If You Make $50k As A Creator Watch This #288

0:00Guys, it's no use putting it off. The best time for an underwear refreshes now. Tommy John underwear is designed for a perfect fit that stays put all day. There's zero shape thanks to four times more stretch than competing brands. And their innovative horizontal quick draw fly is a game changer. With over 30 million pairs sold, there are thousands of men out there more comfortable than you. Don't settle for less. Go to TommyJohn.com today for 25% off your first order with Code Compert. That's TommyJohn.com Code Compert. Tommy John Comford Perfected. Welcome to Influencer Confidential by Sidewalker Daily. My name is Nina Zeta and I will be your host. I love working with brands and influencers on all things business strategy. Are you ready to learn what it takes to work in this influencer industry and see behind the curtain? Well, let's jump in. If your net income as a creator is over $50,000, you're gonna wanna pay attention to today's video

1:00and episode because we are gonna dive deep on some topics that are a little complicated but are going to save you a lot of money. Now, maybe you're not at that 50,000 net figure yet, but you're on the way and you are growing. You should definitely go ahead and take notes as well because what we're gonna be covering is more of a business lesson to my creator community and I'm gonna do my very best to make it as simple and easy as possible so that you guys can digest it. Now, when I say net income, that means after your expenses. So, if you make $100,000 a year and your expenses are $50,000, then you are netting $50,000, okay? And this income doesn't just have to come from brand deals, you guys, this is just your creator income in general. What they're affiliates with your group trips with whatever it is that you're doing, all right? Because at that income level, the way you are set up legally in your business really matters and you can be leaving thousands intact savings on the table if you're not doing it, right?

2:03So, let's start at the basics. What type of business entity are you? So, a lot of creators, when they first get started, they start off as sole proprietors and then many of them will become LLCs at some point in their journey. I'm sure a lot of you are listening in right now, probably have an LLC set up. LLCs are super popular because they separate personal and business liability, they're easy to set up and they're affordable. But from a tax perspective, an LLC alone may not be the best way to optimize your savings. So, you may or may not be familiar with the term S-Corp. That's what we're gonna be talking about in today's episode. Now, just so that you guys know, this isn't something that you form, it's something that you elect. You elect S-Corp status with the IRS. So, if you are an LLC, this is something that you would elect to get taxed as an S-Corp. You can't do this as a sole proprietor, okay? So, it's kind of like this upgrade path that once you're making a certain amount in your LLC, you can be like, oh, I wanna elect to be taxed in this way.

3:04So, when you're in LLC, all of your profit is subject to self-employment tax. So, it could be anywhere around like 15% of your net profit is gonna get the self-employment tax, okay? But with an S-Corp, you basically split up your income into a salary and then distributions. So, your salary is subject to payroll taxes, but your distributions are not subject to that self-employment tax. Don't worry, I'm gonna give you an example to break it down so you can visually see what I'm talking about. So, the way it typically works is you are going to pay yourself a very reasonable salary. And then the rest of that money that you're making those distributions, they're not gonna be taxed that extra self-employment tax. And that is where the big savings comes from, okay? So, let me give you an example to help your brain see it. Let's just say you net $100,000. Net $100,000. If you were just an LLC that did not elect to this S-Corp, you would be tax around 15%,

4:04so let's call it $15,000 of that $100,000 would be your self-employment tax. Now, this is before federal and state taxes as well, okay? So, just off the top, you're taking that 15% off. Now, if you were an S-Corp, that 15% self-employment tax is only gonna go off the salary. So, remember, there's salary and distributions. So, again, let's take that $100,000. Let's say we pay ourselves in salary 40,000, and then we put 60,000 in distributions. So, that 15% is going on the 40,000, not on the 100,000, right? So, that self-employment piece is 40,000 times 15%. It comes to around $6,000. Now, that other $60,000 is not subject to the 15%, you know, self-employment tax. So, that other $60,000 basically is protected from that. It's still gonna have federal and state income tax, but it's gonna avoid that self-employment tax. So, in our original example,

5:06the one that wasn't an S-Corp, we were paying around 15,000 in taxes and self-employment. In our new example, as an elected S-Corp, we're now paying around $6,000, and that is around a $9,000 savings in taxes a year. So, that is why when you hit a certain number, financially, you wanna make sure that your company is set up to take advantage of these tax savings. Now, just so that you know, because you are now, let's just say, an elected S-Corp, it doesn't mean things are free. There are also hidden fees that you're gonna have to take care of, but a lot of times when businesses do the cost benefit, those fees, you still save more in the long run. One of those fees are setting up payroll, like because now you have a salary, you need to put yourself on payroll, and obviously there are fees to be part of different payroll systems, but again, for many people, once you're hitting a certain income level, it is obviously worth it. So, here are some common signs that you're ready to almost upgrade to an S-Corp, right? Remember, it's not a different entity,

6:06you're still an LLC, but now you're getting taxed differently as an S-Corp. So, here are some signs. Obviously, consistent brand deals or revenue coming in, you are looking at your numbers and you're like, wait, this is not just hot and cold. I know that my company is making a certain amount. The reason we said 50,000 net, because that feels like it needs to be the minimum. If you're at 75,000 net, 100,000 net, you should absolutely consider electing to be an S-Corp, because that is a tell sign that you are ready to do so. If you have predictable income, if you have monthly retainers, if you feel like your business is financially safe and ready, these are all great signs that you're ready to do this. Now, let's just say you are ready to switch how your company is being taxed and you're ready to elect as an S-Corp. You are going to have to look into payroll. This is the first thing that we did anyways. A lot of people have asked me, Nina, who have you gone with, especially when I'm dealing with creators who are making serious money and we're talking about their businesses in this way. We, personally, at our company at Sidewalker Daily,

7:07we have been using Gusto forever and we have nothing but good things to say about it. It has such an easy dashboard, such an easy interface because, like, for some of us, these, like, number of things can be really intimidating and scary. I love to have, like, really amazing customer support. They make it really simple to sign on. Just visually, it is very easy. The payments are automated. I love Gusto because it just makes payroll really stupidly simple. That's really the bottom line. It makes it really, really simple. It's built for small businesses, creators, or small businesses. You don't have to have a lot of employees. You could be the only employee, right? But it's built for us. And it also is very contract or friendly. So if you're, like, hiring a photographer, hiring a makeup artist and you need to file like your 1099s and all of that, it just makes it really simple. So if you guys are gonna join them and gonna make the switch, go ahead and use our referral code so that they know you guys came from us. And again, these are all very exciting things because just putting yourself on payroll, like, developing your business in this way, operationally, you become legit.

8:07And that helps you run your business and just feel really good about running your business. Lastly, if you are listening in and you're not at that number yet and you're like, I'm not there, I still think that today's video should help you think about your businesses as you guys grow, even if you're at 20,000 a year or 15,000, you're gonna get there. You're gonna get there. Eventually, you will get to that $50,000 net profit. It's gonna happen. Just keep putting in the work, putting in the time. Businesses are not built overnight. They take years. And for some of you, I hope this could be a really good goal for you of where you wanna be in your business and where you wanna grow. And again, if you ever need support in that piece in your growth, thinking about your business strategically and you want me involved, you can go ahead and get on a call with someone from our team. They'll share with you how I can jump in, how I can support you, how I can be a part of this. There's nothing more that I love than talking about business, especially with creators. So I'm here to support you guys every step of the way. So you can go ahead, get on a call with our success manager and we can share how we can support you. I hope you enjoyed today's episode. If you did, make sure to rate, review, and subscribe to our show and visit sidewalkerdale.com

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