Jacksonville CPA | Setting Up The Appointment
Hello, my name is brandon mcelroy and welcome to this episode of podcast. I’m the president of the navy in Jacksonville Tax and accounting firm. If you’re Jacksonville CPA is not meeting your needs, then please give me a call and set up an appointment to come in for a free consultation and we will help you achieve your financial goals. So today we’re here to talk. Oh, you have a guest and we’re going to talk about s corporations and how we use them as a planning tool. We’re going to try to break it down to someone who has never heard of this concept before and then try to refine it and make sure that we’re explaining it and the most simple terms possible because sometimes accountants can speak, count and speak and, and not communicate properly with their clients. So we have a language expert on the show today, Ms Dot Morgan, and she’s going to help us break this concept down. So you read it to, um, to help. Sure. Okay. So again, if you’re Jacksonville CPA is not meeting your needs them, please give him a naval a call. So, Jacksonville CPA, give us a little bit of background in your, um, your knowledge and expertise and language.
Okay. That was fascinating. Um, so, uh, you know, so you were a teacher for 30 years. You’ve been speaking English for 30 years. Wow. So in your, were you taught you’re a teacher? Correct?
Yes. I’ve been a teacher for the past 12 years.
Okay. Teaching all kinds of subjects, but you’re focusing mostly on language, right? Correct. Okay. So that’s, that’s kind of what I wanted to hear. So, um, so how familiar are you with the text code?
Not at all.
So how far are you familiar at all with the tax code and how the tax return works?
No, I need a lot of help.
Okay. Well good. So we’re going to try to educate you and then you’re going to try to educate us to make sure that we’re communicating this and the simplest terms possible to our clients because a lot of times people have a hard time wrapping, wrapping their head around how things should be structured for optimal tax saving. So we’ll start with you. You understand the difference between self employment taxes and federal income taxes?
No, I do not.
Okay. So, uh, again, was if your Jacksonville CPA is not discussing this and it’s not a pulling out all stops to make sure that you understand what you need to to achieve your financial goals, then please give them a name. I’ll call and set up an appointment. Okay. So self employment taxes are social security and Medicare taxes. Those two terms are synonymous. You know what that word means, correct? Yes. Okay. So they’re synonymous with social security and Medicare self employment taxes and they are levied on any income that is in the employment class. So like if you are an employee and you have a w two job where they, you know that the employer is paying you a salary, they take out taxes from your paycheck every week or every two weeks, however often you’re paid. Part of that tax is security and Medicare part of the tax as federal income tax.
So when you work for an employer, they are obligated to pay half of your social security and Medicare and you are obligated to pay half. So it’s roughly six point six, six, seven point six, five percent for each party. So you as an employee would pay seven point six, five employer would pay seven point six, five percent for social security, Medicare. And that’s how so security fund and Medicare, uh, the medical fund for all the old geezers is funded. Does that make sense? Yes. Okay. So now when you have a joe brick layer, just say he does not work for anyone but uh, he goes out and he and he sells his own jobs and he’s working as a self employed person. Um, and he is set up as a, what they call a sole proprietorship, which is just so prior to ship just basically means an individual that is striking out on their own to transaction to transact business for profit. So an example of a brick layer, he’s just going out and he’s, he’s doing jobs and people are paying him. So that is considered self income. So he is responsible to pay all the social security and Medicare. So seven point six, five percent plus the employer’s portion, which is seven point six, 65 percent. So both of those add up to 15 point three percent. So does. Does that make sense?
Yes.
Okay. So and so right off the bat, as a self employed person has to pay 15 point three percent on every dollar of profit that they earn, not counting federal income tax. Now federal income tax is basically the tax of the federal government Levy’s based on the amount of income you make. So you probably understand that we’re in a progressive income tax system. Does that make sense?
Yes.
So if you make a little bit of money, you pay a little bit. So if you’re Jacksonville CPA is not helping you out and breaking these terms down for you, then please give an eva concept and appointment. So a federal income tax, if you are making $50,000 a year and you have 10 kids, then you may not owe any federal income tax because those kids will offset all of that, but you’re still obligated to pay that, that self employment tax and Social Security and Medicare tax. So there’s two different components to that tax return. So can you see where even if you may only be in the 10 to 15 percent tax bracket on the federal income side, you are having to pay self employment tax on top of that. So your effective tax rate can be, you know, maybe 30 percent. Would you say that? That’s a lot.
Sounds high to me.
Yeah, it’s very high. So if, if you were a self employed person and you had a Jacksonville CPI that didn’t know what in the world they were doing, would you be interested in paying less taxes then you were obligated to without changing anything except for maybe the way your business was structured.
Of course I want to tell me how I can do that.
Okay. So in incomes, so in comes the concept of the s corporation. So you know what a corporation is, correct?
Yes.
Okay. Corporation is a. or just tell me what, what is your knowledge of a corporation and a few words,
a company that has a multitude of learners.
Okay. Well a corporation can have one owner, but it’s basically a separate legal entity other than a, an individual. So it’s basically, it’s almost like it’s an individual in and of itself with the illegal and illegal terms. It can, can conduct business, but it always has owners or shareholders or something of the like. Does that make sense?
Yes. So
if you’re a Jacksonville CPA is not going over this, then please give him a call and set up an appointment. So we’re going to finish this discussion on the next segment. We’re gonna take a break and we’ll, we will be back before you know it, before you can blink and say Aragon. And so phyrra.