taxes on an s corp and standard llc. confused!

5 Replies

so i have a question on taxes.  I searched the answers in the discussions but couldnt find the answers im looking for. So hopefully one of you all can help me.  

So basically i have an s corp and llc.  Filing with the 2 states as of yesterday. 

for the s corp and llc how does the tax be determined?

Is it only what your business makes is taxed?
How does the process actually work..  thanks just a little confused is all.  I heard for the llc only what you bring in is taxed, can anyone concur?

@Tim Speer ,

I think you'd do best to book some time with your accountant. That's rather a bit more than folks might be willing to go into here.

I'm connected to some excellent on-line REI education and in our classes "Tax and Legal" is two-day on-line class taught by a JD Tax Attorney / CPA Tax Accountant (he holds both licenses).

The short version, though, can be summed up like this:

W2 Employee: Earns income, taxes are taken, employer takes pre-tax and after tax contributions, and the employee gets what's left, if anything, to pay his/her expenses.

Business entity (S-Corp, LLC, etc.): Earns income, pays deductible expenses and gets taxed on what's left, if anything.

Hope that helps ...

Yes that helps alot! Whats that price on the class?

Both of these entities are pass-through entities for taxes.  Meaning that the taxes pass through the entity and are taxed on your personal 1040.  You will get a statement from both, called a K1.  This statement will spell out the amount that is required to reported on your personal tax return on Schedule E or C depending on the particulars of each entity.  Complicated with lots of little loophooles.  I recommend speaking with your CPA or Enrolled Agent to get clarification and ensure you are following all the rules.  

Scott is right to the point. Any question PM or post it here and I will be happy to help you from a CPA pont of view.

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