I had a CPA recommend I set up an S Corp in 2015 without explaining to me all of the extra steps and fees I would have to pay. She focused on "all this money I would save" and I ended up paying more the first 2 years. Very glad I have an S Corp now, but I wish I had educated myself more before jumping in! And I definitely got a different CPA! Very thankful for people like you who share so many great tips on this topic!
I hear this more often than you can imagine!! We trust our service providers to know what is best for us so it frustrates me to hear how common this is!! Trying to spread the word to others!!
what about if the business does not have enough profit to actually pay yourself a reasonable salary, but you are willing to work for that amount. also, what if you want to leave some of the profit in the business for next year's expenses? curious your idea about that.
@@junxtaposition7973 If the business is not profitable enough to pay the owner a reasonable salary, it probably should not have an S-corp election. Reasonable compensation is not a requirement for SMLLCs. However, I don't know the rules for removing the S-corp election.
Hey there! In general, if your business doesn't have enough profit to pay yourself a reasonable salary, it may mean that S Corp isn't the best status for you. The tax savings only kick in when you have profit to pay yourself above and beyond your reasonable salary. Also, be sure to jump on our Masterclass next week all about Reasonable Salary jamietrull.com/salary
When calculating reasonable compensation, are expenses paid through the business, such as automobile expenses, added to the salary to determine the compensation amount, or is this simply the gross salary you pay yourself on the P&L that is considered?
I recommend handling these as reimbursements if they are for your personal automobile and not through salary. If you do them as reimbursements (with an accountable plan which is basically a reimbursement plan) they will be tax free. If you add them to your salary you'll end up paying taxes on them, so no real benefit.
If I have a great question, would you consider answering it directly even if I only comment it just right here? This is your youtube channel, right? Or have you hired a 3rd party to run this channel and only respond to comments with a form response?
I can answer some questions personally but not all of them, especially if they really need a more nuanced answer (which is most questions on topics like these!). With over 400 videos on my channel, responding to every specific question would be my whole job ;)
Join us for our Savvy S Corp Owner: Getting Your Salary Right Masterclass: jamietrull.com/salary
I had a CPA recommend I set up an S Corp in 2015 without explaining to me all of the extra steps and fees I would have to pay. She focused on "all this money I would save" and I ended up paying more the first 2 years. Very glad I have an S Corp now, but I wish I had educated myself more before jumping in! And I definitely got a different CPA! Very thankful for people like you who share so many great tips on this topic!
I hear this more often than you can imagine!! We trust our service providers to know what is best for us so it frustrates me to hear how common this is!! Trying to spread the word to others!!
what about if the business does not have enough profit to actually pay yourself a reasonable salary, but you are willing to work for that amount. also, what if you want to leave some of the profit in the business for next year's expenses? curious your idea about that.
@@junxtaposition7973 If the business is not profitable enough to pay the owner a reasonable salary, it probably should not have an S-corp election. Reasonable compensation is not a requirement for SMLLCs. However, I don't know the rules for removing the S-corp election.
Great question! You can submit your questions here for Jamie to anwser it on her next live show: www.JamieTrull.com/UA-cam
Hey there! In general, if your business doesn't have enough profit to pay yourself a reasonable salary, it may mean that S Corp isn't the best status for you. The tax savings only kick in when you have profit to pay yourself above and beyond your reasonable salary. Also, be sure to jump on our Masterclass next week all about Reasonable Salary jamietrull.com/salary
When calculating reasonable compensation, are expenses paid through the business, such as automobile expenses, added to the salary to determine the compensation amount, or is this simply the gross salary you pay yourself on the P&L that is considered?
Great question! You can submit your questions here for Jamie to anwser it on her next live show: www.JamieTrull.com/UA-cam
I recommend handling these as reimbursements if they are for your personal automobile and not through salary. If you do them as reimbursements (with an accountable plan which is basically a reimbursement plan) they will be tax free. If you add them to your salary you'll end up paying taxes on them, so no real benefit.
Curious if the amount we pay ourselves for a self employed 401k contribution each year is considered part of our compensation?
Nope - that wouldn't count toward reasonable comp
If I have a great question, would you consider answering it directly even if I only comment it just right here? This is your youtube channel, right? Or have you hired a 3rd party to run this channel and only respond to comments with a form response?
I can answer some questions personally but not all of them, especially if they really need a more nuanced answer (which is most questions on topics like these!). With over 400 videos on my channel, responding to every specific question would be my whole job ;)