Biz questions RDP / TRDP

[RiverDave]

So those of you putting your kids on payroll? help me understand the tax benefit / or overall benefit of this?

payroll taxes go up, they get taxes withheld from their check.

They don't have to pay income tax due to being below the threshold... but is this just a way to gift your kids money? as in it doesn't really benefit you, other than deducting it from payroll expenses.

They way I understood it was it shows less profit for the business meaning you pay less taxes... the money goes into the kids accounts which you can than use for college etc.. Or in the cases of people that don't want to give the money for their kids they use the ATM cards etc.. but it does help start generating credit for them at a young age?

I haven't done it yet, so I was kinda looking for advice on that whole program too. I was thinking college funds?

RD

 

[EmpirE231]

They way I understood it was it shows less profit for the business meaning you pay less taxes... the money goes into the kids accounts which you can than use for college etc.. Or in the cases of people that don't want to give the money for their kids they use the ATM cards etc.. but it does help start generating credit for them at a young age?

I haven't done it yet, so I was kinda looking for advice on that whole program too. I was thinking college funds?

RD

got it... I can see that...

but wonder what the true net benefit is, after you as the employer have to pay a little more in payroll tax, work comp... and then you have withholding from the check itself.

 

[mesquito_creek]

Keep in mind that the money given is not for the kids to have access to. More like pre-taxed to be used for education or other items that you will be paying for anyway. If you pay them rather than yourself it will reduce you income to a lower tax level. I wouldn’t look at it as to give money to your kid out of your pocket. It puts more money into the family’s pockets.

As a small business that generally shows a loss 3 out of every 5 years... my income some years is already on the floor tax wise. Plus you are only writing off the kids payroll, not a tax credit, so you are spending 12,000 to save 3600 (est 30% bracket) which results in 12000 in your kids pocket and 8400 out of yours. It was easier to just set up a 529 when the kids were young and avoid capital gains. If you are taking all that kid money and investing it in taxable accounts I am not sure the juice is worth the squeeze.

So I don't disagree with you that there is money tax wise to save, but your business still has to be generating taxable revenue, beyond all the simple ways to write off expenses and ultimately, you goal has to be to transfer money to your kids... Its more the last mile of tax wizardly behavior not the first couple hundred miles....

 

[River Runnin]

So who exactly do I talk to about that?

RD

The commercial says! --- Those in the Know! -- Choose BDO!

 

[SKIDMARC]

They way I understood it was it shows less profit for the business meaning you pay less taxes... the money goes into the kids accounts which you can than use for college etc.. Or in the cases of people that don't want to give the money for their kids they use the ATM cards etc.. but it does help start generating credit for them at a young age?

I haven't done it yet, so I was kinda looking for advice on that whole program too. I was thinking college funds?

RD

Allot of info, simple answer, hire a CPA firm that can handle everything. There are allot out there. Some don't deal with the Health Insurance but you can find a broker for that ,depending on how many people you want to insure, you could just give them a monthly stipend to get there own.

The main reason I say get a firm is because you don't want to miss anything and get sued. I know everyone thinks that the people they hire wont sue them but it does happen. And when it does it can hurt.

 

[RandyH]

The expensing alone should save you a ton. Trips to Keywest, Loto, Vegas, LA boat shows should all be included. The RDP sticker on the Holy Grail? Expense the boat...Your doing RECON for your websit…..... Amazing how many trucks you end up buying in the last week of December. Set up a profit sharing plan...along with your 401K. you can expense off 15% of your wages and deduct it fully. Higher amounts if you make other commitments to the plan. You may get to the end of the year and find out you didn't make any money and sometimes that's a good thing.

 

[ONE-A-DAY]

Allot of info, simple answer, hire a CPA firm that can handle everything. There are allot out there. Some don't deal with the Health Insurance but you can find a broker for that ,depending on how many people you want to insure, you could just give them a monthly stipend to get there own.

The main reason I say get a firm is because you don't want to miss anything and get sued. I know everyone thinks that the people they hire wont sue them but it does happen. And when it does it can hurt.

A monthly stipend for health insurance is not legal under the ACA, big red flag for an audit. The way around that would be to wage them up by the amount that you would have provided for health insurance and let them find their own personal plans. The problem with that in Arizona is there is virtually no personal plan market left, most carriers left, you can only get decent plans as a business.

