Thank you. I've started my life over and starting with nothing but a lawn mower. Trimmer and blower. I try to search for answers. Your videos make sense to me. Thank you for your honesty. I watched the one on how much you make . Thank you! I pray I can do this.
Thank u man for all the knowledge. It’s really helping a lot!.I’m just starting a business with my mom . Maby not the best partner but I’m tired of seeing her struggling and working so hard. Just trying to check the boxes off.she knows the business . She did Lawn Maintenance for 11 years. Thx again and God bless
Thank you for this. You put out great real world content and it has helped me a ton. I know you are helping other as well. Thanks for taking the time to do these videos. If you can take this much time I can for sure take the time to hit the like on all of them. :)
Instead of maintaining a separate “tax” account, have you ever considered the Electronic Federal Tax Payment System? Then, you’d just transfer the necessary amount to them every month and it comes out to be quite close at the end of the year.
Your videos are excellent and have really helped me grow my business. They are informative and I appreciate the way you break everything down. Thank you! Todd
How much did you pay yourself before switching to s Corp? Per hr? Weekly draw? I don’t want my per man hr to eat up my “owners “ salary to try and match what I made in corporate job.
Good point for people out there to remember also is that the 'wage you pay yourself' needs to be 'commiserate with the industry and position'. For those LLCs taking the S Corp election this is the number 1 cause for getting audited by the IRS. In other words, if you, in your own mind, think that you can tell the IRS that your yearly salary is only $5,000 (so the rest of your profit is taxed at the dividend rate ~10% ) you better keep good records lol. A salary figure that comes in substantially low when compared to the market is an audit trigger. Even though the salary figure is subjective, its best to not try and play the IRS.
This is very true. The wage/salary has to be a fair market wage for your position. I pay myself better than a crew supervisor, but not like a CEO. I pay myself as an operations manager. Great point. Thanks for watching.
There is no official written law on the books that requires you, me or any US citizen to pay "income taxes". Only sales taxes are you required to pay when you purchase a product or service. NO LAW EXISTS Othrrwise. Over 4 million americans (and counting) has discontinued to pay any "income taxes". Including Donald trump and Hillary Clinton. I guess some people actually know the law and other just don't care or are so afraid, they just Go Along to Get Along. Keep feeding the beast and it will always come back for more and more. Until you can no longer feed yourself and/or your family. Wake up and quit being a follower. americans are so DUMBDED-DOWN. Do your own research. Ask the so-called IRS "Income Reducing Service" to show you an official US law that is currently active and on the books. You will then be happy to pay on the same day proof is provided that the law actually exists. Then just wait. (play Jeopardy music here)
@@hutchcoservicesHey Ovadya TOJ .....Dont mislead people with your ignornace! Not sure WTF your reading regarding Americans paying Income tax or any other taxes. Try this on for size... " The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States" Like any other tax, payment isn't optional and can be enforced. Now thats pretty basic to understand that we do need to pay or we risk way more. NOW..... You can take just about any one of Congress's enumerated powers and argue that there's no requirement in the Constitution for an individual to comply with the enforcement of that provision, and you'd be absolutely correct., MAYBE. However, that particular argument is a red herring. The point of the income tax is not that you have no Constitutional requirement to pay it, but that Congress has the Constitutional authority to lay and collect it, and to enforce its authority to do so by appropriate legislation - which Congress most certainly has done, in excruciating detail. My advice is not to listen to Ovadya TOJ or any of his kind unless you wish to get screwed even worse in th end. Nobody likes paying taxes nor wants to. Its not a choice we have being Americans.
If I followed the math example of 1/3rds here, then the accountant recommends moving to an SCorp election once you get into the neighborhood of $75,000 in revenue. You can use the tax advantages from there to scale further faster as you don’t have the full burden of payroll taxes on all the income. Super helpful! Thank you for sharing!
I’m currently an 50 year old sole proprietor. Should I form an S Corp or go LLC. I’m in this for the long haul. Any advice on retirement, all I have to look forward to is social security. Believe or not, I claim my cash customers, even tips. Every little bit helps. Hope you some suggestions with my situation.
