Cheers for this, I've been looking for "cash generating asset ideas" for a while now, and I think this has helped. Have you heard people talk about - Qonmily Passive Formality - (do a google search ) ? Ive heard some incredible things about it and my co-worker got excellent results with it.
Wow I cannot believe how easy and clear you explained. Thank you so much for making this videos. I know this one is from 2014 but Wow it is a excellent information.
Just wonderful, I been tryin to find out about "weekend income ideas" for a while now, and I think this has helped. Ever heard of - Qonmily Passive Formality - ( search on google ) ? Ive heard some unbelievable things about it and my partner got cool results with it.
This was great, thanks, I been tryin to find out about "books on generating passive income" for a while now, and I think this has helped. Have you ever come across - Qonmily Passive Formality - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my co-worker got great results with it.
Many thanks, been searching for "different types passive income" for a while now, and I think this has helped. You ever tried - Qonmily Passive Formality - (do a search on google ) ? Ive heard some incredible things about it and my partner got great results with it.
Great video. I'm looking to start a self publishing business this year in NYC - I will be placing my book on multiple platforms: Amazon, Apple iBooks, etc.. Along with a corresponding Zazzle store (coffee mugs, blank journals, pens) Under a single person LLC structure - should I choose subchapter S status?
+Surayah White If you are getting mostly passive income, you will not want to be a S-Corp but be a partnership or sole proprietorship. If you are getting mostly earned income, then you will want to be an S-Corp.
My friend recently formed an LLC for a cannabis cultivation company and I am investing in the company and he wants to form a partnership at 51/49%. We are not starting until April. I'm wondering what him and I will need to do to form the partnership and which the best route is. It's a big building, so income will be a bit high. Thanks for your help.
I run a retail store online (ecommerce) selling physical products (home furnishings). Based on your videos I've determined that I should set up an LLC vs. the Sole Proprietorship I have in place now for asset protection. However, I'm still struggling with the question of how to tax it. I make earned income, but currently that income number is still small (the company is only generating about $20,000 in revenue per year and maybe $5,000 in net profit). Based on your videos I would select an S corporation structure for taxation, but I wouldn't be able to pay myself a "reasonable salary" because the company isn't making that much money yet. Am I jumping the gun in setting up the LLC? Should I continue operating as a Sole Proprietor until the company is more profitable? I was planning on setting up the LLC as a partnership with my wife for the added asset protection. Thank you in advance for your assistance.
+Joe Cochran If your company is only making $5,000 profit a year it may not be worth the cost of setting up an LLC. You will have to balance the asset protection you would get from setting up an LLC and the cost and time it would take to setup and run the LLC. You could set up the LLC and have it taxed as an S-Corp but you won't get any tax savings until you start making more profits.
chumgypsy, I'm afraid not. As the only owner and employee, your business would be taxed as a sole proprietorship (unless you choose to have it taxed as an S or C Corporation).
Hello Mr Phillips - excellent videos. If a business earns income through real estate sales where the buyer pays a down payment and then makes monthly payments until the balance is paid off (let's say $300 down and $100 monthly for 50 months), would this be passive income? Would you suggest to structure the business as an LLC taxed as a partnership? Thank you.
That would be considered passive income and would be best structured as an LLC taxed as a partnership. You will also need to make sure you have a note and a mortgage on the property.
I have learned more in 30 minutes of watching several of your videos than hours and hours of trying to find a straight answer elsewhere! I will be opening a service based company. My wife will be listed as co-owner, though will have a separate career. For the first two months of operation I will be the only employee, until we open for business. I will then hire two part-time employees. I have decided to form an LLC and file taxes as an S-Corp. Does this sound correct to you? Thank you again for sharing your knowledge!
Marty Toth I can’t comment on whether you choice to be taxed as if your LLC is an S corporation is good or not. It depends upon how your money is made. if it is earned income then generally an S corporation status is best. If it is passive income (rents, etc.) then probably a partnership tax structure is best. There are lots of moving parts in the tax decision.
Winner of a video, I have been researching "best ways to have passive income" for a while now, and I think this has helped. Have you heard people talk about - Qonmily Passive Formality - (search on google ) ? Ive heard some amazing things about it and my work buddy got amazing success with it.
