The speaker introduces the concept of using an S Corporation to significantly increase wealth, aiming for $100,000 or more.
Credentials: Registered CPA, attorney, best-selling author, and business owner in the tax and legal industry.
Emphasis on helping clients leverage the S Corporation strategy for maximum profit.
Addressing common misunderstandings and misuse of the S Corporation.
Definition: An S Corporation is a specific way of conducting business, distinct from LLCs and corporations.
An S Corporation can be an LLC that elects to be taxed as an S Corp or a corporation itself.
Visual representation provided:
Trifecta Model: Operations (left), Assets (right), Trust/Tax Return (bottom).
Different forms of business ownership: sole proprietorship, LLC, or S Corporation, with S Corporation being a preferred option for tax efficiency.
Sole Proprietorship vs. LLC vs. S Corporation:
Sole Proprietorship: Files a Schedule C tax return.
LLC: Also files a Schedule C tax return; doesn’t save on taxes compared to sole proprietorship.
S Corporation: Files a separate corporate tax return; potential to avoid self-employment tax.
Example of a landscaper:
Generates $100,000 in revenue, spends $25,000 in expenses, nets $75,000.
Sole proprietorship and LLC pay 15.3% self-employment tax; S Corporation potentially avoids most of these taxes.
No self-employment tax: One of the biggest advantages of the S Corporation.
Need to take a 'reasonable salary' (example: $25,000 salary, $50,000 in distributions).
Concerns about reasonable salary and IRS audits addressed:
Speaker has extensive experience and asserts low audit risk when salary is reasonable.
Importance of splitting income into salary and distributions to reduce taxable income.
Use savings from reduced taxes to fund a solo 401(k):
Tax deferral benefits and retirement savings accumulation.
Contribution limit can be up to $30,000 in a year.
Company match can further enhance savings.
Investment Diversification: Funds can be allocated across various assets (crypto, real estate, stocks, etc.).
Stress on the ease of setting up a solo 401(k) tailored to the business owner's needs.
Encourage family involvement in business as a board of directors for operational support.
Tax benefits from business-related expenses when board members travel or have meetings.
Examples: travel deductions, tech gadgets for board members.
Creating legitimate tax write-offs while involving family in business operations.
Importance of maintaining company records and minutes for asset protection.
Using an S Corporation substantially lowers the risk of IRS audits compared to LLCs.
Speaker encourages viewers to take proactive steps in their business structure for exponential growth.
Final suggestion: Consult a tax attorney for setting up or maintaining an S Corporation to maximize wealth and tax efficiency.
Call to action: Watch additional videos for advanced tax and legal strategies.
The video emphasizes the strategic advantages of adopting an S Corporation—tax savings, wealth building through retirement accounts, and leveraging family involvement for operational success.
How The Rich Use S-CORPS To Explode Their Wealth
The speaker introduces the concept of using an S Corporation to significantly increase wealth, aiming for $100,000 or more.
Credentials: Registered CPA, attorney, best-selling author, and business owner in the tax and legal industry.
Emphasis on helping clients leverage the S Corporation strategy for maximum profit.
Addressing common misunderstandings and misuse of the S Corporation.
Definition: An S Corporation is a specific way of conducting business, distinct from LLCs and corporations.
An S Corporation can be an LLC that elects to be taxed as an S Corp or a corporation itself.
Visual representation provided:
Trifecta Model: Operations (left), Assets (right), Trust/Tax Return (bottom).
Different forms of business ownership: sole proprietorship, LLC, or S Corporation, with S Corporation being a preferred option for tax efficiency.
Sole Proprietorship vs. LLC vs. S Corporation:
Sole Proprietorship: Files a Schedule C tax return.
LLC: Also files a Schedule C tax return; doesn’t save on taxes compared to sole proprietorship.
S Corporation: Files a separate corporate tax return; potential to avoid self-employment tax.
Example of a landscaper:
Generates $100,000 in revenue, spends $25,000 in expenses, nets $75,000.
Sole proprietorship and LLC pay 15.3% self-employment tax; S Corporation potentially avoids most of these taxes.
No self-employment tax: One of the biggest advantages of the S Corporation.
Need to take a 'reasonable salary' (example: $25,000 salary, $50,000 in distributions).
Concerns about reasonable salary and IRS audits addressed:
Speaker has extensive experience and asserts low audit risk when salary is reasonable.
Importance of splitting income into salary and distributions to reduce taxable income.
Use savings from reduced taxes to fund a solo 401(k):
Tax deferral benefits and retirement savings accumulation.
Contribution limit can be up to $30,000 in a year.
Company match can further enhance savings.
Investment Diversification: Funds can be allocated across various assets (crypto, real estate, stocks, etc.).
Stress on the ease of setting up a solo 401(k) tailored to the business owner's needs.
Encourage family involvement in business as a board of directors for operational support.
Tax benefits from business-related expenses when board members travel or have meetings.
Examples: travel deductions, tech gadgets for board members.
Creating legitimate tax write-offs while involving family in business operations.
Importance of maintaining company records and minutes for asset protection.
Using an S Corporation substantially lowers the risk of IRS audits compared to LLCs.
Speaker encourages viewers to take proactive steps in their business structure for exponential growth.
Final suggestion: Consult a tax attorney for setting up or maintaining an S Corporation to maximize wealth and tax efficiency.
Call to action: Watch additional videos for advanced tax and legal strategies.
The video emphasizes the strategic advantages of adopting an S Corporation—tax savings, wealth building through retirement accounts, and leveraging family involvement for operational success.