 

[ONE-A-DAY]

In theory...

Stacy could be the “owner” of the real estate business and RD an employee?

RD could be the “owner” of the web site and Stacy could be an employee?

Just curios, it is interesting to me.

No they are married, whats his is hers and vice versa, plus there are shared ownership IRS rules laced in to the ACA to prevent people from doing just this, making larger companies into smaller ones to avoid the ACA.

 

[ONE-A-DAY]

Thanks, there is a way to structure it so it will work for them.

When we were looking to do it we had our son as the employee and my wife and I as owners in the LLC, I think we had different roles I can’t recall. I was told by my accountant and insurance broker one full time 30 hour paid employee. My buddy did it mid cancer treatment just to get off of Obamacare during his cancer treatment and get to a better cancer treatment facility

Correct, one full time W2 employee is needed, that person cant be an owner or family member of an owner ie kids, and that person would have to 18 years old or above to purchase health insurance requring entering into a contract, ie young kids cant do that. We made a huge business out of taking husbands and wife business owners and calling them both owners under California community property laws in order to get them group health insurance since they had medical issues and you could not buy personal plans back then. We wrote 1000's of these small business plans under this loop hole, Obama and the ACA ended that, the ACA requires that one employee be a non owner / non family member.

 

[LargeOrangeFont]

LOL. One of these days I want you to come over here and sit in my garage and see how much shit goes on behind the scenes.

I generally start at 10:00 am.

It takes about 30 minutes to go through and approve new classifieds and correct spelling and file them correctly.. Another 15 minutes to an hour to cancel spam accounts that are waiting in the que.. (I mostly just deny them now instead of investigating each one). Then about 20 minutes to sort through the e-mails from the day before.. Than anywhere from 5-20 minutes to sort through the PM's.

Then I get to switch over to the group page, and approve or deny the 50-100+ accounts that are sitting in the que... So that's another 10-20 minutes, and hopefully I don't get side tracked down some god damn rabbit hole video on FB that I see in one of there accounts while I'm checking the ones that are questionable..

then ya get to read the first page on RDP to make sure nothing is getting to crazy outta line.. Then I go back to the FB and read the group posts to realize that a lot of people on FB are idiots.. But do you ban each one when they are stupid? I try not too, but I do generally ban libs just on general principal.

Than you have to get back to all the phone calls which can take an hour.. Than the biz phone calls you gotta make or return.
While you are doing all that you are checking all the numbers, and seeing what's going on overall.

I'm 5-6 hours in before I even get started on what would be considered a "normal" portion of business, which would be writing, moderating, etc..

I'm amazed I get as much shit done in a day as I do.

Oh and I forgot the usually 10-20 phone calls a day saying. : "Yeah I'd like to buy that 74 Tahiti you got for sale." - Sir we don't actually sell boats it's a website.. "No I got your phone number right here". - Sir you got that off the contact us page. "yeah I know.. so how much are you willing to take?" LOL. or the "Yeah you still got them headers for sale?" I get more voicemails, and weird phone calls throughout the day than you'd ever imagine, and I take or return every single one of them, and try to help them as best as I can.

From teaching them how to PM a member.. To directing them where they are getting their parts they are looking for etc..

RD

I know you are busy, we are all busy. But this is your long term lively hood and your family we are talking about here. Make the time and get it done!

 

[RiverDave]

As a small business that generally shows a loss 3 out of every 5 years... my income some years is already on the floor tax wise. Plus you are only writing off the kids payroll, not a tax credit, so you are spending 12,000 to save 3600 (est 30% bracket) which results in 12000 in your kids pocket and 8400 out of yours. It was easier to just set up a 529 when the kids were young and avoid capital gains. If you are taking all that kid money and investing it in taxable accounts I am not sure the juice is worth the squeeze.

So I don't disagree with you that there is money tax wise to save, but your business still has to be generating taxable revenue, beyond all the simple ways to write off expenses and ultimately, you goal has to be to transfer money to your kids... Its more the last mile of tax wizardly behavior not the first couple hundred miles....

maybe I should reword my initial question here..


Where do you learn or talk to somebody that knows shit like that?

RD

 

[LargeOrangeFont]

They way I understood it was it shows less profit for the business meaning you pay less taxes... the money goes into the kids accounts which you can than use for college etc.. Or in the cases of people that don't want to give the money for their kids they use the ATM cards etc.. but it does help start generating credit for them at a young age?