My wife an I are wanting to set up an LLC and we are trying to decide how we should have it taxed. We will be making earned income and were thinking of choosing S-Corp filings, but some people I've seen said they are waiting to file as an s-corp until their business brings in more money. Is this a better option? Should we file as a partnership until our business is making a lot of money?
You can wait to elect to be taxed as an S-Corp. The problem is that you can only elect to be an S-Corp the first 75 days of the year. So if you start making lots of money after that period, then you wouldn't be able to elect to be an S-Corp until the next year.
So if start our business now, in July, we must wait to file S-Corp status until after the new year in January? or can we choose to do it right after we file our Articles of Organization? And thank you so much for responding to us. We really appreciate it and find your videos very helpful.
hmm..what if you're just wholesaling properties( and don't plan on holding any of them)...basically buying and selling really quickly... I would have "earned" that money via assigning the property to a buyer..can i assume this should be an LLC( single member..just me) via S-Corp tax? ( especially since wholesaling properties can easily net from $5K or more per transaction.
You will want to do the wholesaling in an LLC for the asset protection. As for the taxation, it will depend on a couple of factors if you would want an S-Corp such as how much you are making and if you are a real estate professional.
Lee, If I have an LLC that is a food vending company, so earned income. And, I'm partnered in it with my wife, 50/50. She will only be helping on a limited basis. Can my salary be much higher than hers even at 50/50 ownership? And can we still file as an S Corp? Thanks.
Larry Parks Income has nothing to do with ownership. Generally the manager needs to set the salaries, though your operating agreement may require a different procedure and even members' approval. There should be a section on approving salaries, which may just leave it to the managers. You can file as an S corporation tax structure if you have just set up the company. If you have filed as something else in the past, technically you have to wait until the first few days of the next tax year, though there are ways to make it retroactive. For detailed instructions or answers, I would recommend calling Rucker Tax Consulting at 800-468-4135. How big is the income of the company? Maybe there won't be much of an advantage to the S corporation structure.
Hello Sir. I really appreciate you taking the time to make this videos for as new entrepreneurs. I created an LLC and applied of S-Corp status to do E-Commerce, now I'm ready to start my next one underneath my S-Corp to do transportation. Can I also apply for the S-Corp status on the second company or am I ok just leaving it as an LLC without the S-Corp? Please help us... I'm trying to make an Umbrella Second topic My first LLC with the S-Corp I think is not so much at risk for now since it's small, no much money comes through that one yet. In the other hand I make most of my living as a driver. Can I get a way insuring just my second LLC? If so would the insurance cover my car to be driving? Or do I need to insure the car separately? Or do I need to insure both of the LLC's? I thank you in advance for your answers
There are a lot of questions here, some of which would need more information to answer. You may be best off working directly with a lawyer for your specific situation.
Hi Lee, thank you for your video. What would you say is the different between a LLC tax as a S Corporation and a S Corporation Thank you for you answer
It depends on what those dues are for. If the dues are considered passive income then you do not want an S-Corp taxation. If you are providing services in exchange for the dues then you could use an S-Corp taxation.
We created our LLC with taxation as a partnership but after listening to your video it should be as a corporation as we are offering services...can and how do we change this?
Sheri Schmitt From Ben Rucker: You need to file form 2553. You can file this with your return by March 15th and make it retroactive to the beginning of January 2014. However, you must site the specific Rev-Proc applicable to your situation. I can help file this form for $350. Call my office at 800-468-4135.
They are stupid? The phrase “I made Partner!!!” is a big deal?? EGO Only professional can have an LLP in most states. I don’t know why use an LLP over the LLC. I wouldn’t ever use an LLP over an LLC.
We have an S Corp restaurant in Florida I just inherited 4 rental properties, do I put them in the S Corp or seperate LLC ? I was interested in keeping property in my name only heaven forbid a divorce? What are your thoughts?
S-Corps are best used for earned income like your restaurant. Rentals generate passive income which is best taxed as a partnership or sole-proprietorship. You can create an LLC with you being the sole owner to hold the rentals so that they will stay as separate property and not marital property. You can then have the LLC taxed as a sole-proprietorship.