Johnathan...you outlined that one should consider converting from an LLC to an S Corp or taking the S Corp election once you profit exceed $25K. Are you referring to gross or net profit?
Thank you so much for all your great content. Is their anyway you could make a video on how to use yard book to take peoples payments with a credit card? Maybe auto pay is that available ?
Not sure if you’ll see this on an old video or not. The part i am trying to understand is this: if you pay yourself $20k salary, can you not touch the $80k profit? Because how does one survive on $20k? I’m still trying to wrap my head around the tax laws/rules side of things.
Just starting up which bank or credit union for lowest business account start up? Seems like everyone requires $1500 at all times or fee. Any out there that require less?
Good advice I think next year I have to do something like this as of now I’m a so-proprietor and it’s growing I keep hiring guys and they realize it’s not for them 😜👍
Always enjoy your videos. They’re inspiring us every day. Just trying to get my gross numbers up to some of the profit numbers I’m hearing. 😂 Some services have been a little slow, but we’re still hitting it hard.
Hey Jonathan, Love all your videos. Your one of the few UA-cam channels that I believe provides information value instead of pure entertainment. Question on this to clarify. Are you saying you take 33% from profit or total revenue? If it is profit then doesn't that seem high on the expenses and low on the personal withdrawal at 33%?
It's most likely total revenue. And yes it probably is a little high on taxes, but it doesn't matter. Just means you have money left over after you pay taxes. You dont have to pay yourself as much when you're self employed because the company is paying for your truck, insurance, trailers, cell phone, shirts, pants, boots, and other things - so it's not coming out of your personal income. Those are all business expenses that are tax deductions.
Does that mean you only use the $20,000 salary for personal spending? That’s seems to be very little to survive on, or can use use some of the “business” money for living expenses? Thanks for the great videos!
Yes, that's typically how it works. For example the business can pay for car payments, fuel, cell phones ect... You are just taking a smaller personal paycheck and letting the business take care of the rest for you if that makes sense
If the IRS ever questions you why you are giving yourself such a large bonus, point to the CEOs of all these corporations that got government funding and compare that bonus to average salary as well as your set up.
Just to clarify, are you saying that your take home pay is roughly 33% of your total revenue? If so would you say that this is roughly the ratio that the proprietor of a successful lawn care business should expect? So if I were to quit my $50/year corporate job to start a lawn care business I would need to generate $150K/year in revenue in order to replace that $50K/year salary. Correct?
Your costs of running your business factors into those numbers, but your not too far off generally speaking. I can tell you that it takes owning and operating a business to appreciate how stressful it is. Just because a lot of money is flowing into your bank account certainly doesn’t mean it all gets to stay there.
Hey Jonathan, I am the owner and operator of M.D The Lawn Doctor LLC I sent you a message on fb and was wanting to pick your brain a little bit. I look forward to talking to you.
I own a machine shop Switch to s Corp from a c crop last year And we save a lot as a c Corp. I pay about $28000 in taxes from $100000 income and as a s Corp I payed 8500 from $80000 income cuz the business pay the offer 8500 about but at end of day it about half the taxes. I was told about another business plan when you brake your company up into three crops and all three crops. Ends it tax year four months apart One crop own equipment. And crop is you and employee the other crop is the business and you rent and bill labor to each company. It’s way to move profit with out paying taxes. But you need a license finance accoutant. For keep your books we have gone don’t that road but are looking into it but every boy that know how want a lot of money to manage the books have you ever heard of this
Hello. I have watched three of your videos and they are very informative. The problem I am having is how do you survive? I mean you live in Florida and your house looks to be on the nicer side and so I know it isn't less than $200K. I am not trying to be nosy, I just don't want to leave my job of $45K a year to make $35K a year. I will need insurance for myself and like you said, you have to pay taxes as well. Where I live there are only 8 good months to cut grass and then a person is left with doing other landscaping jobs. I just need to know how to figure what I need to make in order to make a salary of $46K a year or more and still be able to put money in the business. I know that I come off sounding ignorant, but I have always dreamed of having a business of my own and I want to do this right. I didn't mention, but I am Inc. it was suggested I start out as this. I would appreciate any answers or suggestions you can offer. Thank you for your time.
