Hi, I'm attorney Bill Brown. In this video, I'd like to talk to you about the hybrid LLC, which is a rather new way to do your business. It gives you the benefits of both an LLC and a corporation. Now, a lot of people know, or if you don't know, I'm going to let you know that ordinary business income is earned, and it might be subject to self-employment tax if you're an individual, such as commissions if you're in real estate, flipping properties, wholesaling, and consulting. All those types of fees are considered earned ordinary income. If you did them in your own name, you would be subject to FICA tax. However, if you did them in a corporation, such as an S corporation, you would pay income tax on the earnings, but you could limit the amount you pay in terms of FICA tax on those earnings. That's why people use an S corporation. The problem with an S corporation, though, is that it requires annual minutes of meetings and is bound by a lot of formalities. This is why many people opt for the single-member LLC. The problem with a single-member LLC is that it is disregarded for federal income tax purposes. The sole member reports the income and expenses on their personal tax return, and if it's ordinary business income, like wholesaling properties, for example, then it will be reported on Schedule C of their personal tax return. They would have to pay both income tax and FICA tax on that. The LLC is the preferred choice for many people because it is simple and doesn't require as many formalities as a corporation. This led us to the creation of the hybrid LLC. What we do is form an LLC under state law and then...
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Video instructions and help with filling out and completing Who Form 1120 Reit Assets
