10 Business Mistakes I Made That Cost Me Over $1,000,000

Welcome everybody, to a live broadcast. My name is Mark Kohler, cpa, attorney, business owner, real estate investor, influencer, and just trying to be an all around good guy. Doing my best to live the American dream. And I'm here today. Very personal, very personal live broadcast. Today, my team talked me into sharing 10 mistakes. Who wants to talk about their mistakes? 10 mistakes that I made over my career that have cost me over a million dollars. I think it's more than a million. I started doing this. This is no fun. I'm gonna need to go see my therapist after this. But everybody, I promise you, you are gonna learn something today that will change your life. I mean it. Because one of the best ways we can learn is from our own mistakes. But then if we can have someone be transparent and candid and tell us the mistakes they made, maybe we can avoid a pitfall, a landmine, a problem. Well, I'm going to do my best today to share these 10 points in a very authentic, candid way. I'm going to protect the names of the innocent and hopefully. And I. In fact, I already know, if you please take some notes or pay attention, these are 10 incredible points. All right, I going to start. Let's get going. Number one and all these have kind of a little story to them as they do, right? You make a mistake. I'm not trying to justify my mistakes with these. But I'll tell you, when I finally became a lawyer, tax lawyer, I had gotten passed my CPA exam, the bar exam. I'd worked with a law firm and I went off on my own. I was so excited. I built my office. I was starting to see clients. I was super stoked. And what also happened is I felt like this. I was set free. I'd been in School for 10 years. I had worked for other firms and held back. Now I controlled my own destiny. I do anything I wanted. I could take any client I wanted. I could build my business the way I wanted. I had a great team. Well, a paralegal, a partner and his paralegal. It was just four of us in this small office just going for it. Well, I got so excited, I. I would. Clients will come in and say, hey, instead of me paying you, do you want 10% of my business or do you want 5% of my business? Or do you, hey, why don't you partner with me on this? And well, before I could never do that. I had all these issues. I was going to school or I was passing a bar exam, or I was doing this CPA thing. And then Or I was with some big firm and. But all of a sudden I had the freedom to just tackle any of my entrepreneurship ideas. And what did I do? I said yes to almost everything. I said, okay, I'm in. Okay, I'm in. I won't even tell you some of those ideas, and they're not bad ideas. But what I did is I spread myself far too thin for about a year and a half. It was exciting at first, and then all of a sudden I was losing money because I had overextended myself and projects that needed more of my attention, and I didn't take that time. My own firm that I was trying to launch was suffering because I'm trying to chase all these dumb ideas. And it was family, a consultant, my staff, that said, would you just slow down and focus on your firm? And then if there's an idea once in a while you want to do okay. And it really slowed me down for a couple of years into having to dig out of that mess. And I actually had to pay a partner back, oh, 10 or 20 grand that put it into a deal that relied on me. And so the moral of the story is it's okay to say no. There's always another idea, there's always another project, there's always another business to do. Choose your lanes carefully. I like multiple projects going at once. I want to have multiple irons in the fire. But there's also a point of a tipping point where you're doing too much. So be careful, choose your passion. Have a couple sources of income, but don't overextend yourself like mark Kohler did 25 years ago. Number two, this was a real estate deal. This one still stings. It was a deal I did with my dad and my brother. It was 20 plus years ago, and we did a subject to. It was a six plex, and we were going to go into this six plex with some money down and assume the loan and take over the sixplex, refi, do some repairs. And it was a great little deal. We knew there was probably a couple hundred grand of equity in it, and I think we put in 150 grand, assumed the loan, the owner walked away. Now, what the owner promised me was, and this was my mistake is he said, yeah, you can assume this loan is good to go, you know, so you can just assume this loan, pay it off when you want. And I was like, great. Well, as soon as we bought the property, I then dive into the loan. Rookie move. Dumb. In this case, I was my own worst Enemy. I didn't think, oh, I'm not going to make a mistake. I'm Mark Kohler. I got this. And I did not know that there was a prepayment penalty with the loan. I could assume it, but I couldn't pay it