November 14, 2024 • 11 mins
Are you a business owner navigating the complexities of LLC taxes and wondering how to maximize your tax benefits this year? In my latest podcast, I dive deep into the world of Limited Liability Companies (LLCs) and unlock the secrets to leveraging your LLC for incredible tax advantages.
As an entrepreneur, choosing the right entity structure for your business is crucial, and an LLC offers unique opportunities for tax savings. But how do you make the most of these opportunities? That's exactly what we'll explore together.
I've put together this FREE resource for you:
7 Write-Offs Every S-Corporation Business Owner MUST Know
🆓 Download FREE PDF here: https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout
Ready to start saving money on your taxes?
☎️ Schedule your FREE Tax Advisory Session: https://taxplanningcall.com/?el=podcast&htrafficsource=buzzsprout
💸 Save 100k NOW 💸 - https://save100know.com/access-training?el=podcast&htrafficsource=buzzsprout
🤑 If you want a better payroll app to process and file payroll for your business. Check out Gusto, so easy to use and you get a $100 gift card for signing up using this link: https://gusto.com/r/boris466
P.S. When you sign up for Gusto, you get a $100 Visa gift card
*Disclaimer This material & presentation content is for informational and educational purposes only. This material and presentation content is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this ...
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Best LLC tax strategy in 2024 that your accountant,
your tax advisor or your taxplanner is not telling you about
.
We're going to talk about howyou can use LLC as a different
entity for tax purposes.
Should you, or could you, useit as a holding company, or
should you be adding your spouseas a partner to minimize the
risk of an audit Ready?
(00:21):
Let's get started.
Speaker 2 (00:23):
Welcome to the Tax Reduction Podcast for
Money-Making Entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:44):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:57):
So we're going to talk about an LLC best LLC tax
strategies in 2024.
I'd like to start off withentity election.
So if you have an LLC, which isa limited liability company, by
default you are considered whatIRS likes to call a disregarded
entity.
That means for tax purposes notlegal, but for tax purposes it
(01:17):
considers you as a soleproprietorship.
And when you start an LLC andyou start having multiple
millions of dollars in yourrevenue or gross revenue or
profits, you start paying a lotof taxes on it as a single
member LLC, because you payextra 15.3% self-employment
income tax.
Now, to help you lower that taxburden, irs came out with
(01:41):
something that's called anS-corporation.
It's a small business,s-corporation Meaning to say you
can take any legal entity, suchas an LLC or even a
C-Corporation, and elect to bean S-Corporation.
Now, you're not by default asan S-Corporation.
You're not by default.
A lot of people think, yeah,I'm an LLC, I think I'm an
S-Corp.
No, you have to make thatelection.
(02:03):
Once you become anS-Corporation, you're going to
start paying yourself a salarywhich will help you reduce your
payroll taxes on the profit.
So LLC is amazing because ithas flexibility, whether you
have two partners, threepartners, or just yourself, or
you and your spouse.
You can make a decision toelect as an S-Corporation later
(02:23):
on, as you start making morerevenue or you start making more
profit.
Now what happens is that youhave to make an election and
file Form 2553.
This could be filed by youraccountant.
You have to do it within 75days of the beginning of the
year or from when youincorporated.
But even if you're late, youcan do a late S-election.
(02:44):
Hopefully you are working witha tax advisor who walks you
through these steps and lettingyou know once you made an
election, you want to putyourself on a salary right away
and pay w-2 to yourself as anllc owner.
Now, remember we also want totalk about when you have llc as
a holding company or adding aspouse.
We're going to get there, butright now I'm focusing on the
fact if your llc is your mainoperating business.
(03:11):
Once you've got salary, thefirst and foremost you want to
do what do you want to do?
If you pay health insurance asan owner of your own business,
you want to incorporate it intoa salary.
Why?
Because it'll save you not onlyon an asset deduction taxes on
an asset deduction, but alsoadditional savings on payroll
taxes.
But llc can be taxes and scorporation.
That is the takeaway.
Okay, llc can be taxes and scorporation.
(03:31):
What we need to do right now ismake an election, pay the
salary and do health insurancenow.
This is going to save you a lotof money on taxes, especially
if you're a profitable businessowner.
We worked with a business ownerthat was an LLC, didn't know
he's not an S corporation, waspaying himself a salary.
I was happy he was doing that.