Do not put them in with the restaurant. Form a separate LLC in the state where the properties are. You could own all of the LLC and thereby own the houses with nobody else on the ownership of the LLC. In Florida, you lose the charging order protection in a single member LLC. If the LLC is in another state, then you may not have the problem of needing a multimember LLC for the charging order protection.
I understand you recommend a partnership for passive income. I am in the investment real estate business, so passive income, but I do not have a partner. So do you recommend a sole proprietorship? Thank you!
206EASTLAKEROB As an S Corporation. The decision of how to tax an LLC is based mostly on how the LLC will generate income. A music store will generate what is called earned income from the sale of goods or services. With the LLC taxed as an S corporation, you can take a reasonable salary and then take the rest of the “profit” as a distribution from the company. The salary is subject to Social Security, Medicare, etc., while the distribution is not, so you will save 15% on the amount you take as a distribution. If you instead tax it as a sole proprietorship (disregarded entity) or partnership (you would need another person), the income is all subject to the social taxes. Taxed as a C corporation, you would have to pay double taxes: once in corporate taxes and once on the income you receive in wages and dividends. So I would go with an S Corporation for your music store.
Sheri, in order to file as a Corporation you need to file Form 8832 "Entity Classification Form". You can file this form as late as March 15 of this year and have it retroactively applied to your return for last year. There is a special procedure to do this. Contact Ben Rucker from IRStaxrelief.com at 801-857-8437. He works out of our office.
I love your vids I'm addicted!!!
I loved the separation between rents and royalties to selling products or services. Great video, thanks =)...
Cheers for this, I've been looking for "cash generating asset ideas" for a while now, and I think this has helped. Have you heard people talk about - Qonmily Passive Formality - (do a google search ) ? Ive heard some incredible things about it and my co-worker got excellent results with it.
Thnx lee
Wow I cannot believe how easy and clear you explained. Thank you so much for making this videos. I know this one is from 2014 but Wow it is a excellent information.
You're very welcome!
Thank you for the knowledge and for not trying to sell me some book
Good information, as well as presentation. Valuable video, appreciate you!
Just wonderful, I been tryin to find out about "weekend income ideas" for a while now, and I think this has helped. Ever heard of - Qonmily Passive Formality - ( search on google ) ? Ive heard some unbelievable things about it and my partner got cool results with it.
This was great, thanks, I been tryin to find out about "books on generating passive income" for a while now, and I think this has helped. Have you ever come across - Qonmily Passive Formality - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my co-worker got great results with it.
Many thanks, been searching for "different types passive income" for a while now, and I think this has helped. You ever tried - Qonmily Passive Formality - (do a search on google ) ? Ive heard some incredible things about it and my partner got great results with it.
Great video. I'm looking to start a self publishing business this year in NYC - I will be placing my book on multiple platforms: Amazon, Apple iBooks, etc.. Along with a corresponding Zazzle store (coffee mugs, blank journals, pens) Under a single person LLC structure - should I choose subchapter S status?
+Surayah White If you are getting mostly passive income, you will not want to be a S-Corp but be a partnership or sole proprietorship. If you are getting mostly earned income, then you will want to be an S-Corp.
My friend recently formed an LLC for a cannabis cultivation company and I am investing in the company and he wants to form a partnership at 51/49%. We are not starting until April. I'm wondering what him and I will need to do to form the partnership and which the best route is. It's a big building, so income will be a bit high. Thanks for your help.
I run a retail store online (ecommerce) selling physical products (home furnishings). Based on your videos I've determined that I should set up an LLC vs. the Sole Proprietorship I have in place now for asset protection. However, I'm still struggling with the question of how to tax it. I make earned income, but currently that income number is still small (the company is only generating about $20,000 in revenue per year and maybe $5,000 in net profit). Based on your videos I would select an S corporation structure for taxation, but I wouldn't be able to pay myself a "reasonable salary" because the company isn't making that much money yet. Am I jumping the gun in setting up the LLC? Should I continue operating as a Sole Proprietor until the company is more profitable? I was planning on setting up the LLC as a partnership with my wife for the added asset protection. Thank you in advance for your assistance.
+Joe Cochran If your company is only making $5,000 profit a year it may not be worth the cost of setting up an LLC. You will have to balance the asset protection you would get from setting up an LLC and the cost and time it would take to setup and run the LLC. You could set up the LLC and have it taxed as an S-Corp but you won't get any tax savings until you start making more profits.
