Biz questions RDP / TRDP

[RiverDave]

I have long known that I haven’t run my businesses “correctly” where by which the business has its own account and we take salaries, business has its own expenses etc.

The problem is I’m not entirely sure what the correct method of structuring that is for the best tax shelters and investments into the future.

For example I was talking to a guy awhile back at a party and he was saying he puts his kids in his brochures and the biz pays into accounts for them as employees for college funds etc? (I don’t know the ins and outs of what is legit on that).

My main point of interest is starting a 401k and having the business contribute to that. As well as health insurance.

what would he the best insurance for a family of five right now? Is there any advantage of running that through the business vs personal?

we had freedom life but when I used the emergency rider on it for my ankle, I’m not eligible for another one and I am going to need another surgery at some point.

 

[monkeyswrench]

Damn you smart people We have mason jars burried in the yard!

My old boss was very well off, and sharp as could be. I listened enough to know his kids were listed in the corporation, and each recieved paychecks from the businesses. They were older though. I asked him why, and he said it was as much about getting funding to them, as it was protecting the biz.

I also saw him give each of his three kids a mil in cash one Christmas! My guess would be he knew every loophole there was.

Sounds like you need to talk with a good financial advisor, and hopefully they have local med insurance contacts for you.

I've dealt with "American Financial Security" in Prescott. They usually deal in higher end folks, but have been very knowledgeable when I needed help on things. You may send them an email with your questions and goals?

 

[Done-it-again]

You need a good accounting firm that also does tax consulting. We are leaving our current firm of 20 yrs to a new one for 2020 taxes and its crazy different... Learned a lot in a meeting and found out that we are behind the game.

 

[LargeOrangeFont]

You need a good accounting firm that also does tax consulting. We are leaving our current firm of 20 yrs to a new one for 2020 taxes and its crazy different... Learned a lot in a meeting and found out that we are behind the game.

This. X1000. You aren't going to get the accurate advice you need without cracking open the books and have a professional assist you.

 

[mesquito_creek]

You are able to gift 15K to each child tax free. So in order to want to put your kids on the payroll and pay SSN/Medicare etc... you would want to be looking to move more that 15K per kid. Putting you kid on the payroll would be a move to get your wealth transferred while you are still alive and avoid estate taxes etc..

 

[mjc]

You may have to go with an ACA plan that let's in preexisting conditions to get your ankle done.

 

[HSR]

I would find a good accountant that regularly works with a good tax attorney, or vice versa. You want to push it as far as you can into the grey, but still be able to pass an audit, or at least be able to go into an audit with plausible deniability of any fraud.
The attorney I use for tax and estate issues is Scott Santerre. He may be able to help you out, or at least point you in the right direction.

Estate Planning Attorney, AZ - Santerre & Vande Krol, Ltd.

If you are looking for an estate planning attorney, then please get in touch with Santerre & Vande Krol, Ltd. in Scottsdale, AZ.

www.svklaw.com

 

[HNL2LHC]

You are able to gift 15K to each child tax free. So in order to want to put your kids on the payroll and pay SSN/Medicare etc... you would want to be looking to move more that 15K per kid. Putting you kid on the payroll would be a move to get your wealth transferred while you are still alive and avoid estate taxes etc..

I have seen that they are cleaning your boat and other business items....1099 them...

 

[RodnJen]

The basic idea is you want to run as many expenses through the business as you can to reduce the taxable income of said business, legally of course. Gifting your kids money does nothing for your personal tax burden, expensing their "wages" through the business does. Same thing with a 401k if the business is matching contributions. You put in some money before tax to lower your burden. The company "matches" an amount, usually a percentage, to lower the tax burden of the business.

Getting a good accountant and/or tax attorney is sound advice. You can to a lot to help yourself as well with just a few basic steps.

 

[Jay Dub]

Get with a local CPA who has working relationships with local attorneys who serve local businesses with more than 10 employees. Meet and interview them.

 

[samsah33]

Get professional help from someone that knows the areas you need help in (or at least has professional affiliations with people that do) and will defend you in case things go bad. God bless the RDP users (sincerely!), but you can't pull them in front of a judge if things go south. Yes, good professional help is expensive, but not having good professional help is even more expensive...

