2012: S-Corp or LLC? Which Is Best for Your Business?

Today's show covers the ins and outs of LLCs and S-Corps and how to determine which one (or both) is best for structuring your business. The guest is Hannah Cole, creator of Sunlight Tax. You can visit Sunlight Tax https://www.sunlighttax.com/ for resources mentioned in today's episode. This episode was originally published May 13, 2024. How's midlife going? Fill out Farnoosh's survey https://www.jotform.com/build/262556781257063 and help shape the podcast in 2027. Hosted on Acast. See acast.com/privacy https://acast.com/privacy for more information.

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• 1:50Speaker 03

  So Money episode 2012, S-Corps versus LLCs. Which one should you be? Our guest is Hannah Cole, founder of Sunlight Tax.

• 2:03Speaker 04

  You're listening to So Money with award-winning money guru Farnoosh Torabi. Each day, get a 30-minute dose of financial inspiration from the world's top business minds, authors, influencers, and from Farnoosh herself. Looking for ways to save on gas or double your double coupons? Sorry, you're in the wrong place. Seeking profound ways to live a richer, happier life? Welcome to So Money.

• 2:29Speaker 05

  Gosh, the number of people that I see who form an S corp, not even knowing what its purpose is or what it's doing for them and honestly do the setup wrong and then get in massive trouble. It's a big deal. It happens.

• 2:42Speaker 03

  Welcome to So Money, everybody. I'm Farnoosh Torabi. If you're a business owner or are looking to start a business, you must listen and save this episode. This is going to be a capsule podcast where it will be referenced often, and I will be referencing it often. One of the biggest questions I've received from our listeners, our community, especially those who are entrepreneurial, is this, should my business be an LLC or should it be an S corp? And friends, I don't have the answer to that. I am an S corp, but I know others who have LLCs, people who are in the same industry as I am. And it's always been curious to me. It was the recommendation of my accountant and I just went with it. And so far, knock on wood, things are going great. But I learned a lot

• 3:23Speaker 03

  in this episode. I got schooled on LLCs and S corps in 30 minutes by our guest Hannah Cole. She's a friend of this podcast, founder of Sunlight Tax. And Hannah walks us through the differences between the two business structures, why you might want to be both an S corp and an LLC. Did not know that was possible. At what income level does it make sense to be either an S corp or LLC? And how can we leverage artificial intelligence to make tax prep and tax organization a lot easier and most importantly, cheaper for us? Hannah has some trusted resources. Tax nerds unite. This episode is for you. And

• 4:05Speaker 03

  honestly, anybody who's looking to start a business, this is important stuff. Here's Hannah Cole.

• 4:12Speaker 03

  Hannah Cole, welcome back to So Money, our resident tax expert, humanizing taxes for the masses, for the humans. Welcome back.

• 4:21Speaker 05

  Thank you so much, Farnoosh. So happy to be here.

• 4:24Speaker 03

  First off, breaking news. Can I say this?

• 4:27Speaker 05

  Yeah, you can say it.

• 4:28Speaker 03

  You heard it here first. Hannah Cole has signed a book deal, everybody. I'm so excited for this book, chiefly because you're writing it and I think you're the best person to write the next tax book. Because I'll tell you, I've never read a textbook in my life. I think I might read yours. I will definitely read yours. I'll be giving yours away. Tell us about your book.

• 4:51Speaker 05

  Yeah, so it's called Taxes for Humans and Wiley is the publisher. And my idea is that I just want to like, give a really useful book, but it's kind of the book that I wish I had had and that everybody needs to like, do your taxes, especially for people who have freelance income or who are self-employed, but even more holistically to just understand kind of the why behind the tax codes, because you have to do your taxes, right? Like whether you want to or not, whether you feel technically inclined or not. So the point is really like a absolutely no jargon, no shame approach. That's super practical and like helps you get it done.

• 5:34Speaker 03

  Very important. I can't wait. Thank you for taking on this initiative.

• 5:40Speaker 03

  Cause it's, it's so important. Like you say, you can't avoid it, but we're all capable. We are all capable.

• 5:48Speaker 05

  Absolutely.

