A highlight / reminder, however, on the S-Corp election:
This tax status tends to be a better option for higher-earning LLCs. Or, generally, once your accrued profits hit about $40k to $50k.
Also, to edify what's in this post, the MAIN / CORE benefit of an S-corporation is that it saves you from having to pay self-employment tax on distributions.
You can pay a portion of profits as salary to employees, which can include members who provide services to the LLC. The LLC can then distribute the remaining profits to members as dividends, which are NOT subject to self-employment taxes.
Just be sure to pay yourself a “reasonable” salary if you go the LLC/S Corp route. The IRS has been cracking down on the $1 salary takers. And, if you sell your business, you want to be able to add-back at least a portion of your salary and not have to subtract a reasonable salary from your bottom line.
This is great advice, far too few people think about tax until it's too late. One thing I would recommend is to get in touch with a local tax person if you're outside of the US -- the situation is different everywhere in the world and there are a lot of things you can do to optimize your tax situation.
A tonne of it requires getting ahead of the curve though, so definitely recommend acting sooner rather than later.
A highlight / reminder, however, on the S-Corp election:
This tax status tends to be a better option for higher-earning LLCs. Or, generally, once your accrued profits hit about $40k to $50k.
Also, to edify what's in this post, the MAIN / CORE benefit of an S-corporation is that it saves you from having to pay self-employment tax on distributions.
You can pay a portion of profits as salary to employees, which can include members who provide services to the LLC. The LLC can then distribute the remaining profits to members as dividends, which are NOT subject to self-employment taxes.
Just be sure to pay yourself a “reasonable” salary if you go the LLC/S Corp route. The IRS has been cracking down on the $1 salary takers. And, if you sell your business, you want to be able to add-back at least a portion of your salary and not have to subtract a reasonable salary from your bottom line.
Still waiting on efficiency 2.0
This is great advice, far too few people think about tax until it's too late. One thing I would recommend is to get in touch with a local tax person if you're outside of the US -- the situation is different everywhere in the world and there are a lot of things you can do to optimize your tax situation.
A tonne of it requires getting ahead of the curve though, so definitely recommend acting sooner rather than later.
Here’s hoping one day they allow scammed crypto losses as deductions. Hoping for a friend, that is.