 

[Activated]

Have you met @shintoooo ?

 

[Singleton]

You need a solid tax accountant that also helps small businesses.

Example -
My daughters helps my wife’s bakery (advertising type stuff), her payments for those activities are funded by the business and paid into a college fund for her. 100% legal and payments are kept under a tax threshold, so my daughter does not need to file a tax return.

Wife and I both have side gigs and both of those have their own bank accounts and credit cards, etc. Was a PIA to setup legally, but makes life so much easier. We both draw a small salary from those companies as well.

 

[RiverDave]

Have you met @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

 

[ONE-A-DAY]

If you are not paying yourself a salary that’s a huge red flag, I put it off for years, and revenue was too high, my CPA warned me about not doing it and I ignored him, as it’s sucks to double tax yourself as an employee and the employer. For example I pay myself $7500 a month and it costs me $1500 in taxes to do that.

He was correct, it triggered an audit, cost me $106,000 in back taxes.

Also, my kids were on salary from like 6-7 years old.

 

[Ragged Edge]

As your already working with Shintoooo ask your questions there first. If he does not have the knowledge (which I doubt) he can probably direct you to someone he knows that does.

 

[hallett21]

This is RDP we only work in cash.


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[2Driver]

If you have a business you can get group coverage just like any other company and that includes preexisting condition

You need 3 people to qualify and one must a full time ( 30 hours) employee.

So you and your wife could be 2 owners and one kid could be an employee. Lots of ways to do that and medical will be 50% less than Obamacare and it will be quality coverage not the ACA shit no one takes

 

[hallett21]

If you are not paying yourself a salary that’s a huge red flag, I put it off for years, and revenue was too high, my CPA warned me about not doing it and I ignored him, as it’s sucks to double tax yourself as an employee and the employer. For example I pay myself $7500 a month and it costs me $1500 in taxes to do that.

He was correct, it triggered an audit, cost me $106,000 in back taxes.

Also, my kids were on salary from like 6-7 years old.

How do you file a return on a 6-7 year old. Honest question


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[River Runnin]

Didn't Willie Nelson solve that problem? ....... Cash only!

 

[LargeOrangeFont]

How do you file a return on a 6-7 year old. Honest question


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You pay them under the pay threshold for filing a tax return. In 2019 that was $12,200 per year.

 

[hallett21]

You pay them under the limit for filing a tax return. In 2019 that was $12,200 per year.

“Hey honey let’s get serious about kids”

I better go knock on wood


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[sirbob]

How do you file a return on a 6-7 year old. Honest question


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As mentioned above - they are props (models) for the business. They are in all the family shots showing a lifestyle.

As regular features on the website etc they can easily be salaried employees. Also the benefit of having them as employees mean you are transferring money to the kids that you would anyway (in a lot of cases) but the money is pretax. If you just put 10k in their account - its after you have already paid the tax on it. So it ended up costing more than the 10k.

Also you might find that depending on how you have your company set up (LLP / SCorp etc) you may have other options rather than a typical 401k - for instance a defined benefit plan - you will find that you can put more money per year into retirement savings accounts via other types of plans as a small business owner than a standard IRA etc.

Dave you should have been doing this stuff a long time ago!!!

 

[LargeOrangeFont]

Dave you should have been doing this stuff a long time ago!!!

2 more weeks!

 

[HNL2LHC]

This is RDP we only work in cash.


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Crap!!! When did this happen? What do I do with the 3 cashier checks that I have?

 

[jetur]

Not an expert, but do own a couple of businesses. For us it starts with a good CPA to take care of the tax end. We don't fudge anything as I do not want to owe the KGB, I mean IRS anything.... ever. We do however use the tax laws in place to help us. As far as the benefits go we don't need a payroll provider but we use one specifically to put us in larger pools for better benefits and its fairly cheap. You could use a payroll provider easily from PHX and direct deposit everyone.

 

[ONE-A-DAY]

How do you file a return on a 6-7 year old. Honest question


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You pay them just under the minimum income amount for requiring a tax return.

