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

Main Street Business

Content provided by Mark J Kohler and Mat Sorensen, Mark J Kohler, and Mat Sorensen. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Mark J Kohler and Mat Sorensen, Mark J Kohler, and Mat Sorensen or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://staging.podcastplayer.com/legal.

6M ago 13:50

MP3•Episode home

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 introduces the topic of transitioning from an LLC to an S corp, emphasizing the importance of how one pays themselves.
Mark splits life into operations and assets, explaining that operations could include a day job or a side hustle, while assets could include rental properties, brokerage accounts, and retirement accounts.
Emphasizes the importance of treating the S corp as a real business, including having a bank account, tax ID number, corporate book, and annual board meetings.
Explanation of the drawbacks of paying self-employment tax on an LLC, which is 15.3% on all profits.
The importance of properly allocating draws on paper and issuing a W-2 report to achieve tax savings.
How an LLC pays self-employment tax and state tax, while an S corp allows for splitting income into payroll and K-1 distributions to reduce tax liability.
Implementing a payroll matrix to help business owners determine the appropriate payroll percentage based on their profit.
The cost of converting to an S corp is justified by the significant tax savings achieved.

Grab my FREE Ultimate Tax Strategy Guide HERE!
Are you ready to get certified in EVERY strategy I teach? Start your journey with a FREE 15-minute discovery call to explore the Main Street Tax Pro Certification.
You don't want to miss this! Secure your tickets for the most significant business, tax & legal event of the year: Main Street 360
Looking to connect with a rock star law firm? KKOS is only a click away!
Check out our YOUTUBE Channel Here: https://www.youtube.com/markjkohler
Craving more content? Check out my Instagram!

Chapters

1. S-Corp Payroll Strategy for Tax Savings (00:00:00)

2. Unlocking Small Business Success (00:12:48)

696 episodes

#Taxation #Business #Estate Planning #MBA #Entrepreneur #Mark J Kohler #Mat Sorensen #Mark J Kohler And Mat Sorensen #Tax Strategies #Legal Compliance #Business Structure #Tax Tip #Accounting #Irs Updates #Financial Reporting #Tax Prep #Tax Reform