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Video instructions and help with filling out and completing s corp election for llc
Hey Mark Kohler here and I got an important topic to talk about do you have children you own a small business do you think you can integrate the two of those and save a ton in taxes and maybe teach your kids about entrepreneurship at the same time well we got to talk about putting your kids on payroll I got my white board here we're gonna break down and you're gonna love it Music now before I go to the whiteboard let me make a few important points first this is legitimate it's legitimate if you truly have job duties for your children and they are participating in the business not just washing dishes and cleaning the room and that you could document things like janitorial shredding paper stuffing envelopes helping at the worksite even you know just running errands so this is a very important tax strategy if you treat it legitimately I don't want this to be some sort of tax scam or sham now this has been on the books for years this is a very common strategy think of the New York City Deli paying their kids working behind the counter even eighty years ago or in the Oklahoma City Farm paying their kids on the farm in the summer and this could be you and your real estate or internet business help having your kids help you around the office so make sure you have clear duties legitimate services your kids are providing and paying them a fair amount which is another topic which I want to give out of the way is that you're not gonna pay a five-year-old you know several thousand dollars to help in the business maybe it's $100 a month to a six or seven year old to empty trash and shred paper or something like that the older they get the more you can pay him and I have teenagers that can make $10,000 or more helping in a business in the summer throughout the year so you want to think about their duties and how much you're paying them before you start going through the procedures all right let's go to the whiteboard now this is a huge topic and I'm just gonna hit the highlights I've got more in-depth videos on my website and my tax and legal library where I go through all sorts of strategies where there's auto or health care dining and Home Office in pain kids over age 18 20 30 minute videos where I go in-depth very affordable and it'll save you thousands so if you want more just click down below and check it out now also in 2018 the rules changed because of the standard deduction amount now this is important for those that have watched my videos before there's a new rule for 2018 that we're gonna play into this now again a under age 18 not the simple here of 18 or under it's 17
FAQ
What is the cost to establish an S-Corp in California, Indiana, or Pennsylvania?
The filing fee to set up a corporation is $100 in California, $90 in Indiana, and $125 in Pennsylvania. However, that's just the fee to file a certificate of incorporation for a C-corporation in those states. For an LLC, it would be $70 in California, $90 in Indiana, and $125 in Pennsylvania.Beyond that, you would need bylaws and various resolutions if setting up a corporation, and an operating agreement if setting up an LLC. How much that costs depends on the attorney you work with. As for filing an S-corp election with the IRS, which you can do with either a corporation or an LLC, the IRS doesn't charge any fee for that. You can pay an attorney to fill out the form for you, or you can do it yourself.
What are the pros and cons of creating an LLC vs. S corporation?
A major advantage of or organizing your business as an LLC or an S corp is that you can protect your personal assets from the creditors of your business. Limited liability means you can't be financially responsible for more than your investment in the company. If you put in $10,000, and incur $11,000 in debt, you're only potentially liable for $10,000. Your creditors (check that, your LLC's creditors) can't 'pierce the corporate veil, as the phrase goes.LLC Pro's : The owner of a single member LLC doesn't have to file a tax return for the LLC, as they only report the activity on their personal tax return.Ease of Set up: Most LLC forms are only a single page for single member LLCs.Inexpensive to Start: The cost of setting up an LLC is also inexpensive, usually just a couple hundred dollars.Guidelines: The red tape involved in forming an LLC isn't as stringent as that involved with S corps, which also leads to savings on accountant and attorney fees, among others.LLC Con's : Self-employment Tax: Single Member LLC owners are required to pay self-employment tax on income generated in the LLC, which means making quarterly estimated payments to the IRS.Owners of LLCs must make sure they don't pierce the "corporate veil," meaning they have to operate the LLC separately from their personal affairs. The LLC must not be a shell but an operating entity. There have been cases where a business owner lost their protection because there was no distinct difference between the LLC and its owner.S-corp Pro's : The key advantage of an S corp is that it offers tax benefits when it comes to excess profits, known as distributions. The S corp pays its employees a "reasonable" salary, which means it should be tied to industry norms, while also deducting payroll expenses like federal taxes and FICA. Then, any remaining profits from the company can be distributed to the owners as dividends, which are taxed at a lower rate than income.S-corp Con's : S corps have more strict guidelines than LLCs. Per the tax code, you must meet the following standards to create an S corp:Must be a U.S. citizen or residentCannot have more than 100 shareholders (a spouse is considered a separate shareholder for the purpose of this rule).Corporation can only have one class of stockProfits and losses must be distributed to the shareholders in proportion to the shareholder's interest. For example, you can't have disproportionate distributions of dividends or losses. If a shareholder owns 10 percent of the S corp, he or she must receive 10 percent of the profits or losses.It costs more to form an S corp.Shareholders must adhere to the requirements at all times. If they don't, they risk disallowing the S corp election and the corporation would be treated as a C corp and its corresponding restrictions.Passive income limitation: You can't have more than 25 percent of gross receipts from passive activities, such as real estate investment.There can be additional state taxes for S corps.Shareholders should pay attention to paying themselves a "reasonable" salary for the work they perform for the S corp since the IRS is increasingly scrutinizing S corps for this.Given that it takes far less red tape to organize and is generally cheaper to administer, the LLC might be your best choice for you.Hope this was helpful, thanks.