I haven't done it yet, so I was kinda looking for advice on that whole program too. I was thinking college funds?

RD

Dumping money into a savings or checking account does nothing for their credit.

Once the money is in their account from them being on the payroll, you can invest it, let it sit, do whatever you want with it.

 

[LargeOrangeFont]

maybe I should reword my initial question here..


Where do you learn or talk to somebody that knows shit like that?

RD

CPA and/or a Tax professional, and/or a Financial Advisor.

You will likely get yourself into a shit storm if you just follow tidbits of advice from here or there that sound appealing.

Between the 3 professionals I listed, you would ideally work with them collectively to define a financial plan and strategy over the next couple tax years that will yield more money in your pocket and less paid in taxes.

My financial advisor worked with me and we developed a plan when I started with him. He did a full analysis on my current investments, retirement goals, and savings/investment strategy and provided projections on what income levels I could expect out of retirement based on my age. He defined a range of yields I could attain on current investments, the probability of that range of yields, and how investing/saving more or less moving forward would change my retirement picture.

He also factored in possible education costs to my pre-retirement strategy.

 

[mesquito_creek]

maybe I should reword my initial question here..


Where do you learn or talk to somebody that knows shit like that?

RD

My father is a retired "Mennonite" Certified Public Account/Estate Planner... the only problem is that he doesn't cheat. But any local CPA with a good referral in your area can handle these somewhat basic business accounting scenarios.

 

[2Driver]

So who exactly do I talk to about that?

RD

Whats One a Day do, sounds like he has a handle on the insurance set up

Like others have said you really need to find an extremely knowledgeable CPA professional that understands small business so that all aspects are taken into consideration. It might be the arrangement for the health insurance qualification doesn't make sense for other aspects of how you run the biz.

Id sit down for an hour with a few different professionals just to get thoughts and options out on the table.

My CPA is in Chandler, its better you find one local if you can.

 

[Spudsbud]

Whats best for You?
Just ask, Shintoooooooo!!

 

[JD D05]

So who exactly do I talk to about that?

RD

I could do it for you. You wouldn't even necessarily have to have 3 full time employees just 2 for a couple carriers.

 

[shintoooo]

Yes he is looking over our taxes right now actually, but I'm not sure he can help me with business structure and advice on what to do with regard to some of this stuff?

RD

Let me get the taxes out of the way and then I can set you up with all this stuff. But first....Taxes and then we'll see if you even talk to my anymore after that.

 

[monkeyswrench]

Let me get the taxes out of the way and then I can set you up with all this stuff. But first....Taxes and then we'll see if you even talk to my anymore after that.

What's the saying, only two things in this life are certain?
Happier paying taxes than dealing with the other...but try to cheat both when possible

 

[Singleton]

@RiverDave
you will end up paying a few folks

@shintoooo = he will deal with your personal and business taxes and help you limit those.
then you need a good CPA - one that can help you with business strategy, etc.

as I tell my friends, I can give advise on what you could do, but i will not execute on requests. I play in some grey areas in the tax code, but having 3 CPA’s in the family and a half-sister that runs the tax training department for a Big 4, I get feedback on my strategies. When the feedback is “it’s legal and defendable, but I would not do it’, I know I am in the dark grey of tax code and usually move to a lighter shade of grey.

 

[shintoooo]

@shintoooo = he will deal with your personal and business taxes and help you limit those.
then you need a good CPA - one that can help you with business strategy, etc.

What am I, chopped liver? I am a CPA I can help him with all this stuff but first I gotta straighten out his taxes. Almost there. Once that's done, we can move to all the other items on his list and then I can set him up with the pension administrators etc... for his retirement accounts and insurance agent for his insurance needs etc...

 

[ONE-A-DAY]

Whats One a Day do, sounds like he has a handle on the insurance set up

Like others have said you really need to find an extremely knowledgeable CPA professional that understands small business so that all aspects are taken into consideration. It might be the arrangement for the health insurance qualification doesn't make sense for other aspects of how you run the biz.

Id sit down for an hour with a few different professionals just to get thoughts and options out on the table.

My CPA is in Chandler, its better you find one local if you can.