• 5:49Speaker 03

  What we're going to focus on today, and you've been on the show numerous times, but we promise that we would bring you back to talk specifically about LLCs versus S Corps. And if you're listening and you're running a business, whether it's just you're a solopreneur, you have multiple employees, whether you're at the start of it or you're in the middle of it, you've probably second guessed this move. I'm an S corp. I know I have friends have flourishing businesses similar to mine, but they're LLCs. And I wonder, have I done the wrong thing? And so we want to dedicate the next 30 minutes to understanding the mechanisms behind both of these, you know, the ways that you set up your business, why one person would choose

• 6:34Speaker 03

  one or the other. I've heard that S Corps are more tax advantageous. Is that true? So I'm coming at this, just so you know Hannah, with like a lot of questions. I don't have answers. That's why you're the expert on today's show. So first, thank you for, for taking this on, because it's, it's, it's hot, but like every time someone asks me, I wish I had you in my ear. So this is why I'm doing this podcast. Now I have a podcast for, for everybody too. But first, maybe we should just start. With an explanation of these two entities, they're the most common. I mean, there's other ways, I guess, to structure your business, but these are sort of, this is where the road divides a lot of times for people. It's like, which direction do I take S corp or LLC? Maybe you can just give us an overview of each one.

• 7:20Speaker 05

  Sure. So I actually want to shift the premise of the question right up front because it's not an either or question. You can do both. I myself am both. They serve completely different purposes. And that is where a lot of people get confused.

• 7:36Speaker 03

  Okay.

• 7:37Speaker 05

  So the LLC is a legal entity. It's not a tax entity. So what that means is it does do something for you on the legal side, but it actually doesn't do anything for you when it comes to your taxes. And a lot of people do not know this, and I include in that some accountants, though accountants should know this, but a lot of lawyers don't know this, that the LLC doesn't change your taxes and that the LLC is a legal thing that can be layered on top of any tax status you want to have.

• 8:10Speaker 03

  Okay.

• 8:10Speaker 05

  So you get an LLC because you want to shield your personal assets from, from a claim in a business lawsuit.

• 8:19Speaker 03

  Okay. Take a minute. That's, that's fascinating. I didn't know that.

• 8:24Speaker 03

  But my follow up to that really quick, and I don't want to derail us, but it's like, I have business insurance. I have liability insurance. Is that enough where I don't need to then go and also become an LLC? Like, at what point do you do that versus just get super insured?

• 8:41Speaker 05

  Yeah, that's such a good question. And of course, you know, I mean, lawyers do their thing well, but of course, it's a little bit in their interest not to tell you, not to remind you about business insurance. And you are absolutely correct. The business liability insurance can do the same thing an LLC would do for you, often, frankly, for less money. But it's a little bit different. They're not exactly the same thing. The LLC, it puts a legal shield. It creates a legal separation between you, the person, and you, the business. And so that means if somebody sues you because of your business, they can get your business assets. You can't stop that, but they can't get your personal assets.

• 9:22Speaker 05

  Most people's wealth is on the personal side, your 401k, your house, your kid's college fund.

• 9:28Speaker 03

  Well, do you know why this is confusing? Because when you fill out your, let's say, your W9,

• 9:34Speaker 05

  Oh, yes.

• 9:35Speaker 03

  It's like, are you an S corp? Or are you an LLC?

• 9:39Speaker 05

  Yeah.

• 9:39Speaker 03

  So you assume that you have to pick a lane.

• 9:43Speaker 05

  And not only that, in fact, I wish I had my W9, like, I filled out W9 for myself to show you on camera here. But actually, you check the box for LLC, and then you put a letter in for entity type. So the way that I fill out my W9 is I've checked the box for LLC, and then I put the letter S in there for entity type. So I don't check that S corp box. I click LLC and S. And of course, nobody knows this.

• 10:12Speaker 03

  No one.

• 10:13Speaker 05

  Nobody knows this. This is done wrong. Like, the number of wrong W9s out there is just shocking.

• 10:19Speaker 03

  All right. So thank you for sharing that upfront. I think that's really important to kind of get our head wrapped around that. Now, why doesn't everyone do this? Why doesn't everyone S corp with an LLC layered on top? Or have business insurance? Some people are just S corps or they're just LLCs. Can you talk a little bit about what each of them does from a, from an architectural standpoint for your business?

• 10:44Speaker 05

  Sure. So let's, let's finish the, the sort of liability piece first, and then we can move to the tax piece.

• 10:51Speaker 03

  Okay.

