Jacksonville CPA | The Right Firm
Okay, so my name is Brandon Mallory, welcome back to the podcast and the president of Mineva, Jacksonville based tax and accounting firm. And if you were Jacksonville CPA is not meeting your financial needs and please give us a call, set up an appointment, come in for a free consultation and we will show you how to meet and achieve and exceed your financial goals. A membership only accounting firm. We’re not mike any other accounting firm or any other Jacksonville CPA firm. We’re a membership only accounting firm that deals strictly with business owners. So if you’re just an individual and you are not connected any in any way to a business, then we are not the right firm for you. So today we’re talking about a boring text topics, but we have a language expert here and we’re going over, um, different ways to simplify the tax code and ways to make it more interesting for our clients to make sure that we communicate effectively. So during the break, Ms Dot Morgan has made the comment that she does not know how in the world that we do this stuff because it is so boring. So here’s one way to think of it. So do you like to travel?
Yes. And I see where you’re going with this.
Oh, you’re too smart. Let’s see. You just ruined my whole little pathway that I was going to take you down. It’s going to make a jump off a cliff then I was going to catch you, but. So it’s boring. If I could show you as a business owner how to save $10,000 a year, would it? Would it not be boring anymore?
No, it wouldn’t be an. I’m very glad that there are people like you.
Oh well that’s so nice. I’m glad there are people like you. So if you’re Jacksonville CPA firm is not dedicated to helping you pay as little tax as possible, then please give her Neva call and set up an appointment to come and get a free consultation. Free financial analysis for your business. Let us review your prior year tax returns at no cost to you. So the s corporation. So the s corporation is a separate legal entity and that is the way my business is set up. So let’s continue on the example of Joe Bricklayer, who was, I was just talking to a friend of mine, he was a brick layer and telling him he needed to set up his business this way and he was having a hard time wrapping his mind around it, but he wants more information. So, um, anyways, I think he might know. I think he might be a friend of yours as well. Is that correct?
Okay. So the way the s-corporation works is instead of Joe Bricklayer doing work as Mr, brick brick layer as a sole proprietorship and encouraging self employment taxes on every dollar of profit that he makes, he forms an s corporation in his state and he starts doing business under the name of this s Corp. So it could be mr joe’s lucky smells, brick lank incorporated. And then inStead of his clients paying him, mr joe bricklayer, they make the checks out to mr joe’s lucky smells brooklyn incorporated, and he has a separate bank account for this corporation and all of his income goes into this corporate bank account and he has paid, pays all of his expenses out of this corporate bank account and it’s very separate froM his personal bank account. Does this make sense so far? Okay. So
now this fella does not have a Jacksonville cpa. He’s not in jacksonville at all, but uh, that doesn’t make a difference. We can still help them out. So the advantage of the s corp is it’s called a pass through entity, which a pass through entity means that, you know, in the prior example I gave you where an individual pays taxes based on the amount of money that he makes. Well, the pastor entity doesn’t pay taxes in and of itself. Some corporations do, for instance, apple, general electric, google, some of these large corporations, they’re setup as c corporations. And so they’re almost like their own person when it comes to paying taxes. If google makes a billion dollars profit, google pays the taxes on that surgery and, and, and larry don’t pay the taxes. Does that make sense? Yes. So an s corp has caught a pass through entity, so it passes all the income through to the shareholder, which would be mr bricklayer as a single shareholder. So if mr, brick layer makes 100,000 dollars as a sole proprietor, then he sets up an s corp and he makes the same amount of money, his individual tax return. and still he’s still being taxed on $100,000. Correct.
Because the s corp, he’s not paying taxes in and of itself, it’s just passing all of the income through to him as an individual. Does that make sense?
Okay. If your jacksonville cpa has not taken the time to break this down, then please give us a call and set up an appointment. So s-corporation earnings are not subject to self employment tax. Do you see where I’m going yet? Okay. so if, if you can conduct business to an s corp, then you save yourself. So if you make the same amount of money, $100,000 as a sole proprietor, you’re paying self employment tax of 15 point three percent, plus you’re paying federal income tax at 15 percent. So that’s 30 point three percent. If you’re set up as an s corporation, what percentage are you taking? What percentage are you paying?
I don’t reMember.
Well, if s-corporation earnings are not subJect to self employment tax,
at least paying 15 point three percent less. Is that correct? Does that make sense? Yes. Are you sure? Are you just saying that to make me feel Better? Okay. Okay. So do you have, do you have any suggestions so far for any jacksonville cpa out there on how to, um, to make this concept a little easier to understand so far? I guess it might be hard to do if you don’t quite understand it yourself.
Basically what you’re doing, you know, breaking it down to its simplest, simplest way to explain it. I’m avoiding excessive use of jargon that may be, you know, some people wouldn’t understand. And also basically just assuming that your listener doesn’t know anything like an idiot’s guide to tax law, I’m assuming it from that standpoint would probably ensure that you would cover all your bases.
Okay. That makes a good. Brings up a good point. And maybe a question I should ask you because sometimes I do assume that my listener does not know a thing about taxes and then maybe sometimes they do, sometimes they don’t. If you, if you were in a position of explaining something to soMeone at an idiot’s level, would you first ask them or say something to the effect of, if you already know this and please stop me. And, and so we can start at your level
either that or Just say, hey, tell me what you know about this. Show me what your foundation is for this so that I can build from there.
Okay. All right. So if you’re a jacksonville cpa has never had a podcast on this, on the intersection of language in taxes than you need to give the neva a call set up appointment.