How important is it to file a Section 83 (b) election for an LLC S-Corp?
I concur with Karl Stevens in fact most S Corporations today are LLC's at the legal entity level. S Corp and LLC are two very different questions. As to the original question about making an 83(b) election, it is very critical that you understand the consequences of making the election for restricted stock in an S Corp, but if you should or should not make the election will depend on the specific circumstances and both the tax impact on the person receiving the grants and the current S Corp shareholders.If you receive a stock grant for an S Corp and make an 83(b) election then you are considered as being an owner of the S Corp. That means you are required to be allocated a proportionate share of the income of the S Corp each year based on your ownership percentage and if the current shareholders receive a distribution of cash, you have to also receive a proportionate distribution.You also have to take into consideration that making an 83(b) election means the grant recipients by being considered shareholders could terminate the S election if any one of them is a ineligible S Corp shareholder or if adding shareholders puts the number of shareholders over 100.If you do not make the election, then you are not considered a shareholder and thus cannot receive distributions from the corporation and the corporation may be required to accrue any shareholder benefits that would otherwise be due to you during the vesting period.Finally the company needs to be very sure that nothing in the vesting and grant agreements creates a second class of stock that would terminate the S election.You will not know how "important" the 83(b) election is until after it is too late to do anything about it. You have 30 days from the date you receive the grant to make the 83(b) election, but all the election does is accelerate you recognizing income for the receipt of restricted stock, that you would otherwise not have to report as taxable income. You do this because if you recognize the value of the stock today as ordinary income, then years from now when you sell the stock you get capital gain treatment on the appreciation in value between today and that future date. If there was a substantial increase in value in the future, then making the 83(b) election was very important and will greatly reduce your tax burden. If instead the value of stock decreases or becomes worthless, then you made the wrong choice as you would have been better off to have not filed the election.You will often hear people say "you should always file an 83(b) when you receive restricted stock". That statement is based on the fact that no reasonable person would take payment for work done in the form of stock that they can't sell today, unless they believed that the stock was going to be worth a lot more in the future when they can sell it. Add to that the fact that the resulting tax liability when you do sell the stock can be 1/2 of what it would be if you did not make the 83(b) election and you get that filing the election is the safe choice. However, the failure rate of startup companies would tell you that making an 83(b) election is probably the wrong decision just as often as it is the right decision.
Which W-8 form should I fill out as an LLC company?
How do they know to request a W-8 instead of a W-9? Are you Foreign?Assuming you need to submit a W-8 instead of a W-9, here are the questions to guide your W-8 decision.Do you have other members in your LLC? If you are the only member, a Single Member LLC is a Disregarded Entity taxed on your personal tax return. So you would submit the W-8BEN.If you have other members, are you subject to the default status or have you elected corporate status?If you are subject to the default status, your LLC is taxed as a partnership so submit the W-8IMYIf you elected Corporate status, submit the W-8BEN-E.https://www.irs.gov/pub/irs-pdf/...Other great answers here. Especially good advice from Carl and Mark, get to a CPA.
When should I elect to be treated as an S-corp for tax purposes for my LLC?