Health Insurance broker......but I have never done business in Arizona even though I live here. If you thought health insurance in California was a mess, take a look at Arizona, its a very big mess.

 

[OldSchoolBoats]

What am I, chopped liver? I am a CPA [emoji38] I can help him with all this stuff but first I gotta straighten out his taxes. Almost there. Once that's done, we can move to all the other items on his list and then I can set him up with the pension administrators etc... for his retirement accounts and insurance agent for his insurance needs etc...

Seems like he would be a good candidate for a Defined Benefit Plan/401k combo since one business isnt cyclical? Although the DBP costs are high, I assume the tax savings would outweigh it??


Sent from my SM-N960U using Tapatalk

 

[shintoooo]

Seems like he would be a good candidate for a Defined Benefit Plan/401k combo since one business isnt cyclical? Although the DBP costs are high, I assume the tax savings would outweigh it??


Sent from my SM-N960U using Tapatalk

Yes he would be a good candidate. Benefits definitely outweigh the cost depending on how much he wants to put away.

 

[LargeOrangeFont]

What am I, chopped liver? I am a CPA I can help him with all this stuff but first I gotta straighten out his taxes. Almost there. Once that's done, we can move to all the other items on his list and then I can set him up with the pension administrators etc... for his retirement accounts and insurance agent for his insurance needs etc...

So what you are saying is a bunch of stuff will be for sale soon?

 

[Singleton]

What am I, chopped liver? I am a CPA I can help him with all this stuff but first I gotta straighten out his taxes. Almost there. Once that's done, we can move to all the other items on his list and then I can set him up with the pension administrators etc... for his retirement accounts and insurance agent for his insurance needs etc...

no, thought you only focused on taxes.
hell, I have my CPA (inactive license), but I am useless these days

 

[shintoooo]

So what you are saying is a bunch of stuff will be for sale soon?

Quite the opposite. I’m his CPA. [emoji6][emoji6]

 

[LargeOrangeFont]

Quite the opposite. I’m his CPA. [emoji6][emoji6]

Let the business shopping spree begin!

 

[shintoooo]

no, thought you only focused on taxes.
hell, I have my CPA (inactive license), but I am useless these days

Yeah, there’s a lot of accountants out there that do just taxes or business management etc but I do everything from taxes to business management to tax and retirement planning and a lot of the times I’m a psychologist too.

I refer out what I’m not qualified to do like investments, insurance, retirement administration etc...

 

[2Driver]

Health Insurance broker......but I have never done business in Arizona even though I live here. If you thought health insurance in California was a mess, take a look at Arizona, its a very big mess.

Lost every doctor when I had to go to Obamacare.
25 year family doc
Urologist
ortho doc who did my back fusion, cant even go back for follow up.
wife’s gyno
dermatologist.

Not one takes obamacare plus I now pay $24k a year for 3 with a $6500 per person deductible.

LOL Whats wrong with that?

 

[LargeOrangeFont]

Lost every doctor when I had to go to Obamacare.
25 year family doc
Urologist
ortho doc who did my back fusion, cant even go back for follow up.
wife’s gyno
dermatologist.

Not one takes obamacare plus I now pay $24k a year for 3 with a $6500 per person deductible.

LOL Whats wrong with that?

“That’s why I fight the fight here... for my daughter.” - Squeezer.

 

[LargeOrangeFont]

Yeah, there’s a lot of accountants out there that do just taxes or business management etc but I do everything from taxes to business management to tax and retirement planning and a lot of the times I’m a psychologist too.

I refer out what I’m not qualified to do like investments, insurance, retirement administration etc...

I need a new psychologist!

 

[Spot]

@shintoooo is the best. If I had RDP money, I would hire him.

 

[2Driver]

I need a new psychologist!

LOL Dr Don Julio

 

[Singleton]

Yeah, there’s a lot of accountants out there that do just taxes or business management etc but I do everything from taxes to business management to tax and retirement planning and a lot of the times I’m a psychologist too.

I refer out what I’m not qualified to do like investments, insurance, retirement administration etc...

that’s good news to hear
I was straight business mgmt, left the tax stuff to those smarter then me. I know enough on taxes to do damage - legally or not
Realized I worked way too many hours and paid like crap, so I and went into corporate internal audit and compliance. Learned once again my hourly rate was too low and went into compliance software pre-sales. Work life balance is awesome and pay rate is best it has been!