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Video instructions and help with filling out and completing Where 940 Schedule R Form

Instructions and Help about Where 940 Schedule R Form

Hey thanks for joining me guys my name is will Lopez I'm founder of advisor Phi comm today this video is going to cover why the escort status and how to complete form 2553 which is the IRS form to elect S corporation status federally so I get asked this question a lot by a lot of small business owners all across the country I do a lot of consulting in this area and I do a lot of guidance in this area so the common question I get is how do I save money in taxes and then how do I properly format my corporation or structure my corporation where it's beneficial to saving money in taxes and it all basically comes down to this S corp status that this term always gets kicked around so what I want to try to do is explain what the S Corp status is why I believe you should elect it if it quite a few qualify for it and then basically how to elect it which is basically form 2553 and how to complete that so what is the S corp status so the S corp status is a federal tax status that needs to be elected that the IRS allows you to elect federally so you basically fill out form 2553 the corporate the IRS processes that form and basically sends a letter to you saying that your corporation or your LLC has been qualified for S corp status LLC's Ning's can elect it so what people don't know is that LLC's default to a certain tax position and so to inks inks default to a certain tax position in that tax position is not S corp status for inks generally oils for inks it's si corpse for LLC's generally sole proprietorship if one person owns it not the default tax status for LLC's and ynx S corp status is a status that needs to be elected so the IRS by default puts you in the as far as I'm concerned the worst tax position possible and it's your job to elect otherwise and the S Club status is a way to save a bunch of money for all of us default tax status is for LLC's well if one person or one entity owns an LLC or starts an LLC in the state in your state if it's an individual as a sole proprietorship if it's another corporate raishin that formed the LLC and owns wholly owns that LLC is a disregarded entity if two or more people own an LLC it's considered a partnership of two or more corporations or other entities own an LLC it's a partnership so proprietors disregarded entities partnerships in general are subject to self-employment tax which is Social Security tax and Medicare tax and subject to the full realm of Social Security self-employment tax which is the employees portion and the employers portion which is fifteen point three percent total altogether so on $100,000 bottom line if you're an LLC being taxed as a sole proprietorship after all expenses then your tax bill at least will be fifteen thousand three hundred dollars which is what Social Security is and does and that does not take into account federal income tax state income tax if you're subject to that so you know it's a huge way to save money electing S corp status so default tax sentences for in corporations so if you form an Inc in your state the default tax status for that is C corpse also known as a double tax core double tax Corp is really popular for publicly traded companies so like Facebook Twitter Ford GM C corpse allow you to have various kinds of stock that is common stock versus preferred stock unlimited amount of shareholders so that's why our C Corp to really become popular is when you want to have more than 100 shareholders owning your corporation C Corp status is generally the way to go really popular for a lot of tech startup companies you know see corpse in Delaware see corporate REIT you if you want your Inc to be an S Corp then you have to elect otherwise C corpse obviously pay corporate tax so whatever incomes or net income the C Corp generates pays tax at the corporate level and then if the shareholder wants to kick out dividends or if the company wants pay kicks out kick out dividends the shareholders then the dividends are taxed at the dividend tax rates the benefits of being an escort is basically you don't have to pay any corporate tax right so you're not a c-corp you're not paying the corporate tax you're paying basically whatever gender whatever incomes are generated from the escort flow through the entity down to you and then you pay tax at the individual level so just like this point says it's a flow-through entity so any incomes or losses that the S corp or that your LLC taxes and a score or your Inc taxed as an S corp generates flows through that business down to the shareholder and is taxed at the shareholders marginal tax rate that applies to them any flow through income that S corp generates doesn't pay self-employment tax so that's where the savings comes from so for example if you're a LLC as a sole proprietor so being taxes as a proprietor and you have $100,000 net income after all expenses all deductions then as a sole proprietor you pay 15.3% and self-employment tax plus your federal marginal tax rates plus your state income tax but if you make that same under thousand dollars after all deductions and expenses as an S corp it flows through the S corp status down to your individual tax return and you don't pay any self-employment tax you basically save 15.3% on every dollar up to the phase-out of you know Social Security and Medicare now.

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