If you are going to have losses for a while, it's generally better not to operate as an S-corp, because you may not be able to deduct those losses on your tax return immediately (it depends on how much you invested in the business to start), especially if you are the sole owner of the LLC. If your profits are high enough - and remain high enough - where you can pay yourself a reasonable salary for the work that you perform for the business, then you probably should elect S-corporation status - you'll reduce the amount of SS/Medicare tax that you will pay. The IRS Fact Sheet Wage Compensation for S Corporation Officers discusses the factors that go into determining a reasonable salary, which you should take to heart - the Tax Court has been pretty relentless in dinging S-corporation owners who don't pay a reasonable salary. Generally, you also want to go with the S-corporation option instead of default LLC treatment when you are trying to attract investors (although going right to the C-corporation can be even better, especially if you aren't taking money out of the corporation). Investors are extremely reluctant to invest in LLCs, and only marginally less reluctant to invest in S-corporations. It's usually easier when you expect to attract venture capital to go right to the C-corp structure.
How expensive is it to retro an elect S corp from an LLC for last years taxes?
Per IRS Rev Procedure 2009–41, a late entity classification election is allowed up to 3 years and 75 days past the effective date of the election, assuming that no other election forms have yet been filed during that time, and that no other returns have been filed that would be inconsistent with the entity you are electing.In layman’s terms… if you haven’t yet filed the classification form (Form 8832), and you haven’t filed any returns that say you’re really a sole proprietorship or a partnership, then you can still elect to be taxed as an S corporation up to 3 years and 75 days from the date the form is filed.As far as the cost goes, there is no charge imposed by the IRS for this election. The only cost would be the cost of a professional to fill out and file the form for you… or you can file it yourself for free. The form is not difficult to complete. You can download a pdf fillable version here: https://www.irs.gov/pub/irs-pdf/.... The instructions on where to file the form are included with the form.If you prefer to have a tax professional complete it for you, I would not think it would be too expensive since it’s a fairly simple form to fill out and send in, so maybe $100-$200, depending on the tax professional that you choose to go with since hourly rates can vary from firm to firm.
How do I fill out a W9 correctly for a single member LLC that has not decided on a tax election yet?
did you get an EIN? go to the IRS website and get an EIN. put that on the W9 with the name of your entity and its address. for now, you’re a single member LLC, and a disregarded entity [you file a schedule C]if you decide to be something else, then you’ll have to file a change of entity form with the IRS.
I want to start my own online shoe store business, where should I start?
Confused on how to start an online shoe store.Don’t be. Let me help you start a spiffy online footwear/ shoe store.Need to say that technology has radically influenced the way people interact with business and later enter into a commercial transaction. The internet penetration has lured a huge chunk of populous to adapt with the evolving e-commerce trend. People nowadays find it more convenient to buy products online. How could someone ignore the whole commercial space in the virtual space.Try Free Trial - Start an Online Footwear Store - Sell Shoes OnlineIn this technology driven world, technology enabled SaaS based e-commerce platform providers gives you the opportunity to start an online footwear store in seconds. The whole setting up an online store is simplified to that of creating a Facebook account. One small signup and you get a trial store. The fascinating part about most SaaS based ecommerce platform providers are that they give you a trial period of 14 days. You can use this trial period to fiddle around and set up a virtual store featuring footwears.When starting an online business most people fall for the fallacy of investing a huge amount and own a custom build ecommerce store. It’s important that you consider your budget before making any decision. Custom build ecommerce platforms require dedicated resources to build the platform based on your requirement. As there is a requirement for dedicated resource to build and manage your virtual store, there is a high chance for budget overrun.Define your NicheIt’s important that you map your products with the right customers. Based on the products that you are planning to sell your target demography can vary. Let's consider an example,Say you are planning to start a footwear store that sells high end premium products. Premium products that start at a price of INR 25,000. When your products fall into the premium category then you need to make sure that you target people who have the purchasing power to buy these high-end products. Unless and until you define your niche clearly and jot down your target customers it becomes a muddled task to justify your investment.Start with the Right Domain - Find the right Domain for your Footwear StoreEvery activity in the digital world has a purpose. So, selecting the right domain name for your business matters. Always look for a