• 10:52Speaker 05

  So business insurance versus LLC. You can do both. I do do both because I, you know, in taxes, people, you know, as you know, Farnes, when you're talking about money, you know, people can get upset if bad things happen with their money, which you may or may not have any responsibility for. So I want to have as much protection as I can. So I have both. Now, having a shield over my personal assets so that a lawsuit couldn't touch my 401k, my house, that doesn't actually give me any money if there was, if I was found at fault, for example, to pay out, you know, lawyer's fees.

• 11:29Speaker 03

  Right, right.

• 11:31Speaker 05

  That is where business insurance comes in. Business insurance will do things in that department. The LLC is not going to pay any money. Right?

• 11:40Speaker 03

  Right, right.

• 11:41Speaker 05

  So that's kind of the difference.

• 11:42Speaker 03

  Yeah. So I guess always have business insurance.

• 11:48Speaker 03

  But you know, it's interesting because I formed my business in 2008, 2009, 2008, I think it was 2009 after I got laid off. And my accountant, who was also a tax attorney, was very much like, you should establish yourself as an S corp. Why back then? I can't tell you because I was just going with the flow. But can you tell me a little bit about like, when you're at this sort of juncture and you're trying to decide whether to do an S corp? What are even the other options? What are the questions you should be asking yourself and/or your expert that you're working with, whether that's an accountant and/or a lawyer?

• 12:30Speaker 05

  Yeah, absolutely. LLC questions go to a lawyer and S corp questions go to a tax accountant. And that's important because, gosh, the number of people that I see who form an S corp not even knowing what its purpose is or what it's doing for them and honestly do the setup wrong and then get in massive trouble. It's a big deal. It happens. But also, a lot of people set up LLCs not really knowing what the purpose of them is either. So first and foremost, like my first thing to say is like, know what the thing is for, right? Don't go run out and get a thing you don't even know what it's doing. And also, if you don't know what the obligations of it are. So in LLC, you have to pay an annual filing fee with your state and you also have to

• 13:14Speaker 05

  generally update like your articles of organization and confirm who the, you know, like the owner is. Also, by the way, there's a brand new rule that went into effect January 1st, where all LLCs have to file this new piece of paperwork called a Beneficial Ownership Information Report, BOI Report. There's actually $500 a day penalty and two years of jail time if you don't do it. So it's, I mean it when I say mandatory. But this is actually from a really good law called the Corporate Transparency Act, which exists to create a law enforcement database of who owns the LLC, basically to prevent

• 13:55Speaker 05

  shell corporations, which is how we launder money and do, you know, trafficking, you know, do human trafficking and things like that. I have a little free mini course I made on this because the filing should take you just like five minutes and it's absolutely free and really not very hard, but definitely mandatory. So I can put a link to that in the show notes to share with people.

• 14:20Speaker 03

  Will do.

• 14:20Speaker 05

  Yeah. So S Corps, should we jump in there?

• 14:25Speaker 03

  Yeah. Well, just, you know, my thought bubble right now, when hearing you say all this, like, does anyone really need to be in LLC? Just get business insurance, liability insurance. Why? What is the benefit of LLC in absence? If you have business insurance, where is the LLC showing up for you?

• 14:45Speaker 05

  Yeah. Yeah, that's a good question. I think just the fact that I know that all of my personal assets are shielded from a lawsuit, like they're not gettable in a lawsuit, that's, that's nice.

• 14:58Speaker 03

  That's it. So the business insurance won't protect your personal assets necessarily?

• 15:04Speaker 05

  Yeah, it doesn't, it doesn't create any separation there. So it doesn't necessarily, if you had business insurance, but no LLC, then you, if you were found at fault, then they could take your 401k for damages.

• 15:16Speaker 03

  So it sounds like LLC is really helpful for people who are either in the advice space. What other spaces?

• 15:25Speaker 05

  Oh, my gosh, like endless. If physical, physical presence, I mean, if you have a storefront, you know, somebody could just slip and fall in your place.

• 15:33Speaker 03

  Right.

• 15:34Speaker 05

  That would be a thing.

• 15:35Speaker 03

  Location. Yeah, specific, right.

• 15:38Speaker 05

  I mean, I really hate picturing disaster scenarios. It's not what I want to spend my time doing, but lawyers and insurance brokers are really good at it and they will tell you.

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• 19:44Speaker 03

  Moving on to S Corps, let's talk about, again, why you would want this, since you said that is the first question you should ask.

