Do I Have To Pay Myself A Salary From My LLC?

Рет қаралды 16,982

Clint Coons Esq. | Real Estate Asset Protection

Күн бұрын

Do you have to pay yourself a salary from your LLC? In this video, I will explain how to pay yourself a salary from your LLC in order for the company to remain legitimate and tax-compliant.
Learn more about how to become anonymous AND appear as if you own nothing at our next Free Tax & Asset Protection Workshop. Save Your Seat: aba.link/db93ab
“It's critical you understand these because that's going to roll in if a salary is on the table.” 0:40
Are you unsure how to pay yourself a salary from your LLC? If you have started your LLC, you may be wondering whether or not you have to pay yourself a salary. The short answer is yes.
As an entrepreneur, it's important to know whether you have to pay yourself a salary from your LLC. After watching this video, you'll have a better idea of the answer and be able to make an informed decision.
LLCs can be a great way to start your own business and generate income, but make sure you're smart about how you pay yourself.
As a business owner, it's important to know the rules surrounding salary compensation. We'll explain the rules surrounding salary compensation and explain whether or not you need to pay yourself a salary from your LLC.
Clint Coons, Esq. has spent many years aiding and guiding LLC owners on the legal path to handling business so rest assured that he has the tools to help you with your legal needs. He is a highly-qualified lawyer who has helped countless business owners with their legal matters and can do the same for you.
If you have any questions or comments, please feel free to leave them below.
If you enjoyed our content, then be sure to subscribe and share it with your friends!
Show Notes:
0:00 Intro
0:13 Eligibility
0:51 Salary Options
3:03 Active vs Passive Business
4:41 Employment Taxes
5:38 S-Corp & C-Corp
6:33 Partnership
8:34 Disregarded
9:56 Outro
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ABOUT CLINT COONS
Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#llc #salary #clintcoons

Пікірлер: 54

@ClintCoons Жыл бұрын

Join us for our next Free Tax & Asset Protection Workshop Live stream. Our attorneys and specialists will answer all your questions at no additional cost. Save Your Seat: aba.link/tapclint

@mgmtcp Жыл бұрын

This is MBA level Tax education put in simple terms . Thanks for the video Clint

@ClintCoons Жыл бұрын

You are welcome

@delandisdillard3527 5 ай бұрын

This is by far the best set of videos on tax status for llc's that I've seen. Good job.

@ClintCoons 5 ай бұрын

Glad you enjoyed it!

@lanceknuth5300 26 күн бұрын

"If it sounds too good to be true it probably is." Thank you for making this video. Somewhere before this I read that I didn't have to pay myself and came to the conclusion that I didn't have to pay tax on my labor. I already signed up yesterday for your workshop on the 13th so I look forward to acquiring more useful information.

@ClintCoons 25 күн бұрын

Nice. I will see you there.

@frankmartinez2987 Жыл бұрын

This is why I come here every day. Thanks you so much for this information!

@ClintCoons Жыл бұрын

Thanks

@sandrascullark8716 Жыл бұрын

Very informative. Thank you.

@santaniebrown3721 Жыл бұрын

Well explained, thank you so much!

@jegm1118 Жыл бұрын

Great explanations; thank you !!!

@Simon-Misiewicz-US-UK-Taxes Жыл бұрын

A nicely explained video, thank you

@billassim9014 Жыл бұрын

Great info,thanks

@Leila.1219 11 ай бұрын

Awesome video, Clint. I really enjoy your content!

@ClintCoons 10 ай бұрын

I appreciate that!

@ElduroJamCub Жыл бұрын

Regarding the Partnership status, the limited partner does not pay the self-employment tax. That's one way to save the 15.3%, the general partner will have earned the active income and the limited partner's income would be considered passive. The general partner pays the 15.3% and the limited partner doesn't. If both are general partners then both incomes would be considered active and are subject to the 15.3% SE for each partner.

@doughboyu20 Жыл бұрын

@Dario Olivere you are correct. Good additional clarification! Only SE tax the limited partner would be subjected to is if they receive a guaranteed payment(s).

@JC-slammedaf 5 ай бұрын

Im assuming it’s similar for scorp? Me and my fiance have an llc, she is an employee shareholder, im not an employee of the llc just a shareholder. I know I don’t have to pay myself a salary since im not active, but how would i pay myself if the llc has left over profit after her salary and expenses, would i just take my percentage of distribution that belongs to me -and she would take the rest of the distribution?

@lalamala1839 Жыл бұрын

Hi Clint, just started a S corp this year but there’s no revenue yet, how does salary work in that case?

@HopeProphecy 4 ай бұрын

How would I pay myself if I worked for an operating single-member LLC owned by a single member Wyoming Hold LLC (I am the owner of both)? Would the holding company LLC be the S-Corp, or the operating company LLC? Would I pay myself from the operating LLC or the Holding? I am wanting to have the asset protection of the holding LLC and the tax benefits of teh S-Corp. Thanks!

@Yu4got Жыл бұрын

He always on point. Am thinking about creating a Wyoming LLC for my business but I don't know of a way not to lose my anonymity due to applying for sale tax exempt.

@ClintCoons Жыл бұрын

Not sure how to answer without knowing more e.g., where is the business taking place.

