For most selfemployed people, the major tax burden comes from selfemployment tax, not income tax. Self employed people can reduce this burden by (1) forming a Limited Liability Company (LLC), electing for the business to be treated as an SCorporation, and (3) paying themselves a reasonable salary via a W2.

This video shows the extent of savings that can be realized by using this strategy.

To explore all the types of business organization, click here:    • Should your Business be a Proprietors...  

For an overview of selfemployment, click here:    • Are you selfemployed? (and don't kno...  

To learn more about Self Employment Tax, click here:    • What is SelfEmployment Tax (and why ...  

To learn all about Qualified Business Income Deduction, click here:    • Qualified Business Income Deduction (...  

Additional information on LLCs can be found in this video:    • What is an LLC?  

ADDITIONAL INFORMATION AND RESOURCES:

collective.com: "How to Pay Yourself for an S Corp the Right Way": https://www.collective.com/blog/money...

nolo.com: "What is a Limited Liability Company (LLC)?": https://www.nolo.com/legalencycloped...

U.S. Small Business Administration: "Choose a Business Structure": https://www.sba.gov/businessguide/la...

Entrepreneur.com: "Business Structure Basics": https://www.entrepreneur.com/article/...

IRS Publication 334: "Tax Guide for Small Business" https://www.irs.gov/pub/irspdf/p334.pdf

IRS Form 1120S "Tax Return for Small Business Corporations": https://www.irs.gov/pub/irspdf/f1120...

IRS Form K1 (1120S): "Member's Share of Income, Deductions, Credits": https://www.irs.gov/pub/irspdf/f1120...

The Tax Geek on Twitter: @taxgeekusa

Intro Music: "Bluesy Vibes" Doug Maxwell YouTube Audio Library

Background and Outro Music: George Street Shuffle, Kevin McLeod, http://incompetech.com via YouTube Audio Library

DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or investment advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or investment professional.

The tax information in this video is based on tax law and IRS regulations in place when this video was published, and is subject to the whims of Congress.