John Cunningham ...... mark Koehler is a cpa and tax attorney on UA-cam. He has several videos that explain how to do what you are asking. Hope that helps.
Please correct me if I'm wrong but with an S corp aren't you really just deferring selfemployent taxes at the expense of being taxed twice? Once you pay yourself or withdraw that money from the S corp wouldn't you then be required to pay selfemployent taxes? Except the money was already taxed once when you paid your capital gains taxes on your yearly profits.
Using an LLC's business funds for personal expenses is very dangerous, as it could remove the protection the LLC provides for you. You would have to transfer it to your personal account first as some sort of income (which would then later be declared and taxes paid) before using it for personal expenses.
The bad thing is you can only pay into retirement of that $20k. So we can screw uncle sam now and not pay taxes. But we get screwed when it comes to retirement! Thoughts?
You'll probably be splitting the "personal" portion 50/50 if you're an llc or sole proprietor. If you're an S corp, you can adjust your salaries according to each of your responsibilities. -Jonathan C.
@@FloridaTurfPros So my son is helping me run the business I am starting and I wondered should I pay him as a subcontractor or the above 50/50 you just mentioned? What the best route to take. At some point he will be doing all the road work and I will be just running the business from office.
So, you are paying yourself 20K a year. How do you get enough money out of the business to own a home, have a personal vehicle, by toys, go on vacation and do all the other stuff that 20K will not cover? Are you "evading" taxes? Are you advising others to do this?
No, it doesn't really work like that. I pay myself an average market wage, and the business pays taxes on it's earnings separately. You can then take shareholder distributions from the business, as owner/investor earnings. Hope that makes sense.
Be careful with a Sub-S Corporation...you are still supposed to pay yourself a REASONABLE WAGE. So if the Net Profit of the business would have been $100,000, the IRS may not believe that $20,000 is a reasonable wage leaving yourself an $80,000 distribution with only regular income taxes. I know it's great to save the 15.3% social security and medicare tax...just don't get greedy.
Thank you. I've started my life over and starting with nothing but a lawn mower. Trimmer and blower. I try to search for answers. Your videos make sense to me. Thank you for your honesty. I watched the one on how much you make . Thank you! I pray I can do this.
LLC can file as S Corp, dividends won’t be taxed. Still maintain a LLC you just file taxes as an S Corp, LLC also pays “ reasonable salary “
I like your subtle "let me say that again" dude your awesome!
Great Video!
Thanks
Thank u man for all the knowledge. It’s really helping a lot!.I’m just starting a business with my mom . Maby not the best partner but I’m tired of seeing her struggling and working so hard. Just trying to check the boxes off.she knows the business . She did Lawn Maintenance for 11 years. Thx again and God bless
Awesome good luck to you!
Thank you for this. You put out great real world content and it has helped me a ton. I know you are helping other as well. Thanks for taking the time to do these videos. If you can take this much time I can for sure take the time to hit the like on all of them. :)
Instead of maintaining a separate “tax” account, have you ever considered the Electronic Federal Tax Payment System? Then, you’d just transfer the necessary amount to them every month and it comes out to be quite close at the end of the year.
Your videos are excellent and have really helped me grow my business. They are informative and I appreciate the way you break everything down. Thank you!
Todd
Great video! The best explanation I've heard about LLC vs S Corp taxes yet!!!
Your a good man iam considering starting a lawn business with my 3 sons taking what you are saying very seriously thanks
Great Video, you don't get this on other channels
Thanks for all of your videos!! Very informative, and helpful
How much did you pay yourself before switching to s Corp? Per hr? Weekly draw? I don’t want my per man hr to eat up my “owners “ salary to try and match what I made in corporate job.