• 19:53Speaker 05

  Yeah. So by default, when you earn any freelance income or start a business, by default, you file your taxes on a form called a Schedule C, which is just part of your income tax return. And so absent you doing anything, that's where your 1099s get reported. And that's also where you get to take business deductions. So that's where you are. To start, now, everything that you report as profit on a Schedule C is subject to two layers of tax. One is income tax, and that's never going to change. There's no formation that will shift that. But the second layer of tax is self-employment tax. That's how you pay into Medicare and Social Security.

• 20:37Speaker 05

  And it's 15.3% of your profit that you're paying into that. It feels high when you work for yourself because you pay both as an employee and you pay as a boss. So the self-employed means you're the two parties, so you pay double. However, you get the, you know, the other side of that benefit that people often ignore when they're upset about the double Medicare, Social Security is you get deductions and employees don't get any.

• 21:04Speaker 03

  Right.

• 21:05Speaker 05

  So, all your, all your Schedule C profit, all your freelance, small business profit is subject to those two layers of tax. And S corp shifts the structure so that now you can take only a portion of that and have it subject to those two layers of tax. And the other portion is only subject to income tax. So the obligation when you form an S corp is you file some paperwork with the IRS to get permission. You have to wait for their letter back to say you have permission. And then you set up payroll. And you have to register with your state, like as a, as an employer, and you are now subject to employment law, and you, you don't want to gloss over that. That's a big deal.

• 21:49Speaker 05

  You have to run payroll, you have to, you, you are now going to employ yourself as an employee, pay yourself on payroll, and do all the official checks, you know, of like withholding Medicare and Social Security from your paychecks, doing state-level unemployment, disability, anything your state requires. And then as a boss, as the owner of your S corp, you will pay in the other half of Medicare and Social Security. And we call that payroll tax when you're paying as the boss, but effectively, that's the two sides of Medicare and Social Security. So everything you pay yourself in that reasonable salary That you pay yourself is still subject to those two layers of tax.

• 22:31Speaker 05

  Medicare and social security on two sides and then also income tax. But whatever profit you have that is above the salary you pay yourself, that is not subject to Medicare and social security. So that you only pay income tax on. And so, given that that would be 15.3%, that can be a substantial savings once your profit is high enough. But I really want to caution people not to run out and form an S corp too early because the administration burden of setting up and running payroll is substantial. And the state will come after you if you don't properly pay into unemployment and those things. And that's, I've seen that happen. So.

• 23:15Speaker 03

  What's a good threshold?

• 23:17Speaker 05

  Yeah, a good threshold, first of all, for New Yorkers, I'm sorry for bad news, but New York state makes S corps not as beneficial because they essentially put another tax on you when you have one. So.

• 23:30Speaker 03

  New York City or New York state?

• 23:32Speaker 05

  The whole state, New York state. So the calculus is different if you live in New York. But outside New York, I wouldn't even consider an S corp until I had profit in the business of at least $50,000 consistently. So your break even point might be higher than 50,000, but around that point is when you want to start doing some math and figuring if maybe it's time. Yeah.

• 23:57Speaker 03

  Is there any advice, strategy, tax strategy around what you claim for your income as the employee in your company and how that can work in your favor come tax time?

• 24:11Speaker 05

  Sure. Yeah. So the requirement when you're in S corp is you have to pay yourself a reasonable salary. And that's an IRS phrase, reasonable salary. You can't pay yourself a thousand bucks a year. You, you will be audited so fast.

• 24:26Speaker 05

  They have their eyes on that issue and they look at it. So be warned. So the good way to do that-

• 24:34Speaker 03

  People would do that because they want to shield themselves from, they want to pay as less tax as possible, right?

• 24:38Speaker 05

  Exactly. If you know that you're paying the full amount of tax on the salary and not the full amount of tax on everything that's outside the salary, you're trying to reduce the salary to be as small as you can. So the IRS is watching you and saying-

• 24:51Speaker 03

  Really?

• 24:52Speaker 05

  Reasonable or important.

• 24:55Speaker 03

  Yeah.

• 24:56Speaker 05

  So you can go in like Glassdoor or any place where you could find some like comparative salaries and try to benchmark yourself against, you know, someone with your job title, what they would reasonably pay themselves. And it's also okay to say, well, yes, I'm the CEO, I get a CEO salary, but I'm also the admin. And so also mix in a little admin time. So you can kind of divide your time and have like a mixed amount. It doesn't have to be-

• 25:27Speaker 03

  Oh my gosh.

