#554 How To Pay Yourself As An S-Corp In 2025

Main Street Business

Mark J Kohler and Mat Sorensen

Tax Reform, Entrepreneurship, Business, Irs Updates, Tax Tips, Legal Compliance, Business Structure, Tax Prep, Accounting, Tax Strategies, Management, Financial Reporting, Estate Planning

2.4 • 584 Ratings

🗓️ 24 December 2024

⏱️ 14 minutes

🔗️ Recording | iTunes | RSS

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Summary

In this episode of the Main Street Business Podcast, Mark J. Kohler dives into the financial benefits of transitioning to an S corp. He highlights the importance of splitting income into payroll and draws, shares his foolproof 50/50 strategy, and explains why it’s a safe and effective approach. With practical advice on avoiding IRS scrutiny and optimizing your business structure, this episode is a must-listen for entrepreneurs and small business owners. Here are some of the highlights: Mark i...

Transcript

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0:00.0	Welcome to the Main Street Business Podcast with your distinguished hosts, Mark J. Kohler and Matt Sorensen.
0:05.5	Both are best-selling authors and have over 25 years of industry experience with 10,000 client consultations,
0:12.3	making them the leading tax and legal experts in the nation.
0:16.1	Together, they'll unpack the most complex tax, legal, and financial strategies,
0:20.6	crucial for saving more,
0:22.1	stressing less, and building generational wealth. Today, they're your personal advisors.
0:28.1	Ready to break it down for you and make the tax and legal game easier than ever. Here is Mark and Matt.
0:34.5	So you're an S-Corp owner or considering to make the transition from an LLC to an
0:38.7	S-Corp? Well, how you pay yourself is absolutely critical. There is so much tax savings to have,
0:44.4	and I swear there are accountants all over the country that screw this up over and over again.
0:49.3	The right strategy can mean the difference in $5, $10,000 or even $20,000 of extra income in your pocket.
0:56.2	I'm going to break it down here now and information you can rely on.
0:59.6	My name is Mark Kohler, a CPA attorney, bestselling author, and between YouTube, my
1:04.0	podcast and 25 years of experience, I've helped thousands of small business owners make the
1:09.3	transition to the S-Corp and manage it properly, saving them thousands and thousands of dollars.
1:14.2	So let's get into it.
1:15.6	Now, the S-Corporation can either be directly formed as an ink, or you may have converted from an LLC to an S-Corps.
1:23.1	But I'm assuming you're already there and you know that there's tax savings to be had.
1:27.3	But let's put it in a visual representation. I think when you can see it, you can feel it and understand it better. And what I've been using for years is the trifecta. So let's go to the whiteboard. With the trifecta down here at the bottom would be your 1040 tax return. All your money flows downhill into your tax return. and you may even have a revocable living
1:44.2	trust, topic for another day. I'm going to split your life in half, and I'm going to put
1:48.3	operations over here, and this could be even your day job in a W-2, or your side hustle as an LLC,
1:55.0	that's fine. Over here, we're going to put your assets or your investments. And this could
	...

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