LLC Vs. S Corporation: The $50,000 Mistake Most Entrepreneurs Make
VIDEO TRANSCRIPTION – LLC versus S corporation, the $50,000 mistake most entrepreneurs make. Hi, I’m Steven D. Cooper, your tax strategist with Coopers accounting service, because your financial freedom matters.
If you’d like to learn more great tax tips, download our popular financial guide at our website, yourfinancialfreedommatters.com, or click on the link below this video.
I met up with a couple recently we talked about how their taxes were set up. Some reason they thought that they were filing a Form 1065 partnership because they thought that they were partners.
I explained to them that under California law, which is a community property state, they were considered one and their tax returns were filed as a Schedule C because they were considered to be a single member LLC.
What does that mean, single member LLC or LLC or partnership period? That means every 10,000 or $100,000 that you make, you’re going to pay what’s called a SE tax, or self-employment tax, or social security tax.
They all mean the same thing. That means $1,500 on every $10,000 that you net income, you’re going to pay taxes on it. Every $100,000, that translates to $15,000 in self-employment tax that you’re going to pay. That is above federal and state income tax.
They find themselves paying self-employment tax. They were not aware of it, sadly, because they tax preparer. They’re not properly explaining this to them. We talked about other debt come to find out that they owe roughly about $50,000 in credit card debt.
I told them by amending 23, 24, and 25, they’re going to roughly get back around $50,000. That means that their credit card debt will be eradicated. You only can imagine the joy that they had knowing that by the end of this summer, that debt will be gone.
That means that weight on your back is gone. It’s lifted up just by asking a few, just two to three extra questions. We have changed their lifestyle where they can leverage the money and invest other avenues in their business right now. Once again, imagine that.
For more easy financial tips, sign up for a financial tip newsletter by going to yourfinancialfreedommatters.com or click on the link below this video. You can also download a financial guide as well.
If you’d like a free, smart, 20-minute advice, consultation, call us at 562-436-2600. Well again, I’m Steven D. Cooper. Your tax credit is also known as Coach Coop with Coopers Accounting Service.
Don’t miss our next video. It’s going to be a great, another financial tip just for you.
Call now for your FREE Consultation – (562) 436-2600