• 25:28Speaker 05

  Yeah.

• 25:29Speaker 03

  My salary should be my entire revenue and then some. I should be working at a loss, honestly, every year. I often hear this expression, pass through taxation.

• 25:43Speaker 05

  Pass through entity.

• 25:44Speaker 03

  Pass through entity?

• 25:46Speaker 05

  Yeah.

• 25:47Speaker 03

  Can you explain that to me and how, when, what is that?

• 25:50Speaker 05

  Yeah. So basically, the only corporate structure that is not a pass through entity is a C corp. C corps tend to be large companies. Anybody who's like selling equity is generally a C corp. So anybody on the F and P 500, for example. But everybody else is a pass through. So what pass through tax means is that you're making money as a business owner, could be Schedule C, could be S corp, could be partnership. But you don't actually pay a corporate tax rate. Only C corps have a corporate tax rate.

• 26:23Speaker 03

  Okay.

• 26:23Speaker 05

  You report your income on your personal income tax return. So your tax rate passes through to your personal income tax rate.

• 26:33Speaker 03

  Okay.

• 26:33Speaker 05

  So for me, well, just say, for example, at Sunlight Tax, which is my S corp, my company. Let's say I made kind of a modest amount of income. If I was married to somebody who made mega income, then I'd have a fairly high tax rate. And so my income tax rate for Sunlight Tax, even if Sunlight Tax didn't itself make that much money, my rate would be fairly high. That could go the other way, right? I could have a bunch of dependents and be single and not, not pay much tax at all in a pass through. But what it means is that your corporate tax rate and your personal tax rate are one in the same. Your corporate rate passes through

• 27:14Speaker 03

  Right.

• 27:14Speaker 05

  to your personal income tax return.

• 27:17Speaker 03

  You raise a good point about marriage and filing. This is another big question. This isn't actually necessarily about S corps or LLC. But if you are a business owner and you have an S corp and your partner has a nine to five, typically what works best? What's the best arrangement for filing taxes? Is it joint? Is it filing married, but you know, separately? What have you seen work best for couples? Where one is an entrepreneur and one is not?

• 27:48Speaker 05

  Yeah. So the tax code was written in theory to benefit married couples who file jointly. Like, I'm going to say, I'm going to put a big asterisk on that as I say it, but it, in theory, it benefits a joint filing. You get the most access to tax credits. Sometimes those can be cut off if you file married filing separate. But I will say that the tax code was also written by, you know, white landed gentry, mostly men. And so when you actually look at the facts on the ground, this does not always come out to be true for gay couples, for black couples.

• 28:29Speaker 05

  You know, Dorothy Dorothy Brown, this amazing scholar and tax attorney, wrote this book called The Whiteness of Wealth, where she really lays out how a lot of people of color are equal earners in a couple because they could not, they didn't have sort of the privileged salary. You know, they're tending to be underpaid and tending to need two salaries. So they didn't come from that patriarchal patriarchal model that the tax code favors of a high earning, typically man, but high earner and a low earner, maybe stay at home person. If you're married, filing joint, and you have that situation, generally you come out well. But two equal earners, as many gay couples will tell you, as many, you know, people who rely on two salaries will tell you,

• 29:14Speaker 05

  you sometimes pay a higher tax than you feel that you ought to be.

• 29:17Speaker 03

  Sure. You had said earlier, you know, until you're making about 50K profit, you would not advise necessarily someone transition to an S corp. So until then, what are you operating under? What do you recommend? Are you a sole proprietorship? Are you, what are, what are you doing that could still be advantageous tax wise?

• 29:41Speaker 05

  Yeah, so you are probably just filing on a Schedule C. That's the default. So that's where you're going to report your business income until you elect to do it some other way.

• 29:52Speaker 03

  Okay.

• 29:53Speaker 05

  Yeah.

• 29:55Speaker 03

  What else should we know? I, I don't know what I don't know. Okay, I'm going to be the first, my first episode. I'm going to admit that. When you have clients coming to you, what are the biggest questions you're helping them answer?

• 30:08Speaker 05

  Yeah.

• 30:09Speaker 03

  On this topic?

• 30:10Speaker 05

  For sure. I mean, a couple of things.

