LLC S-Corp Conversion Rant! | Mark J Kohler | CPA | Attorney

LLC S-Corp Conversion Rant! | Mark J Kohler | CPA | Attorney


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 It’s hard enough to live the American dream without being out on the web on google trying to find answers to complex Questions and just click in a mouse hoping you got it, right my team and I want to be a huge resource treatment the law firm accounting firm my Education resources on my site. Please continue to follow these strategies I know those safety thousands now click here if you want to be a part of my newsletter It’s awesome weekly updates and deadlines and strategies and tips also subscribe to my youtube channel You’ll love it and make sure to click the bell icon So you get a little ping whenever new video and finally check out my site Marjorie Kohler comm with all sorts of videos Probably 70 plus videos 30 plus hours of content that’ll save you thousands

44 thoughts on “LLC S-Corp Conversion Rant! | Mark J Kohler | CPA | Attorney

  1. someone had their pot of coffee today.

  2. You are amazing, thank you!

  3. paralegal option ! Plus "registered agent" , for state website

  4. Zzzzzzzzzzzzz I forgot my coffee.

  5. why you never reply the comments here?

  6. Mark,
    You are the best!

  7. What if you earn 200k profit, always over the social security limit. Does that 2% Medicare savings make it worth all the extra tax prep, payroll fees, etc

  8. if I have an LLC but I want to go ahead and setup an payroll system that pays me and taking taxes out, would that benefit me?

  9. Can a member of a LLC taxed as a S-Corp be a foreigner? S-corps have this restriction. Are there more advantages to create an LLC and treated as S-Corp than create an S-Corp directly?

  10. You're so perfect. Thanks !

  11. Keep up the great videos Mark!

  12. Great Video Brother !!! 🙂

  13. Would it be wise to build an LLc and a separate S-Corp,Then install the LLC into the S-Corp?

  14. Finally a freaking layer/accountant who talks like a normal human being. I'm hoping to close on my first rental investment property soon. Will be using your guys to set up my LLC.

  15. To do a retroactive s-Corp election would i have had to have taken a salary all year? What if I took regular distributions and paid quarterly taxes as planned? Could I still elect for it?

  16. Is it worth it to elect the S-corp if u make $60k or less a year. Like is there a certain amount of money that is needed to justify the election.

    Also do u know anything about structuring Holding companys with Operating companies for small businesses entrepreneurs.

  17. If you convert from an LLC to S-Corp mid year, how is the payroll handled? In other words, an LLC does not require payroll so after the conversion is payroll for the previous months (previous LLC) paid out in a lump sum?

    Also, what do you charge for corporate (s-corp) taxes? Can't find it on your site. Thx!

  18. Is it even necessary to even have an LLC first?

  19. Hi is this work with NON-US?

  20. What if you have already selected a C Corp?

  21. I'm Trying to understand what benefit, if any would there be to having an LLC that is owned by 2 single owner S-corps, instead of just making an conversion from and LLC to an S-corp owned by the 2 50% shareholders?

  22. Good video. Thanks for sharing. Grateful for tips. 🙂

  23. Is being an LLC and taking the S-corp election different than just filing as an S-corp from the start?

  24. Mark you’re awesome. I’m just a graduated accounting student. I did not learnt this in college. Of course I know what is an S Corp and C Corp and LLC etc, but they did not teach me strategies.

  25. Call!!

  26. I started an LLC late last year. How can I determine if I elected the S-Corp option?

  27. What if you have a full time job as a W2 making 250k but also have an LLC taxed as an s-Corp. do you still save on taxes?

  28. Can a non-resident alien single member LLC elect S-Corporation?

  29. How do you balance the goal of paying the lowest reasonable salary and the desire to maximize the company match into a Solo401k. In this case, a higher salary means a higher company match given its 25% of the salary no to exceed 56K in 2019 including the max employee contribution of 19K. To achieve the max, one needs a salary of $148K. Now I know this is economies of scale, but if the business revenue is going to be high enough to do this, then there seems to be little choice in the salary selection.

  30. Can you do a video on best practices to handle your S-Corp money (i.e. how much to keep it capitalized, what bank accounts to have for the biz [one for operational, one for taxes, etc.] That sort of thing) thanks!

  31. The entire amount distributed from an LLC taxed as a Partnership is eligible for the 20% deduction, however only the profit from an S Corp is eligible for the 20% deduction, correct?

  32. What happens if there is a fire that destroyed my book? How to do tax?

  33. Can you take the S election is you are a single member LLC?

  34. S Corp seems to be a great way to go since I work but I want to start a business on the side

  35. Hey Mark, if a startup misses the filing deadline for an S-corp in the fiscal year they start, can they make the selection after the deadline? For ex: January 1st Launch, and it's now April

  36. On the S-Corp example “$50,000 distribution” and a $25,000 salary, how does that $50,000 get into the owners pocket?
    Does the owner just simply write a check to himself, minus taxes of course?
    What if that $50,000 is left in the business account as business profit, taxes have to paid on that $50,000?

    I have always been told, I’m LLC S-Corp, to leave very little to no profit at the end of the year because I the business owner would have to pay taxes on that profit, because that profit goes on my personal wages. Which is crazy because I personally didn’t get any of that $50,000 and the business could lose that $50,000 the next calendar year.

  37. I filled for a single member llc for my lawn care/landscaping business a couple weeks ago should I convert to s Corp right away after approval and then get my EIN, my intentions were to keep business finance away from my personal finances, and will I still be the owner of the business in an s Corp.

  38. ok so i am trying to start a llc and was wondering if the online companies that file for llc for you are the right way to go?

  39. Aloha Mark!
    We're just getting started and really appreciate you taking the time to do this! Thank you!
    Mike & Jenny

  40. Should you be set up as an LLC, S-corp, sole proprietor if you're only going to receive one large lump sum commission as an independent agent? Would you have to pay self-employment tax on a Form 1099? Thanks

  41. Should i start with s corporation or file for it later?

  42. Are you guys familiar or have experience with VI tax laws?

  43. Hi. Could you help with LLC s-corp for no-residents? Nice presentation! 🙂

  44. Hi Mark, do you have any recommendations for a Tax Attorney in Portland, OR? Thanks!

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