We quickly fixed that, madesure the salary is reasonable,
(03:54):
added health insurance and madea selection.
He was compliant with IRS andhe was on his way to save tons
of money on taxes.
Now let's talk about LLC beinga holding company, and we'll do
it right after this.
Speaker 2 (04:04):
Break taxes Now let's talk about LLC being a holding
company, and we'll do it rightafter this break.
If you have a tax preparer andyou do not have a tax advisor,
the only way you can save moneyon taxes is by using proactive
tax planning strategies thatonly a tax advisor can give you.
Boris put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
(04:25):
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:36):
Okay, awesome, welcome back.
Let's talk about LLC as aholding company.
Now, in many instances, whathappens is that a lot of
business owners, as they starthaving profits in the business,
they start investing.
Right, they, they invest inanother business, or they invest
in real estate rental realestates, flips, or it could be
commercial properties and andthey start questioning hey,
(04:58):
should I be forming a holdingcompany?
How should I structure that?
So the best practice, first ofall, is when you have an LLC
right, I'm gonna write over herea real estate LLC.
Okay.
So when you buy any rental realestate property, we strongly
recommend to our clients is toput each property into its own
(05:20):
LLC.
Okay, you're protecting, it's alimited liability company.
Let's say you live in florida,but you bought a property I
don't know in georgia, so youmight want to open that llc in
the state of georgia, okay.
Now you say, okay, boris, I'vegot an llc in the state of
georgia, but now I want to havea holding company.
I've got a llc in the state ofgeorgia instead of florida,
(05:40):
instead of texas, and I want tohave a holding company.
You can certainly do so.
You can open up a holdingcompany either in one of the
most favorable states when itcomes to opening up holding
companies.
This could be Nevada, wyomingor Delaware, you know,
definitely, speak to yourattorney about this.
Okay, definitely, definitelyspeak to your attorney about
this for legal protection.
(06:01):
But you can open up a holdingcompany one of these states.
Then this holding company is,in fact, is going to own each
individual llc in which theproperties are located.
Now, again, we're assuming thatyou already have a main business
llc as an s corporation and youconverted that to an s
corporation.
You're on your way to savemoney on taxes.
(06:22):
Now you start investing moreand you start putting each real
estate or you could own otherbusinesses right.
You could own a share inanother business, you could be a
partner in another businesswhere you're receiving residual
income or you're a passivepartner, so this could also be
an llc, okay, and then you canhave a holding company in one of
(06:44):
these states.
Speak to your attorney thatcould could own these LLCs.
That is another strategy thatLLC can be used for.
Remember, llc is flexibility.
That's what I like to say.
It's so flexible.
It could be used for your mainoperating business, it could be
used for your real estateholdings or it could be used as
your holding company.
Now that you've got your mainbusiness LLC structured as an S
(07:06):
corporation, you've got yourholding company and you've got
real estate let's talk about.
Should you be adding yourspouse as a partner to your LLC
to minimize the risk of an audit?
And we'll do it right afterthis break.
Speaker 2 (07:19):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(07:40):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (07:51):
Let's talk about adding your spouse.
Now you're like, boris, what doyou mean?
Adding my spouse To myS-corporation, to my holding
company, or what?
So a lot of times what happensis that business owners that I
work with that are veryprofitable and we, thank God,
help them save a lot of money ontaxes.
Okay, they start anotherbusiness.
Now that when they startanother business they ask him,
(08:13):
boris, should it be another Scorporation?
And the answer is really alwaysdepends.
In some cases it cannot be an Scorporation for whatever other
reasons.
Right, not going to get intodetails, but it needs to stay as
an LLC and it's a.
It's an operating business thatthe client is involved, the
user, business owner could beinvolved in.
It generates revenue, itgenerates expense, it has
(08:34):
expenses, generates nice profit.
Now, if you file, remember whatI said LLC is a disregarded
entity.
For IRS purposes.
It is treated as a soleproprietorship, as a schedule C.
So that means you have to editon your Schedule C.
Schedule C's in America havethe highest audit rate, I
believe, if not, if I'm notmistaken, the last census that
was taken, uh, the last report,excuse me, uh, that was, uh that
(08:58):
came out.
I believe it was about eight ornine percent audit rate for
Schedule C's.
So when you put your businesson a Schedule C, your LLC is a
sole proprietor.