• 30:15Speaker 05

  First is just definitely to separate out the issues. Legal liability, that's LLC. So you want to make that decision separately.

• 30:22Speaker 03

  Yes.

• 30:22Speaker 05

  Then tax status, separate decision. When you, when you elect to form an LLC, sorry, when you elect to form an S corporation, you, you have some obligations that are quite real. You know, running payroll, paying into state stuff like unemployment. The state gets real upset with you if you abuse your employee. And I think a lot of people feel like, well, but the employee is me. It doesn't matter if I don't pay myself. The state sees you're not paying your employee and you can get in trouble for that.

• 30:54Speaker 03

  You know, so I use Paychex.

• 30:57Speaker 05

  Yeah.

• 30:57Speaker 03

  Paychex Flex, it's actually a like sort of a less expensive way. Cause they, you know, they had Paychex, which was like, again, whoever like started Paychex was like imagining the typical small business owner with like multiple employees, office space, da, da, da. And I'm like, one person working out of our home. So I think they created a more modified version of that paycheck service, which is great. My accountant helps me run the payroll, but often I'll get paperwork from them. That's like, please put this up publicly in your workspace, which is like workers' rights, the bill of rights. And I'm like, I'm not putting that. I hope they're, I hope this, they're not listening. But I don't, I don't have that anywhere in my house. Okay. I store that away. I usually throw it out, but like, yeah, I mean, there's a lot of that stuff.

• 31:42Speaker 03

  You might get some mail like that from the state.

• 31:44Speaker 05

  Yeah. Yeah. Well, I, I use Gusto for my payroll and, um, oh my gosh, it's changed my life. I, I think it's so wonderful. It costs $39 a month.

• 31:57Speaker 05

  They make it really easy. It's very modern. Um, and it also has different like, um, things you can plug into it, like Guideline, which is a separate company, but integrates very smoothly with Gusto. And I was able to set up a 401k plan for my business through Guideline that hooks into my payroll. So it's like beautifully automated.

• 32:20Speaker 05

  But $39 a month is a lot less than accountants charge you to run payroll. And so it's a huge savings to use it. And, um, I just love it, honestly.

• 32:29Speaker 03

  Well, tell us other resources that you like. I've never heard of Gusto. I, I'm, I, I think it's especially right now with, I think accountants are a little worried for their jobs, to be quite honest.

• 32:42Speaker 05

  Oh, yeah.

• 32:43Speaker 03

  I sit on the board at my business school at Penn State and this is, these are conversations we're having about just like the future of business jobs and AI, separate episode. But how can we take advantage of the technology right now to lower our costs, but also make the tax process easier, more correct, more efficient?

• 33:03Speaker 05

  Yeah. Great. Great question. I sold my tax preparation practice in advance of AI on purpose because I was like, well, this AI is coming for this part. And it should because it's the worst and most unpleasant part of the job. Like, I love teaching people, but oh my gosh, the deadline and the tax return, blech.

• 33:23Speaker 03

  Yeah.

• 33:23Speaker 05

  Um, so yeah, Gusto is really awesome. I definitely recommend them. And they also have different services that plug in, like, for example, the employment posters service that you're talking about.

• 33:34Speaker 03

  Yeah.

• 33:34Speaker 05

  A lot of states, it's a state by state requirement, but depending on your state, you don't need to post those unless you have, you know, X number of employees. So I only, I only need to.

• 33:46Speaker 03

  Yeah.

• 33:46Speaker 05

  Yeah. Um, what else is, what else is really good? Let me think. Well, like, you know, basically stuff to keep your deductions is a good idea. Like, all businesses are going to get great mileage deduction or like business meals. Um, you know, so like having a great mileage tracker is a good idea because if you drive to meet clients or do site visits or have offsite meetings, that's all deductible when you work for yourself. So Mile IQ is a, is a really good mileage tracker.

• 34:19Speaker 03

  I know about them.

• 34:21Speaker 05

  It's cool because it's like using the GPS in your phone so that anytime your body, your phone is moving at more than five miles per hour, it assumes you're driving. So you don't have to remember. And I love that because, you know, I used to actually track like with a notebook in my dashboard. Um, I used to track my mileage that way. Ugh, it's just awful. And I would forget half the time. So.