Can a single member LLC elect to be taxed as a partnership?
chumgypsy, I'm afraid not. As the only owner and employee, your business would be taxed as a sole proprietorship (unless you choose to have it taxed as an S or C Corporation).
Hello Mr Phillips - excellent videos. If a business earns income through real estate sales where the buyer pays a down payment and then makes monthly payments until the balance is paid off (let's say $300 down and $100 monthly for 50 months), would this be passive income? Would you suggest to structure the business as an LLC taxed as a partnership? Thank you.
That would be considered passive income and would be best structured as an LLC taxed as a partnership. You will also need to make sure you have a note and a mortgage on the property.
I have learned more in 30 minutes of watching several of your videos than hours and hours of trying to find a straight answer elsewhere!
I will be opening a service based company. My wife will be listed as co-owner, though will have a separate career. For the first two months of operation I will be the only employee, until we open for business. I will then hire two part-time employees. I have decided to form an LLC and file taxes as an S-Corp. Does this sound correct to you? Thank you again for sharing your knowledge!
Marty Toth I can’t comment on whether you choice to be taxed as if your LLC is an S corporation is good or not. It depends upon how your money is made. if it is earned income then generally an S corporation status is best. If it is passive income (rents, etc.) then probably a partnership tax structure is best. There are lots of moving parts in the tax decision.
Thanks for you help. You've actually answered my question with you're response. Keep up the great job!
Great video! Can my passive income marketing business be taxed as a partnership if I am the only owner and employee?
Winner of a video, I have been researching "best ways to have passive income" for a while now, and I think this has helped. Have you heard people talk about - Qonmily Passive Formality - (search on google ) ? Ive heard some amazing things about it and my work buddy got amazing success with it.
My wife an I are wanting to set up an LLC and we are trying to decide how we should have it taxed. We will be making earned income and were thinking of choosing S-Corp filings, but some people I've seen said they are waiting to file as an s-corp until their business brings in more money. Is this a better option? Should we file as a partnership until our business is making a lot of money?
You can wait to elect to be taxed as an S-Corp. The problem is that you can only elect to be an S-Corp the first 75 days of the year. So if you start making lots of money after that period, then you wouldn't be able to elect to be an S-Corp until the next year.
So if start our business now, in July, we must wait to file S-Corp status until after the new year in January? or can we choose to do it right after we file our Articles of Organization? And thank you so much for responding to us. We really appreciate it and find your videos very helpful.
hmm..what if you're just wholesaling properties( and don't plan on holding any of them)...basically buying and selling really quickly... I would have "earned" that money via assigning the property to a buyer..can i assume this should be an LLC( single member..just me) via S-Corp tax? ( especially since wholesaling properties can easily net from $5K or more per transaction.
You will want to do the wholesaling in an LLC for the asset protection. As for the taxation, it will depend on a couple of factors if you would want an S-Corp such as how much you are making and if you are a real estate professional.
Lee, If I have an LLC that is a food vending company, so earned income. And, I'm partnered in it with my wife, 50/50. She will only be helping on a limited basis. Can my salary be much higher than hers even at 50/50 ownership? And can we still file as an S Corp? Thanks.
Larry Parks Income has nothing to do with ownership. Generally the manager needs to set the salaries, though your operating agreement may require a different procedure and even members' approval. There should be a section on approving salaries, which may just leave it to the managers.
You can file as an S corporation tax structure if you have just set up the company. If you have filed as something else in the past, technically you have to wait until the first few days of the next tax year, though there are ways to make it retroactive. For detailed instructions or answers, I would recommend calling Rucker Tax Consulting at 800-468-4135.
How big is the income of the company? Maybe there won't be much of an advantage to the S corporation structure.
Hello Sir. I really appreciate you taking the time to make this videos for as new entrepreneurs.
I created an LLC and applied of S-Corp status to do E-Commerce, now I'm ready to start my next one underneath my S-Corp to do transportation. Can I also apply for the S-Corp status on the second company or am I ok just leaving it as an LLC without the S-Corp? Please help us... I'm trying to make an Umbrella
Second topic
My first LLC with the S-Corp I think is not so much at risk for now since it's small, no much money comes through that one yet. In the other hand I make most of my living as a driver. Can I get a way insuring just my second LLC? If so would the insurance cover my car to be driving? Or do I need to insure the car separately? Or do I need to insure both of the LLC's? I thank you in advance for your answers
There are a lot of questions here, some of which would need more information to answer. You may be best off working directly with a lawyer for your specific situation.
