open your bank account
Start a business with a partner. I mean have your S corp own the LLC? Oh my gosh, LLC's are awesome
I use them every day for clients around the country, but they don't save taxes
The only way the LLC will save you taxes is if you convert it to an S corporation
And now the benefits of an S corp are the is the ability to save on self-employment tax
So let me give a quick example here. You've got your LLC. You got your S corp
let's say you make
$100,000 in both examples. We bring in a hundred thousand in sales one hundred thousand in sales
You spend twenty-five thousand dollars and you?
net 75 same
example in both scenarios
Two different companies but two different results with self-employment tax. You're gonna pay fifteen point three percent almost
$10,000 in self-employment tax before you pay federal or state tax ouch
with an S corporation, we're going to take a salary maybe 25 grand and take a dividend or pass-through income or a k1 of
$50,000 I call it different things to make sense for folks
This could save you close to
$7,500 Wow, that's a huge savings. Now. I know some of you accountants out there are like, oh my gosh
That's way too aggressive of a salary or something
You're like, well, my accountant said I had to take your salary. I could never do that
It's got to be reasonable and blah blah blah. I've been teaching this for years. I've interviewed ex IRS agents on my radio show
I write on this I research every payroll case in America and I've got a matrix watch another video of mine read my book and
I'll help you determine the proper payroll. This is an example but not far off
Too many business owners take too big of a salary now
If you have an LLC, you're paying self-employment tax on everything, but with an S corp you save on self-employment tax
So what you can do now
this is the point of the video is you can take an LLC and
convert it to an S corp with one form is called a
2553 and I can convert my LLC to an S corp now, that's simply stated
This is a very complex issue that I've summarized in about 90 seconds
You've got to get a real tax attorney or CPA or attorney that does taxes that understands this to help you in the conversion
That's what law firm accounting firm has been doing for 15 years for clients around the country and we're affordable
Don't just go online and click click click and think you're done too many people screw this s election up
Let's put it up you other important points
first let's talk about timing and
I elf oftentimes call this LLC S corp insurance
I mean, it's really cool now hang with me on the insurance part of this but for those of you that are an LLC
Right now in any given year this video could transcend several years, so don't worry about the year
But maybe you're somewhere in the middle or the end of the year and you've got an LLC
you can backdate into an S corp and
turn it into a
corporation S corporation as of January 1st
Now some of you may freak out again and go I thought it was a 75 day rule
no, no now there's special revenue rulings and
Documentation you can put on the 2553 to do a retro F retroactive S selection up to a year. That's right and
again, if you try to do this online or try to do it yourself or you hire an accountant that doesn't understand this you're gonna
Jack it up and we only charge like 125 dollars to do this
2553 election it's not that hard if you know what you're doing so you can make this election back to the begin year now
Where's the insurance and all this?
This is why I call it an LLC S corp insurance because some of you don't know how much money you're gonna make this year
You don't know if an S corp is really a right election for you
So in your first year you make this election. I set up LLC's for clients all the time
And then we talk in november/december and say hmm. How much men Jamaica what should your payroll be?
Could we do an S election to the first of the year are we gonna cease avians?
And if you're gonna see savings boom
We pull the trigger and we make you know s-curve
But that's a consultation at the end of the year. Now if you're making more than 50 grand net
Anywhere in this mix you better call right now and get your S Corp going
But this is something you can determine at the end of the year now. You can't wait till the next year ago
Oh, I'll be an S election two years back
No, no
We're gonna try to make this s election in no later than the month of January the following year because we've got to run payroll
Reports remember if you're an S corp, you've got to take payroll
So watch the other videos on how to manage an S corporation and how to take care of it now
I just want to make one more final point. I could go on this for a half an hour to an hour
I've got online videos on my website for hours and killer topics you would love it'll save you thousands of dollars
It's a few hundred bucks. Check it out
But just let me whet your whistle here on
this payroll issue and how much payroll to take we've got all sorts of things because a lot of people think oh
I got an LLC. So I just have one sheet of paper. I'm good. No, you should be doing your annual minutes
You should be making sure you're filing everything with the state at the end of every years
You should have a corporate book and an operating agreement. Well, I thought with an LLC it was easier than an S corp
No, you treat them the same. That's why I write books on asset protection. Good luck in court with that one sheet of paper
Maintain the LLC like a corporation if you make the S election, you've got to treat it like a corporation
You're gonna do a separate tax return at the end of the year. You got to do payroll quarterly. See all these little issues
Well, this is what a good advisor should be helping you do in an hour with any of my tax lawyers
We pound it out we nail down the issues so that you're s Corpse ready to go
Then you have a follow up call maybe once a year we dial it in
It doesn't have to be thousands upon thousands of dollars for a few hundred dollars once a year. You're meeting with the tax lawyer
built for small business
That's what our firm is built for small business owners
And then we hook you up and you get this right equation done guys
This is this is so important when you're trying to build wealth
it's hard enough to be a small business owner and make ends meet and then the
Taxman at the end of the year is killing you the S corporation is so powerful for operational businesses
You're not going to convert an LLC for rental property
you're just gonna use an LLC for
Operations and then do an S election that that answer alone that I just shared there is a key part of a consultation
To help you succeed in this conversion process. So anyway, this is not a sales pitch. This is an infomercial
I've hope my throat on some important information that'll help save you but there's it's so much more than just a youtube video
Set up a consult not with me or my firm find a tax lawyer. That knows what they're doing that loves small business
That's gonna save you ten times what you pay him. That's what we're about. So anyway, keep living the dream don't give up
Boom. See you later
Thanks so much for watching that video and I want to be your source for tax and legal strategies
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