• 34:46Speaker 03

  Any other laws in the pipeline that could affect taxpayers, specifically business taxpayers? You mentioned the annoying LLC form that, but you're going to help us out with that because you've got a link for, to walk us through that. But any other updates or changes to tax law that we should know about?

• 35:07Speaker 05

  Yeah, well, I'll tell you about one that's coming, potentially, but you know, so we'll have to revisit for a nation that happens. The Tax Cuts and Jobs Act, which was passed by the Republican Congress and by Trump when he came into office in 2017, that act had a lot of provisions in it that it expire sunset is the word they use in taxes in 2025. So pay attention because tax laws are going to shift in 2025. That's just a word to the wise. So, I mean, first of all, you, I hope everybody who listens votes, but you should vote because whoever gets into office is going to be making the next rules about what

• 35:48Speaker 05

  happens in 2025. The QBI deduction, the qualified business income deduction, which if you have a small business, you've been benefiting from for the last, since 2018, that is a 20% deduction of your business profit that you get to take off your taxable income. That's been a nice benefit and that's going to go away. That was temporary, came into effect in 2018. Everybody flipped out about it and it's going to go away in 2025 unless they renew it. There's probably a few other, there definitely are a few other things in the 2025 Tax Cuts and Jobs Act that are going to shift as well. So it's just something to have.

• 36:33Speaker 03

  We'll just have you back. We'll just have you back, I guess. Thank you so much. You know, when I started this podcast, I didn't envision doing a lot of tax episodes, but now that I have you in my corner, I will, because you make them so easily, easy, easy to digest. I haven't fallen asleep yet in the last 28 minutes. I don't think anyone online has either. Tell us more about your book. And I know you literally just, the ink is still wet on the contract, but I don't know, I just thought I'd like to give authors the platform.

• 37:09Speaker 05

  Oh my gosh, so nice of you. I'm so excited about it. I mean, I actually, when I was writing the proposal, I immediately found you, Farnoosh. And I was like, I want to go do Farnoosh's conference and I want to, I want to learn from her. And just to anybody listening, I did.

• 37:25Speaker 03

  Book to brand. That's what she's talking about, everybody. Book to brand.

• 37:29Speaker 05

  That's right. I did it and I like, I was watching just the recordings of Book to Brand. And I'm telling you what, my book proposal was so strong because of, because of your mentorship, Farnoosh, really.

• 37:42Speaker 03

  Oh, thank you.

• 37:43Speaker 05

  I just was like, you know, I got multiple offers. I had, you know, I went on vacation. My agent said to me, go on vacation. Don't bother. Don't check your email. Like, take a rest. The day that we submitted my book proposal, she was like, this, this is a long process. It'll be months before you hear a word. I got home from, I did take like five days off. I literally did not check email. I went to a spa with a friend. And I'm in the airport checking my email on the way home. And I had this urgent message in my inbox. And it said, an editor at Wiley wants to talk to you. She, she got the proposal same day, cleared her schedule, read the whole thing, and wants to talk to you.

• 38:25Speaker 03

  Wow.

• 38:27Speaker 05

  Whoa.

• 38:29Speaker 03

  That's the best.

• 38:30Speaker 05

  It was such a good feeling. And I just, you know, I think you can spend a lot of money with coaches and stuff. And it's not, some of it's worth it and some of it's not. And I knew that I could sink a lot of money into paying for help to get my book proposal written. And that could have been a good move. But honestly, it was very cost effective to work with you.

• 38:54Speaker 03

  Farnoosh, a cost effective way to get further along in life. I'll take it. Thank you. It was an honor to work with you. Again, like you inspire me. So I love that I was able to even just support you in this, in this journey. And we'll obviously have you back. Books take a while. She was right. It probably won't be out till. At least another year.

• 39:18Speaker 05

  Well, I have the publication date is September 2025.

• 39:22Speaker 03

  Wow. Okay. That's actually an expedited book launch, let me tell you.

• 39:26Speaker 05

  Yeah, it's actually what I liked about the publisher. They were like, we're going to do this quick.

• 39:30Speaker 03

  Yeah. Wiley knows, Wiley knows business books. Hannah Cole, Sunlight Tax. Thank you so much.

• 39:37Speaker 05

  Such a pleasure, Farneesh. Thanks again for having me.

• 39:42Speaker 03

  Thanks so much to our guest Hannah Cole from Sunlight Tax. Thanks for tuning in, everybody. I'll see you back here on Friday and I hope your day is so money.

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