So what do you do with the money in the business acount? Pay employees,buy equipment and maintenance stuff like that?
Good point for people out there to remember also is that the 'wage you pay yourself' needs to be 'commiserate with the industry and position'. For those LLCs taking the S Corp election this is the number 1 cause for getting audited by the IRS. In other words, if you, in your own mind, think that you can tell the IRS that your yearly salary is only $5,000 (so the rest of your profit is taxed at the dividend rate ~10% ) you better keep good records lol. A salary figure that comes in substantially low when compared to the market is an audit trigger. Even though the salary figure is subjective, its best to not try and play the IRS.
This is very true. The wage/salary has to be a fair market wage for your position. I pay myself better than a crew supervisor, but not like a CEO. I pay myself as an operations manager. Great point. Thanks for watching.
There is no official written law on the books that requires you, me or any US citizen to pay "income taxes". Only sales taxes are you required to pay when you purchase a product or service. NO LAW EXISTS Othrrwise. Over 4 million americans (and counting) has discontinued to pay any "income taxes". Including Donald trump and Hillary Clinton. I guess some people actually know the law and other just don't care or are so afraid, they just Go Along to Get Along. Keep feeding the beast and it will always come back for more and more. Until you can no longer feed yourself and/or your family. Wake up and quit being a follower. americans are so DUMBDED-DOWN. Do your own research. Ask the so-called IRS "Income Reducing Service" to show you an official US law that is currently active and on the books. You will then be happy to pay on the same day proof is provided that the law actually exists. Then just wait.
(play Jeopardy music here)
@@hutchcoservicesHey Ovadya TOJ .....Dont mislead people with your ignornace! Not sure WTF your reading regarding Americans paying Income tax or any other taxes.
Try this on for size...
" The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States" Like any other tax, payment isn't optional and can be enforced.
Now thats pretty basic to understand that we do need to pay or we risk way more.
NOW.....
You can take just about any one of Congress's enumerated powers and argue that there's no requirement in the Constitution for an individual to comply with the enforcement of that provision, and you'd be absolutely correct., MAYBE. However, that particular argument is a red herring. The point of the income tax is not that you have no Constitutional requirement to pay it, but that Congress has the Constitutional authority to lay and collect it, and to enforce its authority to do so by appropriate legislation - which Congress most certainly has done, in excruciating detail.
My advice is not to listen to Ovadya TOJ or any of his kind unless you wish to get screwed even worse in th end. Nobody likes paying taxes nor wants to. Its not a choice we have being Americans.
You're videos are very helpful
What do you use for payroll? I am hiring my first employee right now.
Great video topics! Priceless information!
Your videos are very informative. Good channel
Having an accounting finance background, that's the back bone to the business.
If I followed the math example of 1/3rds here, then the accountant recommends moving to an SCorp election once you get into the neighborhood of $75,000 in revenue. You can use the tax advantages from there to scale further faster as you don’t have the full burden of payroll taxes on all the income. Super helpful! Thank you for sharing!
I’m currently an 50 year old sole proprietor. Should I form an S Corp or go LLC. I’m in this for the long haul. Any advice on retirement, all I have to look forward to is social security. Believe or not, I claim my cash customers, even tips. Every little bit helps. Hope you some suggestions with my situation.
Another great video! What program/software/company do you use for payroll?
Johnathan...you outlined that one should consider converting from an LLC to an S Corp or taking the S Corp election once you profit exceed $25K. Are you referring to gross or net profit?
Thank you so much for all your great content. Is their anyway you could make a video on how to use yard book to take peoples payments with a credit card? Maybe auto pay is that available ?
Yes, I'll work on this in the near future.
Thanks for the info man! You’re awesome
Depends on your state business tax and very hard to get money out if needed personally from a s corp..just letting ya know
Not sure if you’ll see this on an old video or not. The part i am trying to understand is this: if you pay yourself $20k salary, can you not touch the $80k profit? Because how does one survive on $20k? I’m still trying to wrap my head around the tax laws/rules side of things.