off early. And the interest rate was terrible. The terms were terrible. And to prepay it made the whole deal a bad deal. But we had already bought it, and I'd already given the seller his money. And my dad was relying on me to have done the due diligence and make sure it was going to be a good deal. My dad was a businessman. I looked up to him a lot. For years and years, he taught me everything he knew in business. And I did some great projects with my dad and impressed him at times. And this was one that did not go well. So by the time we fought it out with the bank and the seller, who I thought misrepresented the issue, there's nothing I could do was either pay off the loan with a prepayment penalty or walk away. And because it was a loser and we lost the 100 grand or 150 grand on the deal. And the bank, why they didn't want to negotiate with us is they saw the value in the property, too. They wanted to repossess the property. So if I didn't make the payment and I didn't pay the prepayment penalty, they were like, that's great. We'll take the property and we'll resell it. And the bank wanted it. It was a local bank, so got screwed in that deal. Moral of the story, Read the loan documents on every real estate deal. If you're going to get creative with a subject to or a prepayment idea, paying it off early. Number three, is this going okay? You got people liking this. I don't. Give me some love in the chat. Say, Mark, lick your wounds. It's okay. We love you. Please. All right, number three. As I was running my business, this was good. 10, 15 years ago, probably 15 plus years ago, you have employees, you know, and some employees you really trust and love. There was this situation where this employee was put in an overtime. They were like, they just. They wanted to work the overtime. They're like, I need the work. I want it. I don't think. I can't pay you overtime. I don't want to pay overtime. Time and a half. That's expensive. And there was things to be done. And they're like, no, I want to stay a couple hours after work and do this. This Is great. I'll just put it on my time card. Da da da da da. And so Instead of a 40 hour work week, this ended up being kind of a 52 or 50 hour work week for this employee for, you know, and it would vary from week to week or month to month, but for about three months they were doing this extra work and la la. And then as it happened with an employee, there was a falling out. They just didn't perform as well. I needed to let them go. It was ugly. And you try to train and cajole and help an employee succeed because change and turnover is not cheap. But I had to let them go. Guess what I got in the mail a week later? A letter from a lawyer that said you owe my client overtime of a hundred something hours over three months time and it's treble damages if you don't pay. And by the way, all the attorney fees are paid for by the violator, me. So I had to pay the lawyer for the employee and back time and a half times three. It was just a nightmare. And the employee who was disgruntled and pissed off came back. Now the moral of the story is even if an employee says they'll work extra hours for not time and a half, you are legally required to pay them time and a half. Breaks, lunches, time and a half. Whatever you agree to with an employee does not matter. State law overrides because you don't want to be this sweatshop. The state government doesn't want sweatshop employers that can talk employees into violating their own rights. The state's there to protect the employee. So you may think you're okay with this employee that wants to have a different relationship than state law, don't do it. Tell them no overtime or pay them for time and a half. Number four, this was kind of a recent one. That stung. And you'd think I'd see this is so embarrassing because some of you are like Mark, you don't make any mistakes. You're this successful influencer and you're doing all this and tax and legal and all that. But the moral of the story, this one is we're our own worst enemy. I, a lot of times am very trusting. I think, oh, this contract is pretty straightforward. La la la. And I don't sometimes read the fine print. Now most of the time I'm okay. I am pretty savvy and I look around and I can tell a bad deal from a good deal. But recently it was a fun one with sleep number A. Sleep number Bed purchase. And I've got story after story of getting ripped off in bad contracts. And I was told one thing by the sleep number representative, the agreements and the fine print were hefty. I'm signing stuff, boom, boom boom. And we get this and come to find out what's exchangeable and not exchangeable is very different in the contract versus what you're told. And of course as soon as I complained, they shoot over the contract and what I initialed and I didn't read the fine print and I got screwed over on some thousands of dollars on a piece of the