Hi Lee, thank you for your video.
What would you say is the different between a LLC tax as a S Corporation and a S Corporation
Thank you for you answer
See my video explaining how to choose your tax structure at czcams.com/video/SxBdtbOMnjg/video.html
@@Legaleescorp Thank you
I'm starting a membership site, where i will collect monthly dues. Should i use the LLC taxed as an S corporation?
It depends on what those dues are for. If the dues are considered passive income then you do not want an S-Corp taxation. If you are providing services in exchange for the dues then you could use an S-Corp taxation.
Thank you for this information. I sell digital products online (printable files.) Can that be considered a passive income?
No, the sale of digital files on line is the sale of “goods and services”, which is earned or active income.
We created our LLC with taxation as a partnership but after listening to your video it should be as a corporation as we are offering services...can and how do we change this?
Sheri Schmitt From Ben Rucker: You need to file form 2553. You can file this with your return by March 15th
and make it retroactive to the beginning of January 2014. However, you must site the specific Rev-Proc applicable to your situation. I can help file this form for $350. Call my office at 800-468-4135.
hi sir ; thank you so much; but i have Question Does this apply to non-Americans?
The nature of the taxable income as earned or passive applies in most situations to foreign residents.
Only 23K views on all this valuable education smh
Why do a lot of law firms and cpa firms that don’t have foreign owners elect to have a LLP instead of an LLC taxed as an S Corporation?
They are stupid? The phrase “I made Partner!!!” is a big deal?? EGO Only professional can have an LLP in most states. I don’t know why use an LLP over the LLC. I wouldn’t ever use an LLP over an LLC.
We have an S Corp restaurant in Florida
I just inherited 4 rental properties, do I put them in the S Corp or seperate LLC ?
I was interested in keeping property in my name only heaven forbid a divorce?
What are your thoughts?
S-Corps are best used for earned income like your restaurant. Rentals generate passive income which is best taxed as a partnership or sole-proprietorship. You can create an LLC with you being the sole owner to hold the rentals so that they will stay as separate property and not marital property. You can then have the LLC taxed as a sole-proprietorship.
Do not put them in with the restaurant. Form a separate LLC in the state where the properties are. You could own all of the LLC and thereby own the houses with nobody else on the ownership of the LLC. In Florida, you lose the charging order protection in a single member LLC. If the LLC is in another state, then you may not have the problem of needing a multimember LLC for the charging order protection.
I understand you recommend a partnership for passive income. I am in the investment real estate business, so passive income, but I do not have a partner. So do you recommend a sole proprietorship? Thank you!
Yes, if the income is going to be passive income then a sole proprietorship is probably your best option for taxes.
LegaLees thank you! If that is the case, LLC formation would then only provide asset protection, not a tax benefit as well, if I understand correctly?
Yes, that is correct.
LegaLees Hi, I am trying to start a music company as a SMLLC, how do you think I should have my company taxed?
206EASTLAKEROB As an S Corporation. The decision of how to tax an LLC is based mostly on how the LLC will generate income. A music store will generate what is called earned income from the sale of goods or services. With the LLC taxed as an S corporation, you can take a reasonable salary and then take the rest of the “profit” as a distribution from the company. The salary is subject to Social Security, Medicare, etc., while the distribution is not, so you will save 15% on the amount you take as a distribution. If you instead tax it as a sole proprietorship (disregarded entity) or partnership (you would need another person), the income is all subject to the social taxes. Taxed as a C corporation, you would have to pay double taxes: once in corporate taxes and once on the income you receive in wages and dividends. So I would go with an S Corporation for your music store.
Thanks! Your videos have helped a lot.
Sheri, in order to file as a Corporation you need to file Form 8832 "Entity Classification Form". You can file this form as late as March 15 of this year and have it retroactively applied to your return for last year. There is a special procedure to do this. Contact Ben Rucker from IRStaxrelief.com at 801-857-8437. He works out of our office.