When starting a business, setting up an LLC is easy
But an LLC IS NOT A TAXABLE entity when Uncle Sam comes knocking
Here's how you set up your online business to pay the LEAST amount possible in taxes๐
But an LLC IS NOT A TAXABLE entity when Uncle Sam comes knocking
Here's how you set up your online business to pay the LEAST amount possible in taxes๐
Quick Background:
I started my career as a CPA. Brutal industry.
Never going back...
BUT
Helps now ensure I don't pay the tax man anything more than the bare minimum.
And neither should you.
Alright, let's goโฌ๏ธ
I started my career as a CPA. Brutal industry.
Never going back...
BUT
Helps now ensure I don't pay the tax man anything more than the bare minimum.
And neither should you.
Alright, let's goโฌ๏ธ
1. Decide your tax structure
Form an LLC, but we know that.
The IRS doesn't see you an LLC as a taxable entity (strictly flow-through), so we you must decide how you want to be taxed.
Best Options:
โข Single member LLC
โข S Corp
Form an LLC, but we know that.
The IRS doesn't see you an LLC as a taxable entity (strictly flow-through), so we you must decide how you want to be taxed.
Best Options:
โข Single member LLC
โข S Corp
Single Member LLC:
You will be taxed as a sole proprietor. All Schedule C info from the business flow through directly to your personal tax return.
And you'll pay self-employment tax on business profits.
You will be taxed as a sole proprietor. All Schedule C info from the business flow through directly to your personal tax return.
And you'll pay self-employment tax on business profits.
S Corp:
Here, you're required to pay yourself a salary... which is a business expense.
You report the salary + profits of the S Corp on your personal income tax.
Here, you're required to pay yourself a salary... which is a business expense.
You report the salary + profits of the S Corp on your personal income tax.
Differences:
S-Corp: you only pay self employment tax (includes Social Security & Medicare) on your SALARY.
S-Corp -> business profits are not subject to this self-employment tax.
That's where the Potential Tax Savings come into play๐ค
S-Corp: you only pay self employment tax (includes Social Security & Medicare) on your SALARY.
S-Corp -> business profits are not subject to this self-employment tax.
That's where the Potential Tax Savings come into play๐ค
In general:
If you make $75k OR MORE in business profit, an S Corp is going to save you money.
That goes way up if you are making a multiple of that.
Can save thousands for your biz if you do this right as you grow.
If you make $75k OR MORE in business profit, an S Corp is going to save you money.
That goes way up if you are making a multiple of that.
Can save thousands for your biz if you do this right as you grow.
What I recommend:
> Start out as single-member LLC
> You can ALWAYS change to an S Corp when you need
> So change to an S Corp once your biz is making $75k+ IN PROFITS (not revenue)
> Start out as single-member LLC
> You can ALWAYS change to an S Corp when you need
> So change to an S Corp once your biz is making $75k+ IN PROFITS (not revenue)
There's a little more upkeep with an S-Corp, like:
โข Paying yourself a salary
โข Additional tax return filings
But it's worth the extra few hours a year to ensure you aren't paying a dollar more than you should.
โข Paying yourself a salary
โข Additional tax return filings
But it's worth the extra few hours a year to ensure you aren't paying a dollar more than you should.
That's how I do it, hope ya'll enjoyed!
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2) For more gems on eCom, Amazon FBA and marketing, follow @wishzen๐ฅ
1) To help share with others, please RT the first tweetโฌ๏ธ
2) For more gems on eCom, Amazon FBA and marketing, follow @wishzen๐ฅ
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