bed I didn't want. I thought I could exchange that or return it. That was what I was told. Sleep numbers got all this great, oh, try it out. If you don't like it, bring it back or we'll exchange it. Da da da. Well there's a lot of if squares and la la la's on that. So be very, very careful. And moral of the story, don't sign a contract until you read every line. And I know it sucks and some of these sections you don't have, I mean they're boilerplate, but you gotta look at the sections that really matter. And it could be price, it could be exchange policy, it could be delivery or turnaround time. I've got story after story of hiring contractors to fix a rental property or a home of mine where I didn't read the contract and I got screwed. So always read your contracts. That's a pretty straightforward one, right? But again, we're own worst enemy. We don't think it's going to happen to us. Number five. Now by the way, my number one, my number ten is the creme de la creme that has cost me more hundreds of thousands of dollars than anything else. And so you got to, you got to wait for number 10. But okay, number five, tax deposits with the IRS. Oof, big one. Now luckily I have never got behind on payroll tax deposits for employees. I've had clients do that. A couple clients even went to jail. You got to be super careful when you have, you're an employer withholding from employees paychecks. But for all of us as taxpayers, if you're an entrepreneur, no one's withholding from your paycheck but you. And so this was a good 10 or 15 years ago. It was right around the 2008 crash. For those of you that are old enough to remember the real estate boom of 2003 to 2008 and then the crash, it was ugly. And a lot of entrepreneurs and I Was in this boat for years. I would sometimes make tax deposits, and other times, you entrepreneurs know what I'm talking about. In the spring of the next year, I'd make money and pay my taxes for the prior year. So instead of quarter one, I make x dollars, I send in a deposit, which all of us should do. And we're making our quarterly deposits based on the income we make that quarter. Sometimes we're like, oh, I need this money for this deal, or I need this money for that. And so we wait till the end of the year, and then we try to make enough money in the first quarter of the next year to pay the taxes for the last year. Well, when the music stopped with the real estate crash, I didn't have the money in 2009 to pay the taxes for 2008. I was like, ah, I should have been making deposit. Because sometimes you don't know what could happen to your business or the economy. A natural disaster, embezzlement, bad employees, whatever. Here I had an industry of real estate fully collapse, and we're a law firm helping people in real estate, so it hurt. So you can always do a payment plan with the irs. I did. Not a big deal. I have many, many, many clients that get on payment plans and all this and never claim bankruptcy. And I know some people do no judgment, but, you know, paid the bills, got out of the hole, making deposits on time moving forward, but it took a while. It's not easy. And so all of you entrepreneurs, the moral of the story is, make sure you're setting aside money in a bank account or just sending it to the IRS or the state. Don't think, oh, I'll make money in three months or six months or nine months and then pay the tax bill. Pay it as you make the money. I tell clients of every dollar you make off the top, take 10% and put it towards taxes. Now, 10% off the top is equivalent usually to 30% of the take home. So if you're a realtor and you get a commission for ten grand, take two and put it in a savings account. Or if you say, oh, I took home three grand this month, then you put a thousand away. So you take kind of this 30% of whatever you take home or 10% off the top. Find an equation that works for you. It doesn't have to be extremely accurate, but you got to set aside money for the irs. Don't get behind on tax deposits. Number six, partners. Now, I have had great partners in my law firm and accounting firm firms over the Years, great partners that I just have helped me succeed in so many ways. But there was an instance where we partnered with some other lawyers down in Vegas to open another office. And they were great people, and I'm not slighting them in any way. But when you partner with someone and you kind of have a lot of trust and faith that they're looking out for your backside. And when you're opening an office a thousand miles away or 500 miles away, you got to really be on top of it. The relationship, the expectations of all the parties. And I put a lot of money into the partnership, and they had different plans, different expectations than I had. And I was trying to build this out and create this relationship. And I was the kind of the bank. And they walked away again, not sliding them for anything they did wrong