Just starting up which bank or credit union for lowest business account start up? Seems like everyone requires $1500 at all times or fee. Any out there that require less?
Doesn't this have negative repercussions in that you will only eligible for a very small social security benefit upon retirement?
What do you do with the profit money after you pay the taxes ?
Good advice I think next year I have to do something like this as of now I’m a so-proprietor and it’s growing I keep hiring guys and they realize it’s not for them 😜👍
Great video as always!!!
I guess my main question though that you didn't really answer in this video would be where do you hire a good accountant?
Thank you for your information, extremely helpful
Great info, thanks
Always enjoy your videos. They’re inspiring us every day. Just trying to get my gross numbers up to some of the profit numbers I’m hearing. 😂 Some services have been a little slow, but we’re still hitting it hard.
Can you do a video on dealing with dogs while mowing?
Get an air horn.
Good info
How do you pay for your house and everything if you only pay yourself such a small amount?
Thanks I'll look into this
Hey Jonathan,
Love all your videos. Your one of the few UA-cam channels that I believe provides information value instead of pure entertainment.
Question on this to clarify. Are you saying you take 33% from profit or total revenue? If it is profit then doesn't that seem high on the expenses and low on the personal withdrawal at 33%?
It's most likely total revenue. And yes it probably is a little high on taxes, but it doesn't matter. Just means you have money left over after you pay taxes.
You dont have to pay yourself as much when you're self employed because the company is paying for your truck, insurance, trailers, cell phone, shirts, pants, boots, and other things - so it's not coming out of your personal income. Those are all business expenses that are tax deductions.
Very well said.
Thanks man.. The S Corp has saved a lot of money for me last year and figured I'd share with the community as I know most of us are LLC's.
Starting from the bottom here. How long did you wait until you became an LLC?
If you have the choice to start between an LLC and a sole proprietor, I would advise LLC to limit your personal liability.
Does that mean you only use the $20,000 salary for personal spending? That’s seems to be very little to survive on, or can use use some of the “business” money for living expenses? Thanks for the great videos!
This is what I'd like to know also
Yes, that's typically how it works. For example the business can pay for car payments, fuel, cell phones ect... You are just taking a smaller personal paycheck and letting the business take care of the rest for you if that makes sense
Awesome. Thanks so much.
If the IRS ever questions you why you are giving yourself such a large bonus, point to the CEOs of all these corporations that got government funding and compare that bonus to average salary as well as your set up.
So how would someone be able to access the rest of the profit
Owner distributions
Where are the tall grass vids or tall wet grass vids lol, just kidding. I found that hilarious a few videos ago. Enjoy the weekend
Just to clarify, are you saying that your take home pay is roughly 33% of your total revenue? If so would you say that this is roughly the ratio that the proprietor of a successful lawn care business should expect? So if I were to quit my $50/year corporate job to start a lawn care business I would need to generate $150K/year in revenue in order to replace that $50K/year salary. Correct?
Your costs of running your business factors into those numbers, but your not too far off generally speaking. I can tell you that it takes owning and operating a business to appreciate how stressful it is. Just because a lot of money is flowing into your bank account certainly doesn’t mean it all gets to stay there.
Hey Jonathan, I am the owner and operator of M.D The Lawn Doctor LLC I sent you a message on fb and was wanting to pick your brain a little bit. I look forward to talking to you.
