Episode 61: S-Corp vs. LLC: Which Is Best for My Company?

In this episode of the Stuff About Money podcast, Xavier Angel, a Certified Financial Planner (CFP®), Chartered Financial Consultant (ChFC), and Certified in Long-Term Care (CLTC), sits down with CPA Keith Raymond to discuss common questions from business owner clients about LLCs and S-Corporations.

Keith Raymond simplifies the key differences and misconceptions about LLCs and S-Corporations, providing valuable insights into how business owners should navigate tax considerations. Whether you’re a seasoned entrepreneur or just starting out, understanding the tax implications of being taxed as an LLC versus an S-Corp is essential.

With the complexities of tax codes, having a knowledgeable CPA like Keith Raymond as a guide is invaluable for business owners. Tune in to this episode to gain clarity on LLCs, S-Corporations, and make informed decisions for your business’s financial future.

Episode Highlights:

  • Keith discusses his career beginning in accounting with Ernst and Young in New Orleans, facing early challenges due to Hurricane Katrina. (1:53)
  • Keith explains the distinction between an S Corp (tax status) and an LLC (legal structure), highlighting misconceptions about tax implications. (7:57)
  • Keith emphasizes the protective benefits of an LLC, which safeguards an owner’s personal assets from business liabilities, such as lawsuits or bankruptcy. (15:25)
  • Keith discusses S Corp benefits, including tax savings on earnings above a reasonable salary with certain limitations. (18:19)
  • Keith shares the key differences in business structures: sole proprietorship for simplicity, partnerships for flexible profit allocation, and S Corps for equal distribution among owners. (22:21)
  • Keith discusses the importance of considering both direct and indirect expenses when operating or planning to start a business. (28:04)
  • Keith mentions that it is important to understand deductible expenses, including recent changes to meals and entertainment rules, and encourages consulting professionals to ensure correct tax deductions. (29:47)

Key Quotes:

  • “The whole purpose of the LLC, the Limited Liability Company, is to protect the assets that are in the business, to the business.” – Keith Raymond, CPA
  • “The benefits of an S corp, for the most part, comes down to a popular strategy that is used where earnings within an S Corp are generally not subject to self-employment taxes.” – Keith Raymond, CPA
  • Just make sure you’re capturing all of your business activity. Because, if you miss some expenses, that’s tax dollars, that could be in your pocket that you’re ultimately could be paying into government, that you just don’t want to miss out on.” – Keith Raymond, CPA

Resources Mentioned:

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