Welcome everyone! This video is for small business owners or people planning on starting their own business. Many clients come to me and ask which type of business structure they should form: an LLC or an S corporation. Well, the answer is, it depends. Tonight, we're going to go over the different types of businesses, the advantages, and the disadvantages of each type. Then, I'll be able to give you an idea of which type of business structure would be better for you, depending on what business you're in and what your situation is. Let's start with the LLC. The first advantage of an LLC is that it is simpler. It's easier to form and easier for tax purposes. If there's only one member in the LLC, the LLC will be disregarded for tax purposes. Instead, the owner or member of the LLC will file a Schedule C on their personal tax return and list the income and expenses of the business. This means that only one tax return needs to be filed for the business, instead of two. Another advantage of an LLC is that there's no need to do payroll. The owner(s) of the LLC will file a partnership return and each owner or member will get a k1. The income will be reported on their personal return. If it's a single member LLC, a Schedule C will be filed on the personal return. If the LLC grows, it can later elect to file as an S corporation for tax purposes, which provides the best of both worlds. Starting with simplicity and then transitioning to a corporate structure. On the other hand, the disadvantage of an LLC is that all net income after expenses is subject to self-employment tax. This means that in some situations, overall taxes can be higher compared to...
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Video instructions and help with filling out and completing Fill Form 1120 Schedule M 3 Deductions
