How to use an S Corporation to save thousands in taxes? | Realtor and Small Business Edition

This video is for Real Estate Agents, Brokers and other Small Business Owners who want to understand how an S Corporation can save you thousands of dollars in taxes. I compare the self-employment taxes that you pay if your business it taxed as a Sole Proprietor vs. an S Corporation.

The S Corporation is a tax classification (not a legal entity such as an LLC or Corporation). You can elect to have your LLC, PLLC, P.A., P.C., or C Corporation taxed as an S Corporation by completing and submitting paperwork with the IRS.

Take what you learn from this video and ask your tax professional all of your specific questions. If you want to contact me, my information is below.

Remember, this is a very important decision that may or may not save you money in taxes depending on a variety of factors. Please don't elect S Corporation status without consulting a tax professional that knows what they are talking about - all tax prepares are NOT the same.

If you learned something from this video, please like and subscribe and follow me on my various social media handles below. If you would like to contact me with a specific question, please visit my website or leave me a comment.

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This video was created for informational purposes and it is not to be construed as legal or tax advice specific to your unique situation.

© Navi Maraj CPA PLLC. All rights reserved.

[therupleteam]

In Texas, can only a Broker file as a S-corporation since a broker can not pay an individual agent’s llc. You have to be a broker in order to receive commission

[sonaiu]

So the federal income tax is the same on the distribution as well? Is it only the 15.3% that you are saving until the 168K - the reasonable salary? I thought tax brackets are different on distribution for s corps

[sergeis]

I might be missing something but this strategy doesn’t seem to take QBI 20% deduction for real estate agents into consideration. So it seems like forming an LLC with S corp tax election will not save you money because you’d be loosing QBI deduction on your salary part. You’d probably need to make at least 120k/ year with your distribution of 70k and salary of 50k to save maybe a 1-2 grand on taxes considering that you LLC would also incur extra work and expenses such as payroll and filing. Yes if you make 150k+/ year then an LLC with S corp will be a good choice. Navi please clarify. Thanks

[tssafarina]

Thanks. I was trying to figure out why an LLC treated as an S Corp made more sense then the default Partnership/sole Proprietorship.

[khaskin]

Do you HAVE to distribute funds as K-1?
What would happen if, in this example you've provided, I left the $40k in the LLC bank account? Would it be subject to corporate taxes?

[smart]

Hi Navi, Do you have to get the 1099 from the main company in the name and EIN of S Corporation to show under the S corp? or even if it is in the name and SSN of the realtor, you will be able to show income and expenses under the S corp?

[LivinginHoustonTX-Adrian]

I am in Texas and need your services. Can you help structure my Realtor business like this or guide me in the right direction? Are you licensed in Texas?

[tomd]

What changes with the s corp taxes when you have a W-2?

[Throttl.Therapy]

What is the way to look at this if this is my side hustle? I have a w2 in addition to my Realtor income.

[adamarrison]

Is a k-1 considered a stock distribution?

[IamRoxy]

I set up my S Corp last year in July (I'm a Realtor) and I think everything was done correctly, from what I can tell. Now I have to file a Zero return 1120S, is this something I can do on my own? I ended up not having any income/expenses charged to the S Corp after creating it (slow end of year!) I did my Franchise Zero tax report already, but just unsure how to go about doing the 1120S

[jyotibalabrahmbhatt]

Hi Navi, i am in NC have SM LLC. Can i elect to file as SCorp for 2021 taxes?

[cooperwilliams]

how do you change from 1099 to corp taxed as s corp lets say aug 1 2020

[eric_denmark]

Hi Navi. Can we schedule a meeting? I’m realtor here in KY and am looking to do this but would love to speak directly with you if possible. Thank you!

[zachreinke]

Can you cover what makes sense for a landlord to form, income that may be considered passive? Thanks so much for taking the time to cover these topics!! The examples really help!

[guillermoespinosa]

I see you in the background of your video that you have your boar of accountancy diploma which leads me to believe that you are in Florida. I'm in the Tampa area and would like to connect with you regarding my small business. If you are in Florida how do i get in touch with you?

[GriffinStructuresInc]

Hi Navi. Thanks for the great content. You mentioned the this math doesn't work if the business is a "side hustle." Can you expand on that comment in more detail? Are there certain income brackets that change how the math works for calculating the side hustle?

[lisali]

Very informative video! I wish I knew this earlier! I’m a real estate broker and have a single person LLC. Will contact you to see how I can choose to be taxed as S Corp.

[danielaclary]

Thank you for the info. I am a Real Estate broker and MLO I’m trying to start doing my own RE and Mortgage, I haven’t been making much at all and have no other income. Since I’m starting do you think it would be good to state as a sole proprietor? Or would it be better start as a corporation? Or any other option?