domain name which is,Easy to rememberHas less technical jargonCan buy all the TLD’s (Top Level Domains). Eg, .in, .com, .org, etcDon’t have any special charactersGives a context to the businessA unique/ catchy name people could remember.Make sure that you will consider these factors when deciding a domain name for your footwear business.Find the Right SaaS Based Platform ProviderAs I mentioned before there are a handful of SaaS based ecommerce platform providers out there you could look into. Almost all these platform providers comes with a set of pre-built themes and templates that people can make use of. These pre-built themes are created around a customer oriented strategy. Every brand that you come across has invested their time and resources in finding the right mix and to develop a theme that best suit the end user.There are a couple of themes/ templates listed under every platform provider. As a start up entrepreneur make sure that you invest the right time to find the template that best suites you need.Look for template that falls into your niche.Eg: In this case since you are planning to start an online shoes / footwear store look for a theme or template that's designed with the same intent. There are few pre-built platform providers like Shopnix, who has created themes that best suits the needs of needs of end customer.Few E-commerce Platform Providers to Look IntoShopnixQuicky:- INR 1000/ monthStandard:- INR 2000/ monthPro:- INR 5000/ monthPremium:- INR 10,000/ monthBuildABazaarSilver:- INR 1000/ monthGold:- INR 2500/ monthGold Plus:- INR 5000/ monthWeeblyStarter Plan:- USD 8/ monthPro Plan:- USD 12/ monthBusiness Plan:- USD 25/ monthPerformance Plan:- USD 38/ monthShopifyBasic Shopify:- USD $29/ monthShopify:- USD $79/ monthAdvanced Shopify:- USD $299/ monthECWIDVenture:- INR 700/ monthBusiness:- INR 1500/ monthUnlimited:- INR 5000/ monthClueCommerceBasic:- INR 7,500 (first year)Advance:- INR 19,500 (first year)Business:- INR 39,500 (first year)Enterprise:- INR 59,500 (first time)VolusionPersonal:- INR 2030*/ monthProfessional:- INR 5530*/ monthBusiness:- INR 20,930*/ monthSquareSpaceBasic:- USD 26/ monthAdvanced:- USD 40/ monthLemonStandStarter:- USD 19/ monthGrowth:- USD 69/ monthProfessional:- USD 199/ monthWhat Features Should I Look for When Deciding to Start a Footwear StoreTo manage your online store seamlessly you need to make sure that you have all the basic tools/ featured required. Make sure that you check all the plans made available by the ecommerce platform provider and then make a decision. With plans the features and the benefits you get varies. Spent enough time to check all the features available with individual plans. Talk to the support team and learn how much does an additional feature cost.Top features to look for when planning to start a shoe store,Customers And Order ManagementCourier TrackingProduct notifications And Pre-OrdersProduct VariantsGift CardsDiscount CouponsStandard Payment options (PG,COD,DD,MO)Discount RulesUse these features to manage your online shoe store effectively. In-case if you need an additional feature/ plugin make sure that you talk to the support/ sales team and integrate that feature with your virtual store.Partner with the Right Logistics PartnerYou need to partner with the right courier company or logistics handler to make sure that the online orders you get are shipped and delivered on-time. Timely delivery matters, for any online business to be successful it needs to make sure that the products are shipped on time and the delivery is fulfilled at the best interest. As a business you need to make sure that the end customer is happy with their overall experience interacting with your online shoe store.There are a couple of logistics partners that you could look into.Come up with a Commercial Model for your Online Shoe StoreSetting up an online shoe store is just one part at the same as an entrepreneur you need to make sure that you footwear store is commercialized in the best possible way. Without promoting your business (online shoe store) it will be a painstaking task for you to generate revenue. And, without revenue a business cannot survive in the virtual world.Make sure that you invest the right time and resource in identifying the marketing channel for your online store. Few online marketing channels that you could look into.SEO (Search Engine Optimization) - Educate yourself and learn what are the best practices in optimizing your website. There are multiple factors that determines your organic ranking on Google. As a start up entrepreneur you need to make sure that you invest the right time to optimize your website for both users and google bots.Social Media Marketing - Social channels like Facebook and Instagram has evolved to an amazing marketplace to promote your products. When promoting your products on social media make sure that you won’t see this channel as a broadcast media. Instead you should focus your effort on interacting and engaging with people of social media thus creating a community of loyal followers.Influencer Marketing - Find the right influencer to promote your products online. Start small find micro influencer in the initial days. Us the local resources and talent to promote your products. Let’s say, there was an arts and sports fest in your local community. Then find the candidates who has won the hearts of people who gathered at the fets. Use these local talents to promote your product.Try Free Trial - Start an Online Footwear Store - Sell Shoes Online