Irs says whoa $1.2 million ingross revenue, $700,000 in
expenses, and we see no balancesheet.
Because there is no balancesheet with Schedule C, bam, that
return has a higher probabilityof getting picked up for an
(09:21):
audit.
What we do with our clients,we're like hey, how about we add
your spouse as a partner?
Now some clients are verycomfortable and say, you know
what my spouse can be 50 percent.
Or some clients like, oh no, Idon't, I don't want my spouse
anywhere near that.
So we just give a 0.01 percentor one percent, whatever your
financial situation is with yourspouse.
But why do we want to do that?
Is because we're triggeringwhat's called a partnership tax
(09:44):
tax return, right form 1065.
That means we're now not goingto be filing a Schedule C, but
we're going to file apartnership return.
And guess which has the lowestaudit rate?
Partnership tax returns.
Okay, so they have the lowestaudit rates.
And bam, we just decrease theaudit rate from like 8% to like
(10:05):
almost nothing.
Right, so now we continuereporting that same income.
Now I'm not trying to over hereto say, hey, avoid IRS.
What we're trying to do isminimize the risk of audit.
Now, if you do get ordered, youshould not be afraid of the IRS
, especially if you've doneeverything diligently and
correctly and you havedocumentation for all of your
expenses and your income.
(10:26):
It's just that we want to avoida headache of dealing with the
IRS and the audits just becausewe didn't know this little thing
that your tax advisor couldhave told you.
Now you're like Boris, how canI add my spouse you might want
to call your attorney yourcorporate attorney, whoever put
together your corporatepaperwork and add your spouse to
your operating agreement.
(10:46):
Transfer the ownership.
There will be no taxes on thetransfer of ownership to your
spouse, so you're totally okaythere.
Hope this was helpful.
Ladies and gentlemen, if you'renot working with a tax advisor
yet, please get yourself a taxadvisor, especially if you're
opening up new entities, newLLCs.
You're thinking about doingholding companies, real estate,
adding your spouse as an owner,having LLCs and S-corporation.
(11:09):
All of this requires taxplanning.
Your tax preparer that puts theright numbers in the right
boxes is not going to be doingthat for you.
Thank you so much Until thenext time.
Best LLC tax strategy in 2024 that your accountant,
your tax advisor or your taxplanner is not telling you about
.
We're going to talk about howyou can use LLC as a different
entity for tax purposes.
Should you, or could you, useit as a holding company, or
should you be adding your spouseas a partner to minimize the
risk of an audit Ready?
(00:21):
Let's get started.
Speaker 2 (00:23):
Welcome to the Tax Reduction Podcast for
Money-Making Entrepreneurs withBoris Mushaev.
Boris has helped entrepreneursacross the United States
collectively save millions ofdollars in taxes with the power
of tax planning and advisory.
The only way you, the businessowner, can save money on taxes
is by using proactive taxstrategies, and this podcast is
(00:44):
all about saving you money ontaxes.
Boris will share with youin-depth and easy to understand
tax reduction strategies thatyou can implement in your
business within 30 days or less.
Let's jump into today's episode.
Speaker 1 (00:57):
So we're going to talk about an LLC best LLC tax
strategies in 2024.
I'd like to start off withentity election.
So if you have an LLC, which isa limited liability company, by
default you are considered whatIRS likes to call a disregarded
entity.
That means for tax purposes notlegal, but for tax purposes it
(01:17):
considers you as a soleproprietorship.
And when you start an LLC andyou start having multiple
millions of dollars in yourrevenue or gross revenue or
profits, you start paying a lotof taxes on it as a single
member LLC, because you payextra 15.3% self-employment
income tax.
Now, to help you lower that taxburden, irs came out with
(01:41):
something that's called anS-corporation.
It's a small business,s-corporation Meaning to say you
can take any legal entity, suchas an LLC or even a
C-Corporation, and elect to bean S-Corporation.
Now, you're not by default asan S-Corporation.
You're not by default.
A lot of people think, yeah,I'm an LLC, I think I'm an
S-Corp.
No, you have to make thatelection.
(02:03):
Once you become anS-Corporation, you're going to
start paying yourself a salarywhich will help you reduce your
payroll taxes on the profit.
So LLC is amazing because ithas flexibility, whether you
have two partners, threepartners, or just yourself, or
you and your spouse.