 

[Singleton]

2 more weeks!

what started as a hobby for RD has grown into a business.
you don’t always think of these things when starting out

 

[ONE-A-DAY]

If you have a business you can get group coverage just like any other company and that includes preexisting condition

You need 3 people to qualify and one must a full time ( 30 hours) employee.

So you and your wife could be 2 owners and one kid could be an employee. Lots of ways to do that and medical will be 50% less than Obamacare and it will be quality coverage not the ACA shit no one takes

Partially correct...........one of the employees has to be a non owner. You need two full time employees, one of which has to be a non-owner W2 employee. So you can be a group of two, one person the owner is tied to company by the corporate docs and the second has to be W2 non-owner. You cant do Dave and Stephanie if they both draw paychecks, one has to be documented as a non-owner.

 

[monkeyswrench]

At the risk of sounding like a hick...
What exactly is an "SCorp" or an "LLP"? I've been told about LLC's, but thinking the aforementioned may be for larger business models?
Probably won't effect me in much at all, but like to learn what it means on checks and such.

 

[Havasu blue label]

Corp on your business then pay for your toys and some weekend playtime it’s advertising for business then take draws on business save all your expensive

 

[sirbob]

At the risk of sounding like a hick...
What exactly is an "SCorp" or an "LLP"? I've been told about LLC's, but thinking the aforementioned may be for larger business models?
Probably won't effect me in much at all, but like to learn what it means on checks and such.

I guess an easy way to describe them is they are different types of classifications that provide different benefits.

example - I have an S Corp for my consulting business. When I started it as a family of 4, my kids and wife were employees and I received certain benefits in the way I set up retirement accounts and paid the kids etc.

If I want to raise cash for a business and have (LLP) Limited Liability Partners you can have them included as owners but I still remain in control the business (depending on how you set it up) as the managing partner.

As a mercenary mechanic you may in fact benefit from being set up as a S Corp - Possibly now you are a Sole practitioner/proprietor ? if so you may not have certain protection from law suits for example that you would have if you were an S Corp.

I AM NOT AN EXPERT BY ANY MEANS AND I MAY HAVE GIVEN EXAMPLES THAT ARE NOT TOTALLY ACCURATE !!!

 

[DLC]

I don’t have kids but one thing I have read is that you want to start a retirement account for each kid and drop in some cash monthly start with $1,000 bucks and adding $50 monthly they could easily get $250,000- 300,000 by 59. You need to figure out what type of IRA plan to go with, non taxable is usually a Roth. I would think getting the grand parents involved would be a big help to the monthly contribution....

 

[Tooms22]

I always advise my new business entity clients to consult a CPA first. I have sent a client or two to @shintoooo. Others who already have a CPA, I make sure they talk to the CPA first. The tax ramifications of the business type are usually the #1 priority. Business structure for management usually comes in second.

Based on revenue, you'll likely benefit from forming the correct business entity. Then you can take advantage of healthcare, savings options, and business expense write-offs.

 

[Wedgy]

River Dave. Role Model!

 

[mesquito_creek]

You people are way more generous than I am with my kids,... I am keeping all my money and trying to spend it all, if there is any left over when I die they can inherit it through the family trust. In the mean time the most simple way for me to give my adult children money is to gift it to them... They aren't part of my business or on the payroll. If that means I am leaving a few buck on the table tax wise, so be it, I don't want them to think they got any skin in my game. If my business has money to expense on more payroll I invest it in people who bring value to my business.

At 18 years old after high school they either get jobs or go to college...

 

[guest hs]

I would call A&E taxes and accounting here in Havasu ask for Noah. He set my business up for me and is doing all my bookkeeping

 

[Activated]

Partially correct...........one of the employees has to be a non owner. You need two full time employees, one of which has to be a non-owner W2 employee. So you can be a group of two, one person the owner is tied to company by the corporate docs and the second has to be W2 non-owner. You cant do Dave and Stephanie if they both draw paychecks, one has to be documented as a non-owner.

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.

