FinAccurate LLC

Thinking about switching your LLC to an S-Corp?
We see this advice going viral on social media lately.

One question we got was:
“If I become an S-Corp, will I stop paying taxes on distributions?”

The short answer?

That’s a half-truth.

Yes, if your LLC makes over $40,000 in net profit, becoming an S-Corp can be a smart move.

The tax benefits start to add up at that level.

Your accountant might be right about when to switch.

But wrong about why.

No — your entire income doesn’t magically become tax-free.
Here’s what really happens:
When you switch to an S-Corp, the IRS expects you to pay yourself a reasonable salary.

Just like an employee.

That salary is taxed like normal income.

But the remaining profit — your distributions — are not hit with self-employment tax.

That’s the big win.

This works because your business is no longer just you.

You may have a team. Contractors. Systems.

Now you’re building wealth as a company — not as a solo freelancer.

And while most states don’t tax S-Corps, some do.

So don’t assume it's tax-free across the board.

But even with taxes, you can save $6,000 to $6,500 on just $50,000 in profit.

That’s real money back in your business.

Want to find out if S-Corp is right for you in 2025?

Book your Free 45-Minute No Obligation Tax Strategy Call today.
👇 What you’ll learn on the call:
✅ If your LLC qualifies for S-Corp
✅ How to set your salary the smart way
✅ How much you can save this year

You heard about cost segregation and the big tax savings it offers.

But here's a question we get all the time:
Can you still get the benefit if your rental is managed by a property manager?

The answer? It depends.
Let me break it down.
If you have only one rental property and it’s being managed by a property manager…

You won’t qualify for the active income offset through cost segregation.

Why?

Because one key requirement is material participation.

That means you must be the one spending the most time managing the property.

Not your property manager.

So if they’re doing most of the work?

You lose that big benefit.
Now, let’s say you own multiple rental properties and they’re all handled by managers.

There’s a strategy called grouping elections that can still work in your favor.

Even with property managers involved, you can still meet the IRS rules for material participation…

If you group them and manage the managers.
But this strategy isn’t perfect.

The downside?

If you sell one property from a grouped pool, the whole group is impacted tax-wise.
Here’s the truth:
Cost segregation can legally reduce your tax bill by tens of thousands.

But only if it’s used right.
Need to know how this applies to your rental portfolio?

Book a Free 45-Minute No Obligation Call and let’s see how much you could save.

👇 Here’s what you’ll learn on the call:
✅ If you qualify as a real estate professional
✅ How to use grouping to save on taxes
✅ Whether cost segregation makes sense for you