Hey Guys, I recently setup a LLC. There is a partnership with this LLC so we met with a CPA to see how we should be doing taxes. I was thinking I would be getting hit with capital gains taxes, but since I’m doing most of the work he said that I would actually be considered self employed. Capital gains taxes are actually much cheaper than my standard tax bracket and another 15% on top of that for self employment. He seemed very knowledgeable about this subject, but I was wondering if anyone else had encountered this. There certainly will be writeoffs for a lot of things but it makes it much more difficult to be profitable with it being setup this way. Any help would be appreciated.
depends on what you’re doing.
buying, fixup and selling is generally regular income subject to tax at your personal rates plus self employment.
rental income is passive and avoids self employment taxes.
you can choose to tax your LLC as an S-corp and avoid self employment taxes if the company pays you a reasonable salary.