Video instructions and help with filling out and completing Fill Form 843 Pub

Instructions and Help about Fill Form 843 Pub

My people my people how's it going so today is going to be a fairly quick and easy one this is concerning escorts S corporations or small business corporations or small corporations the S Corp is a really great tool if you are a 1099 employee or if you are self-employed if your profit at any time in the next you know a couple years it's going to be more than ten thousand dollars then I seriously suggest that you do an escort the reason why is because an escort literally cut your self-employment tax in half and I'll explain how that works so number one just the use of numbers here let's say your profit is ten thousand dollars okay typically when you file just a regular of 1040 Schedule C with ten thousand dollars in profit then you pay fifteen point three percent of that in self-employment tax okay now if you if you have an escort then all of a sudden that ten thousand dollars of self-employment becomes only five thousand because with an escort you can pay yourself okay and I'm sorry I'm doing like three things at once right now but just bear with me so let's say you probably is ten thousand dollars okay what you can do is you can pay yourself five thousand dollars okay and you would pay the payroll tax or self-employment tax on the five thousand dollars the other five thousand dollars will go to you as what's called a distribution and that gets taxed at just regular income tax rates not self-employment tax rates we've also talked before about 197 amortization and amortization if you recall can be done on any return but it's it's it's really it's really better to only do it on a corporation or a partnership return and the reason why is because if you remember from that video in order for you to claim the 197 amortization you must show that the assets has changed hands has changed from you know person to person or from personal to business and it's really hard to prove that if it's a Schedule C return because a Schedule C means is unit so it hasn't changed hands once you incorporate that becomes a completely different person and so you can say it change hands from the person to the corporation and that's the reason why you can get away with the 197 amortization so that's just one thing the other thing is once you have the S corporation and you'll also be eligible for a a 401 K okay remember a 401 K can be a 401 K allows you to deduct up to 25 percent of your income okay sorry I'm struggling with this scanner alright a 401k allows you to deduct 25% of your income so what that means is let's say you have ten thousand dollars of profit right okay you pay yourself five thousand dollars okay so you pay payroll tax on the five thousand all right but you still have ten thousand dollars of income total alright well now you can take twenty five percent of their ten thousand which is twenty five hundred you can put that into a 401k and then now you're only gonna pay payroll tax on five thousand and income tax on seventy five hundred okay now those are just you know sample numbers I'm throwing up there you can multiply it times ten if you want to it doesn't matter it's the same thing okay so the 401k allows you to do that and you can't really do that with Schedule C Schedule C's do allow you to have what's called a SEP IRA plan but the SEP IRA is going to limit you to what you can contribute simply because you have employer contributions and you have personal contributions but if you are Schedule C then you're not the employer and you're just you know one person you're just the owner of the business and that's it so like I say before the biggest the biggest thing about having an S Corp is simply to limit your payroll or self-employment taxes there's also opportunity to have other ownership of the S corporation which is huge for instance a portion of my S corp is owned by my nonprofit so what that means is simply that a portion of my income goes to the nonprofit which is in taxable right Music and they're gonna be able to answer that right now um it's not it's not gonna be taxable because it goes to the nonprofit so that's just a few quick things that's an S corp allows you to do like I said before if your thing still isn't again if your net profit is gonna be anything more than ten thousand dollars I sincerely suggest creating an S corp okay otherwise you're gonna kill yourself in self-employment taxes all right for me to you