I own a machine shop Switch to s Corp from a c crop last year And we save a lot as a c Corp. I pay about $28000 in taxes from $100000 income and as a s Corp I payed 8500 from $80000 income cuz the business pay the offer 8500 about but at end of day it about half the taxes. I was told about another business plan when you brake your company up into three crops and all three crops. Ends it tax year four months apart One crop own equipment. And crop is you and employee the other crop is the business and you rent and bill labor to each company. It’s way to move profit with out paying taxes. But you need a license finance accoutant. For keep your books we have gone don’t that road but are looking into it but every boy that know how want a lot of money to manage the books have you ever heard of this
Hello. I have watched three of your videos and they are very informative. The problem I am having is how do you survive? I mean you live in Florida and your house looks to be on the nicer side and so I know it isn't less than $200K. I am not trying to be nosy, I just don't want to leave my job of $45K a year to make $35K a year. I will need insurance for myself and like you said, you have to pay taxes as well. Where I live there are only 8 good months to cut grass and then a person is left with doing other landscaping jobs. I just need to know how to figure what I need to make in order to make a salary of $46K a year or more and still be able to put money in the business. I know that I come off sounding ignorant, but I have always dreamed of having a business of my own and I want to do this right. I didn't mention, but I am Inc. it was suggested I start out as this. I would appreciate any answers or suggestions you can offer. Thank you for your time.
John Cunningham ...... mark Koehler is a cpa and tax attorney on UA-cam. He has several videos that explain how to do what you are asking. Hope that helps.
Very interesting info👍
Please correct me if I'm wrong but with an S corp aren't you really just deferring selfemployent taxes at the expense of being taxed twice? Once you pay yourself or withdraw that money from the S corp wouldn't you then be required to pay selfemployent taxes? Except the money was already taxed once when you paid your capital gains taxes on your yearly profits.
why would you pay taxes?
Do you pay yourself by printing a check?
I'm going to do this for the first time this year expecting net savings of 7k in taxes. Good video
so can you then spend that business profit on personal expenses?
Is this a tax loophole?
Using an LLC's business funds for personal expenses is very dangerous, as it could remove the protection the LLC provides for you. You would have to transfer it to your personal account first as some sort of income (which would then later be declared and taxes paid) before using it for personal expenses.
@@CopperCreekCuts can you do a profit share at the end of the fiscal year and pay the taxes and then move that money around into personal accounts.
It's a limited liability company, not corporation.
I've never paid myself my accountant's I've had over the years really hurt my business
Great info!
2:14 "The Case Of The Missing $1,000 & Other Financial Shenanigans" Just kidding, of course! When the camera is rolling numbers elude us! ;)
I had thought about saying 3,333.333333, but figured it would get lost lol
I saw that too... Good for him
So if the companies profit is 25,000.00 then you guys must be doing 250,000.00 a year. That's pretty good.
3,000+3,000+3,000=9,000. Maffs
Wait so you only make 20k a year
The bad thing is you can only pay into retirement of that $20k. So we can screw uncle sam now and not pay taxes. But we get screwed when it comes to retirement! Thoughts?
What if you have a business partner 50/50
You'll probably be splitting the "personal" portion 50/50 if you're an llc or sole proprietor. If you're an S corp, you can adjust your salaries according to each of your responsibilities. -Jonathan C.
@@FloridaTurfPros So my son is helping me run the business I am starting and I wondered should I pay him as a subcontractor or the above 50/50 you just mentioned? What the best route to take. At some point he will be doing all the road work and I will be just running the business from office.
Your background is in finance right? That's is important for guys to know because it makes what you say very legit
So, you are paying yourself 20K a year. How do you get enough money out of the business to own a home, have a personal vehicle, by toys, go on vacation and do all the other stuff that 20K will not cover? Are you "evading" taxes? Are you advising others to do this?
No, it doesn't really work like that. I pay myself an average market wage, and the business pays taxes on it's earnings separately. You can then take shareholder distributions from the business, as owner/investor earnings. Hope that makes sense.
@@FloridaTurfPros That's what I missed. Thanks for the great video! I know those are a job in themselves.
Be careful with a Sub-S Corporation...you are still supposed to pay yourself a REASONABLE WAGE. So if the Net Profit of the business would have been $100,000, the IRS may not believe that $20,000 is a reasonable wage leaving yourself an $80,000 distribution with only regular income taxes. I know it's great to save the 15.3% social security and medicare tax...just don't get greedy.
I am a corporation.
The less you pay into Social Security, the less you get when it is time to collect from it.
Good info. Thanks!