 

[LargeOrangeFont]

what started as a hobby for RD has grown into a business.
you don’t always think of these things when starting out

I know.. but it has been over a decade.

 

[2Driver]

Partially correct...........one of the employees has to be a non owner. You need two full time employees, one of which has to be a non-owner W2 employee. So you can be a group of two, one person the owner is tied to company by the corporate docs and the second has to be W2 non-owner. You cant do Dave and Stephanie if they both draw paychecks, one has to be documented as a non-owner.

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

 

[monkeyswrench]

You people are way more generous than I am with my kids,... I am keeping all my money and trying to spend it all, if there is any left over when I die they can inherit it through the family trust. In the mean time the most simple way for me to give my adult children money is to gift it to them... They aren't part of my business or on the payroll. If that means I am leaving a few buck on the table tax wise, so be it, I don't want them to think they got any skin in my game. If my business has money to expense on more payroll I invest it in people who bring value to my business.

At 18 years old after high school they either get jobs or go to college...

I chuckled at this...the last time I saw my Pops, we talked about stuff. I told him it was his money, he worked for it, he should blow it all. I told him me and my kids would be fine. He passed away, suddenly, not 8hrs later. What he did have was spent when Mom got sick...as it should have.

Bottom line, my theory is you should spend it! Let the kids sell off your toys after you check out. Money is just paper, memories last a lot longer.

Obviously I am in no way endorsed as a financial planner

 

[PaPaG]

Get a great CPA and Tax Attorney...their advice is priceless.....

 

[Singleton]

I know.. but it has been over a decade.

when 2 weeks takes 2 months, you get this

 

[HNL2LHC]

You people are way more generous than I am with my kids,... I am keeping all my money and trying to spend it all, if there is any left over when I die they can inherit it through the family trust. In the mean time the most simple way for me to give my adult children money is to gift it to them... They aren't part of my business or on the payroll. If that means I am leaving a few buck on the table tax wise, so be it, I don't want them to think they got any skin in my game. If my business has money to expense on more payroll I invest it in people who bring value to my business.

At 18 years old after high school they either get jobs or go to college...

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.

 

[Halvecto]

I guess an easy way to describe them is they are different types of classifications that provide different benefits.

example - I have an S Corp for my consulting business. When I started it as a family of 4, my kids and wife were employees and I received certain benefits in the way I set up retirement accounts and paid the kids etc.

If I want to raise cash for a business and have (LLP) Limited Liability Partners you can have them included as owners but I still remain in control the business (depending on how you set it up) as the managing partner.

As a mercenary mechanic you may in fact benefit from being set up as a S Corp - Possibly now you are a Sole practitioner/proprietor ? if so you may not have certain protection from law suits for example that you would have if you were an S Corp.

I AM NOT AN EXPERT BY ANY MEANS AND I MAY HAVE GIVEN EXAMPLES THAT ARE NOT TOTALLY ACCURATE !!!

Yep. Good points SirBob. This is the right track. A big difference between S, LLC, LP is whether you intend to possibly have other owners (shareholders). For instance, if you have a business that you can imagine a time when you may incentivize an employee with opportunity for ownership or you want to give units to your kids, etc. That is easier to do with a LLC than S. LP is a good structure if you plan to raise outside investment capital. Point being, the differences are not just in taxes, but also in structure flexibility, legacy planning, etc.. Business formation/structure is a decision that takes many considerations of today and possibilities of tomorrow. Not always simple. You can change structures down the road, but that is a hassle.

 

[DaveC]

Here is the correct answer. Well it depends.....

 

[RiverDave]

This is RDP we only work in cash.


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Some people do for sure.. LOL.

RD

 

[RiverDave]

If you have a business you can get group coverage just like any other company and that includes preexisting condition

You need 3 people to qualify and one must a full time ( 30 hours) employee.

So you and your wife could be 2 owners and one kid could be an employee. Lots of ways to do that and medical will be 50% less than Obamacare and it will be quality coverage not the ACA shit no one takes

So who exactly do I talk to about that?

RD

 

[EmpirE231]

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.

 

[RiverDave]

2 more weeks!

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