You can make a decision toelect as an S-Corporation later
(02:23):
on, as you start making morerevenue or you start making more
profit.
Now what happens is that youhave to make an election and
file Form 2553.
This could be filed by youraccountant.
You have to do it within 75days of the beginning of the
year or from when youincorporated.
But even if you're late, youcan do a late S-election.
(02:44):
Hopefully you are working witha tax advisor who walks you
through these steps and lettingyou know once you made an
election, you want to putyourself on a salary right away
and pay w-2 to yourself as anllc owner.
Now, remember we also want totalk about when you have llc as
a holding company or adding aspouse.
We're going to get there, butright now I'm focusing on the
fact if your llc is your mainoperating business.
(03:11):
Once you've got salary, thefirst and foremost you want to
do what do you want to do?
If you pay health insurance asan owner of your own business,
you want to incorporate it intoa salary.
Why?
Because it'll save you not onlyon an asset deduction taxes on
an asset deduction, but alsoadditional savings on payroll
taxes.
But llc can be taxes and scorporation.
That is the takeaway.
Okay, llc can be taxes and scorporation.
(03:31):
What we need to do right now ismake an election, pay the
salary and do health insurancenow.
This is going to save you a lotof money on taxes, especially
if you're a profitable businessowner.
We worked with a business ownerthat was an LLC, didn't know
he's not an S corporation, waspaying himself a salary.
I was happy he was doing that.
We quickly fixed that, madesure the salary is reasonable,
(03:54):
added health insurance and madea selection.
He was compliant with IRS andhe was on his way to save tons
of money on taxes.
Now let's talk about LLC beinga holding company, and we'll do
it right after this.
Speaker 2 (04:04):
Break taxes Now let's talk about LLC being a holding
company, and we'll do it rightafter this break.
If you have a tax preparer andyou do not have a tax advisor,
the only way you can save moneyon taxes is by using proactive
tax planning strategies thatonly a tax advisor can give you.
Boris put together a free PDFfor you, the business owner
Seven tax write-offs everyS-corporation business owner
must know.
(04:25):
In this PDF you can find seventax strategies that you can
start using in your business toinstantly start saving money on
taxes.
Click on the link in thedescription below for a free
download.
Speaker 1 (04:36):
Okay, awesome, welcome back.
Let's talk about LLC as aholding company.
Now, in many instances, whathappens is that a lot of
business owners, as they starthaving profits in the business,
they start investing.
Right, they, they invest inanother business, or they invest
in real estate rental realestates, flips, or it could be
commercial properties and andthey start questioning hey,
(04:58):
should I be forming a holdingcompany?
How should I structure that?
So the best practice, first ofall, is when you have an LLC
right, I'm gonna write over herea real estate LLC.
Okay.
So when you buy any rental realestate property, we strongly
recommend to our clients is toput each property into its own
(05:20):
LLC.
Okay, you're protecting, it's alimited liability company.
Let's say you live in florida,but you bought a property I
don't know in georgia, so youmight want to open that llc in
the state of georgia, okay.
Now you say, okay, boris, I'vegot an llc in the state of
georgia, but now I want to havea holding company.
I've got a llc in the state ofgeorgia instead of florida,
(05:40):
instead of texas, and I want tohave a holding company.
You can certainly do so.
You can open up a holdingcompany either in one of the
most favorable states when itcomes to opening up holding
companies.
This could be Nevada, wyomingor Delaware, you know,
definitely, speak to yourattorney about this.
Okay, definitely, definitelyspeak to your attorney about
this for legal protection.
(06:01):
But you can open up a holdingcompany one of these states.
Then this holding company is,in fact, is going to own each
individual llc in which theproperties are located.
Now, again, we're assuming thatyou already have a main business
llc as an s corporation and youconverted that to an s
corporation.
You're on your way to savemoney on taxes.
(06:22):
Now you start investing moreand you start putting each real
estate or you could own otherbusinesses right.
You could own a share inanother business, you could be a
partner in another businesswhere you're receiving residual
income or you're a passivepartner, so this could also be
an llc, okay, and then you canhave a holding company in one of
(06:44):
these states.
Speak to your attorney thatcould could own these LLCs.
That is another strategy thatLLC can be used for.
Remember, llc is flexibility.
That's what I like to say.
It's so flexible.