@TheNAVagator 3 ай бұрын

Great video. Question in regards to this. As an H1B VISA holder, I am not allowed to have active income other than my actual W2 job. I am trying to start my real estate portfolio with your methodology, with long term rentals (thus passive). Is it possible for the WY-LLC to be a partnership (me and wife), collecting income from a bunch other out of state LLCs and Land Trusts, thus filing a 1065 yearly? We would not be taking any money out of the WY-LLC for personal use since we are using our W2 jobs for our income, and thus do not need income from the WY-LLC. Instead, we would probably just have the WY-LLC re-invest its own income. Would this still be considered all passive?

@seanmclaughlin7415 Жыл бұрын

Hey Clint! Looked forward to joining your seminar on ZOOM this past Saturday, but would not let me in. Tried it multiple times. Is there a replay available? A recording, maybe?

@ClintCoons Жыл бұрын

We do not but I am teaching another event in 2 weeks.

@ZanNNNNG 6 ай бұрын

First of all, thank you very much for this video! Really easy to understand! However, I do have one thing I am confused about. Aren't S-Corps required to pay owner employees a "reasonable" salary before dividends bypass payroll taxes and cap gains? If this is correct, then LLCs electing S-Corporation tax treatment are required to, vs simply electing to, pay active owners a salary right? Otherwise any distributions taken will be subject to capital gains tax in addition to their personal income tax right? The only entities that can elect to or not to pay active owners a salary would be C Corps or an LLC with C Corp tax treatment right? They could potentially avoid payroll taxes but would be subject to 21% on the 1120 and short term capital gains tax (which is like 15% right?) on dividends thereafter.

@ClintCoons 5 ай бұрын

Ok to tackle this one I am going to go deep. The Internal Revenue Code and Treasury Regulations do not provide explicit requirements for S-corporations to pay a salary to their owners or employees. However, they do provide guidelines on how salaries and other forms of compensation are treated for tax purposes. Section 162(a)(1) of the Code allows a deduction for all of the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered. This suggests that S-corporations can deduct reasonable salaries paid to owners or employees as a business expense. The key phrase is "any trade or business". Is the activity the LLC engages in considered a trade or business giving rise to the salary requirement. Furthermore, Section 1366(e) of the Code provides that if an individual who is a member of the family of one or more shareholders of an S corporation renders services for the corporation or furnishes capital to the corporation without receiving reasonable compensation therefor, the Secretary shall make such adjustments in the items taken into account by such individual and such shareholders as may be necessary in order to reflect the value of such services or capital. This suggests that if an owner or employee of an S-corporation is not receiving reasonable compensation for their services, adjustments may be made to reflect the value of these services. In conclusion, while there are no explicit requirements for S-corporations to pay a salary to their owners or employees, the Internal Revenue Code and Treasury Regulations provide guidelines on how salaries and other forms of compensation are treated for tax purposes.

@kevinmaloncon4802 2 ай бұрын

Clint, How does a disregarded llc that is only used as a beneficiary to a land trust on a primary residence for liability protection generate income? It doesn’t appear to fit active or passive income since no income is generated. How does it work? There’s no income to pass through to the member. I didn’t see a video that seemed to speak on this aspect concerning income and salary for this type of asset protection. If there is one please share the link with me. P.S. The education you provide is priceless. Thank you 👍

@ClintCoons 2 ай бұрын

I appreciate the support. To get the best answer tailored to your specific circumstances, I recommend scheduling a free consultation with my team. Visit: aba.link/lk2

@seanmclaughlin7415 Жыл бұрын

After exhausting all of the tax reducing laws available to me on a rental after the first year (including the cost segregation and bonus depreciation) and you don’t plan on selling (1031), how do we continue to keep our tax burden low?

@ClintCoons Жыл бұрын

Purchase additional rentals and use the depreciation to offset the income.

@joesinegal8167 Жыл бұрын

A Question For You Clint, How Are Online Businesses Categorized By The IRS? Active Or Passive? They Usually Require A Set Up And Minor Monitoring Throughout The Year! Thank You For Another Educational And Informative Video! 🙏

@ClintCoons Жыл бұрын

Active if you work for the business or non-passive.

@joesinegal8167 Жыл бұрын

@@ClintCoons Thank You For The Information Sir! You And Your Organization Are Priceless And Much Appreciated! 🙏

@9thebigcool Жыл бұрын

I heard somewhere about a 700 hour rule or a living off the income rule/primary income rule. I don't know if any of that is applicable or true, but it might be a good place to start research.

@Khans1199 4 ай бұрын

So as LLC partnership, me and my business partner has to get paid all the profits through wages???

@ClintCoons 4 ай бұрын

The profits are wages.

@dizzy50485 Жыл бұрын

How can I change it to an S Crop?

@ClintCoons Жыл бұрын

You need to make a change of accounting election after your tax year end.

@tlothompson6935 2 ай бұрын

What should you do if you are a part owner of a partnership and you find out that the other owner has been paying you a W-2 salary? Is it a criminal offense that you should report?

@ClintCoons 2 ай бұрын

No its not criminal just ignorant.

@tlothompson6935 2 ай бұрын

@@ClintCoons Thank you for the reply!

@dizzy50485 Жыл бұрын

Where can you find out what you are?

@ClintCoons Жыл бұрын

The type of tax return your LLC files each year or you can contact the irs

@user-ym4ks9fz3j Жыл бұрын

Instead of taking a salary from my company can I move that money tax free into another business that I’m wanting to start ?

@ClintCoons Жыл бұрын

You can not. If the business was already established you might be able to if you could show the business was providing a service to your existing company. But then again the income you pay is taxable to the new company.