or treated me poorly. It just didn't work. But I fault myself. I didn't document the relationship as best I could or treat them in the right way to make it a success. And so when you have a partner, the moral of the story is, make sure you plan for the sunny skies and the storm clouds. You're constantly communicating, working together, understanding expectations, roles and duties, and don't take anything for granted. Be careful when you partner number seven, not being consistent with tax strategies and bookkeeping. Now, you may think, well, Mark, come on, you have an accounting firm, a law firm, you should be all over it. Have you ever heard the story of the shoemaker and who gets the last pair of shoes? The shoemaker is always in their family to get the the last pair of shoes because you're out serving everybody else. And you never take the time to make yourself your own best pair of shoes. And if you're in a restaurant, sometimes you're the last one to eat. If you have a landscaping business, sometimes your own home gets the worst landscaping, right? So I have had great years where I was very consistent doing my tax strategy and had my books up to speed. But there's other years where I'm running around with my head cut off and my books are the last ones to get attention. And I forget in December, oh, I should have done this HRA reimbursement, or I should have funded my HSA here or my IRA there. And so the moral of the story here is all of us need to take care of ourselves first. And I joke about Vince Vaughn and Reese Witherspoon in Four Christmases when they're in the car and remember that Jack they're talking about, what do you do when the plane, when the Oxygen comes down. He's like, you take care of yourself first. If I help you over here, I'm going to die. I got to do it first. And it was this funny debate between the two characters and four Christmases as they were driving along. But it's a fair point. If there's a problem in an airplane, you take your oxygen, put it on first, then help those around you. And so, as you're building your business, as you're building your wealth, even your customers have got to come. Number two, you got to take care of yourself first. And it's, it's just so, so important. And that's in all areas, whether it's bookkeeping, the taxes, or the services you're providing. Number eight, hiring the right consultant. Oh, boy. I've hired some doozies in the past, some great consultants and some bad ones. And if all of us, all of us are trying to build businesses, people hire me as their business consultant, I hire the others. We need brain on brain. You can't do it all. You can't be in the trees and solve all the problems. You got to hire someone to come back and look and look at the forest and tell you what you're missing. So I've, in an instance about four years ago, hired a consultant that I did not, was not a fan of, but my partners were, and they hire. And this consultant had the ear of some of the key leaders in the business. My partners and I fought tooth and nail with the process but did not win the vote. And I attribute a lot of the policies implemented by this consultant in killing a business of mine. And it was sad, it was very frustrating. And so we've. You've got to be really in alignment with your partners on the consultants you hire. And be careful yourself, hiring a consultant that wants to come in and change things around quite a bit. I'm looking at my integrator here. Jack, who is just yesterday on a call, said, hey, you don't fix what's not broken. Sometimes keep, stay consistent with what's working. Bring in a consultant to improve, add some features, some revenue. But a consultant that comes in and turns everything upside down, Be wary, be careful. So really, really be careful with the consultants you let tweak your business. You need consultants. I'm not saying don't hire consultants, but be careful. Number nine. Ooh, a lending deal. First trust deed. Now, for those of you that have done some lending, if you're going to do hard money, you're going to loan money on a project and secure it with real estate, get points in interest, and when the contractor's done, they sell the property or get final financing, you get paid off. That's called first trust deed lending. Well, back in the day, this is about 10, 15 years ago, I lent money to a contractor in the greater Chicago area that was doing a big rehab. Now, I had gotten introduced to this contractor through a financial consultant that was like, oh, dude, this is where we. He was my financial consultant saying, you need to put 100 grand here, 200 grand there. And he said, this first trustee note is going to be great, and the points and interest are wonderful. Here's the property. It's going to sell for X, Y and Z. It's going to be great. I'm like, all right, all right. And he goes, but by the way, you're not first trustee, you're second. There's