Dear Mike,
Here's something most business owners don't know they can do:
You get to elect how your LLC is taxed.
An LLC is a legal entity — it exists in state law. But the IRS doesn't care about state law for tax purposes. For tax purposes, the IRS gives you a choice. Your LLC can be taxed as a disregarded entity, as a partnership, as an S-corporation, or as a C-corporation. Same legal structure. Four completely different tax outcomes.
Most business owners never make this choice on purpose. They form an LLC, the IRS defaults it to whatever fits their filing status, and that's the end of the conversation. Nobody tells them the default is a choice they can change — and that the wrong choice compounds every year they don't fix it.
The right election depends on your specific facts: what your business does, how much it earns, whether you're the only owner, whether you have real estate, whether family is involved, what you plan to do when you exit. There's no universal answer. But there is a wrong answer for almost every situation, and most entrepreneurs are living inside one.
This is one of the first things Doug and I work through at the Bootcamp. Not because entity choice is the most exciting topic — it isn't — but because almost every other tax strategy sits on top of it. Get the entity wrong and the strategies you build on top of it work harder than they should for less benefit than they could deliver.
The point isn't which entity is best. The point is that it's a choice, and once you understand what you're choosing between, the rest of your tax strategy starts to make sense.
The next Bootcamp is October 5–7 in Tempe.
- Your spouse attends with you at no extra cost
- Welcome reception the evening of Monday, October 5 (5:00–6:30 PM)
- Lunch is included both full days
- The Bootcamp is $2,997
👉Reserve Your Seat 👈
Live Tax Free,
Tom Wheelwright®, CPA
Founder & CEO
PLA Software & WealthAbility®
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