CPA EXPLAINS Tax Differences: LLC, S Corp, C Corp, Partnership, Sole Prop

In this video, I'm breaking down the tax variations among sole proprietorships, LLCs, partnerships, S corporations, and C corporations. We'll use a $100,000 profit scenario to see how each structure impacts your social security taxes, Medicare taxes, federal income tax, and state income tax. Discover why an S corporation might be your best friend in tax savings, while C corporations, despite their allure, may not be ideal for smaller businesses due to double taxation.

If you find this video helpful, hit that like button and share it with fellow entrepreneurs. Drop your questions in the comments, and I'll answer them. For a deeper dive into tax optimization, explore my comprehensive course on my website. Remember, mastering taxes doesn't have to be daunting—I'm here to guide you toward financial success!

🔗Links to my Website and Course:

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⏱️ Video Time Stamps ⏱️

00:00 - 00:39 Intro to Tax Differences for Business Entities
00:40 - 1:08 Intro to Navi Maraj CPA
01:08 - 02:35 Overview of Tax Classifications
02:36 - 06:44 What Taxes do Sole Proprietorships Pay?
06:45 - 09:01 What Taxes do S Corporations Pay?
09:02 - 10:52 What Taxes do Partnerships Pay?
10:53 - 15:20 What Taxes do C Corporations Pay?
15:21 - 16:05 Adjustment to Gross Income (AGI) for Self-Employment Tax Paid
16:06 - 18:15 Resources to Calculate Your Own Taxes

📘 Resources 📘

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This video was created for informational purposes and it is not to be construed as legal and tax advice specific to your unique situation. Some of the links above are affiliate links which means that if you purchase a product or service with the provided link, I may receive a commission with no additional cost to you.

© Navi Maraj CPA PLLC. All rights reserved.

#LLC #SCorp #CCorp

[edgonzalez]

Also... is GREAT to have a CPA making a video on the subject... Seemed like attorneys had taken over tax related videos... just to end up suggesting trusts, holding companies, series LLC's... and the "words" Wyoming, Delaware, Nevada, anonaminity.... for us regular folks with our hustles that just want to make some sort of reasonable living.

[ElectroTree]

The best explanation yet!
The only thing I didn’t see you explain was retained earnings and how they are taxed differently and how a different structure(c corp) can reduce tax on retained earnings.

[mntes]

as someone with ZERO tax knowledge even back when i was under W2's this is explained so well, i understood everything! thank you so

[mindmaven]

Wow. I wish I could have had this clear of an explanation 20 years ago. Great job. Thank you.

[legacymoney]

Good explanation! Some things that often get overlooked are the filing of the Schedule K1, bookkeeping costs, legal fees and filing fees.

[qbantek]

@NaviMarajCPA you mentioned the associated taxes when taking a dividend from the C-Corp, but you did not mention how would the distribution from the S-Corp would be taxed, assuming John does not want to leave $60K in the company's account.

[kyg]

Thank you for breaking this down in such an simple and easy way to understand. A+ video!

[DarrylBodkin]

This is great information. Thank you for your service!

[adibadjugelieva]

I liked the way you explained. Thank you so much!

[stevegallo]

Are we able to have a downloadable version of this Excel example?

[makedaily]

This video is genuinely inspiring! -- "Embrace your aspirations with unwavering determination."

[YudiJ]

Thank you for this video, helped cleared a lot of doubts. Do you have the spreadsheet where I can download it or use it?

[logangill]

Best video I’ve seen on this topic! Thank you!

[wastedump-hgnd]

Would be great if you can make a video on how these profits flow into your personal return and are taxed

[ChristopherAbelman]

I honestly think America needs a completely restructure of their political system. It is just not working. Trump and Biden being elected out of 300 million people to run the country is evidence for that too.

[racquelpouchet]

Question: Should you start at LLC is company makes less than 100K then covert to S Corp when profits increase?

[nazimkabiri]

Thank you so much, the best video I have ever watched that answered all my questions regarding the taxation rules on different types of entities. It helped me convert my LLC to an S-Corp and save on taxes. God bless you!

[douglastarvestad]

I have a question. Considering personal cash flow the sole prop and general part, the individual gets taxed at a personal level and they get those funds. And a C-corp the owner takes a salary and the C-corp gets taxed on the $60m and if the owner wants those funds the need to take a distribution, they can't just pulled money from the register like a sole prop and gen part can do. But what you don't show is, how does the S-corp treat the $60m that was taxed on the corp level? Don't they have to take a distribution also? And they don't get taxed then, correct? And if so, can't they skip the salary and take a distribution instead? I work at a bank and I see a lot of S-corps and this seems to be the norm.

[KR-lnqw]

Please explain the FIT tax for S corps.

[dragonpower]

Regarding the Sole Proprietor tax, if the business profit is $1, 000, 000, do we still use the same formula to calculate the social security and Medicare taxes?
For example:

$1, 000, 000 x 0.153 = $153, 000.