It could be used for your mainoperating business, it could be
used for your real estateholdings or it could be used as
your holding company.
Now that you've got your mainbusiness LLC structured as an S
(07:06):
corporation, you've got yourholding company and you've got
real estate let's talk about.
Should you be adding yourspouse as a partner to your LLC
to minimize the risk of an audit?
And we'll do it right afterthis break.
Speaker 2 (07:19):
If all your accountant does is taxes, you
may be overpaying in taxes bythousands of dollars every year.
Every week, Boris releases atax strategy on his podcast so
that you, the business owner,can pay less in taxes every
single year.
Be sure to subscribe to ourpodcast to be notified when a
new tax strategy is released.
If you're ready to work with atax advisor on your tax strategy
(07:40):
and planning, be sure toschedule your call by heading
over to wwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Again, that'swwwtaxplanningcallcom.
Speaker 1 (07:51):
Let's talk about adding your spouse.
Now you're like, boris, what doyou mean?
Adding my spouse To myS-corporation, to my holding
company, or what?
So a lot of times what happensis that business owners that I
work with that are veryprofitable and we, thank God,
help them save a lot of money ontaxes.
Okay, they start anotherbusiness.
Now that when they startanother business they ask him,
(08:13):
boris, should it be another Scorporation?
And the answer is really alwaysdepends.
In some cases it cannot be an Scorporation for whatever other
reasons.
Right, not going to get intodetails, but it needs to stay as
an LLC and it's a.
It's an operating business thatthe client is involved, the
user, business owner could beinvolved in.
It generates revenue, itgenerates expense, it has
(08:34):
expenses, generates nice profit.
Now, if you file, remember whatI said LLC is a disregarded
entity.
For IRS purposes.
It is treated as a soleproprietorship, as a schedule C.
So that means you have to editon your Schedule C.
Schedule C's in America havethe highest audit rate, I
believe, if not, if I'm notmistaken, the last census that
was taken, uh, the last report,excuse me, uh, that was, uh that
(08:58):
came out.
I believe it was about eight ornine percent audit rate for
Schedule C's.
So when you put your businesson a Schedule C, your LLC is a
sole proprietor.
Irs says whoa $1.2 million ingross revenue, $700,000 in
expenses, and we see no balancesheet.
Because there is no balancesheet with Schedule C, bam, that
return has a higher probabilityof getting picked up for an
(09:21):
audit.
What we do with our clients,we're like hey, how about we add
your spouse as a partner?
Now some clients are verycomfortable and say, you know
what my spouse can be 50 percent.
Or some clients like, oh no, Idon't, I don't want my spouse
anywhere near that.
So we just give a 0.01 percentor one percent, whatever your
financial situation is with yourspouse.
But why do we want to do that?
Is because we're triggeringwhat's called a partnership tax
(09:44):
tax return, right form 1065.
That means we're now not goingto be filing a Schedule C, but
we're going to file apartnership return.
And guess which has the lowestaudit rate?
Partnership tax returns.
Okay, so they have the lowestaudit rates.
And bam, we just decrease theaudit rate from like 8% to like
(10:05):
almost nothing.
Right, so now we continuereporting that same income.
Now I'm not trying to over hereto say, hey, avoid IRS.
What we're trying to do isminimize the risk of audit.
Now, if you do get ordered, youshould not be afraid of the IRS
, especially if you've doneeverything diligently and
correctly and you havedocumentation for all of your
expenses and your income.
(10:26):
It's just that we want to avoida headache of dealing with the
IRS and the audits just becausewe didn't know this little thing
that your tax advisor couldhave told you.
Now you're like Boris, how canI add my spouse you might want
to call your attorney yourcorporate attorney, whoever put
together your corporatepaperwork and add your spouse to
your operating agreement.
(10:46):
Transfer the ownership.
There will be no taxes on thetransfer of ownership to your
spouse, so you're totally okaythere.
Hope this was helpful.
Ladies and gentlemen, if you'renot working with a tax advisor
yet, please get yourself a taxadvisor, especially if you're
opening up new entities, newLLCs.
You're thinking about doingholding companies, real estate,
adding your spouse as an owner,having LLCs and S-corporation.
(11:09):
All of this requires taxplanning.
Your tax preparer that puts theright numbers in the right
boxes is not going to be doingthat for you.
Thank you so much Until thenext time.
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