a first in place, but it's only this amount. And. And you're going to be in second position here. But the property is worth twice the amount of the first and second you'll be. If you took out the first, you'd own the property if you had to. I'm like, all right, okay, cool. Did not do a title search. Did not look to confirm if I really was second trustee position. Come to find out. That's right. Number five. It was number five in this trust deed lineup. And there were some people in front of me that had a lot more money in the deal than I did. And of course, this contractor blew it, did not finish the project, ran out of money and walked away. So unless you're. If you're in a lower position, you have to take out everybody in front of you to save the deal or number one gets it. And so it went into foreclosure. Everybody started fighting, and who's going to pay off who and who's going to buy what and whatever. And the project. The contractor, of course, was a loser, didn't get the project as long as far as the money that was at stake. So it was not worth me taking out four people in front of me. I think the second or third position took out one and two and was able to salvage the deal, but I was too far down. So moral of the story, if you're going to loan money, make sure you have collateral, security, personal guarantees, you understand the document, and you do your due diligence to make sure that equity is there so that on that loan you're protected. I lost my money. So right there, if you start adding up some dollars, I think it could be Over a million. This is so depressing how you talk me into the show. All right, number 10, here's my biggest mistake. I put too much money back into my own business. Sounds hold up, Mark. That's a mistake. I mean, a lot of business owners, they say putting money back into your own business is your best investment. Invest in yourself, put money back in your business. Grow it, build it. Yeah, that's kind of true. Not only do you need to be paying your taxes, but you want to be peeling out some profit and reallocating it, distributed it and investing in it in other areas. There were years I didn't even fund my IRA or HSA or 401k. I said, why am I going to go out and buy stocks, bonds, mutual funds, crypto or real estate? I'm going to put my money back in my business and I'm going to make more money in my business. Now I've got some successful businesses and I'm going to grateful for that. But at the same token, some of my partners have much bigger savings accounts than I do retirement accounts and real estate portfolios because they took a little profit out and redeployed it. Another example, I've got a great friend that's a farmer up in Idaho and he was just talking to me about this the other day. This is classic of farmers. Farmers will make money in the fall, you know, whether they're harvesting corn or potatoes or wheat or whatever. And they're going to take their profit. And if they have a good year, they pay off their debt and what do they do? Go buy more land, go buy more equipment. And then 10, 15 years down the road they're land rich and cash poor. When they could have said, okay, I'm going to take my profit of 300 grand this year in the farm, and I'm going to take 50 or 100 grand and go put it in a retirement account and go buy a rental property inside the retirement account, go do some lending, go do some stock, bonds and mutual funds. Whatever floats your boat. But not in the farm. Get the money out of the farm. Start building some other sources of income so that you're not wholly reliant on your business. What happens if the farm has a disaster year? What happens if my business has a disaster year? Heaven forbid. Wow. Do I have other resources to fall back on? Because I've been peeling out some money along the way. Now I've started to do it in the most in the last few years, but I didn't do it soon enough. And you start taking 10, 20, 50 grand a year and putting it in a Roth IRA. If I was doing that 20 years ago, I'd be sitting on $1.5 million tax free right now. And all I had to do was take that 20 to 50 grand every year for the last 20 years and just put it away. Even with an 8 or 10% ROI, I'd be in the millions. So the moral story is, people, please, fund your Roth IRA every year right now. You have three more weeks to fund it before April 15th. You put 6,500 in if you're under age 50, 7,500 if you're 50 or older. Go do it. Go do it right now for last year, and then fund this year's five grand a year. Five grand a year. Five grand a year. People, you young people that are listening, if you're under age 30, I just made you a millionaire. Put that five to ten grand away every year, and it'll start to snowball. And all of a sudden you're going to get addicted to savings. You're going to be in your 30s and 40s and fully invested in this process because you're so stoked you were doing it in your 20s. Now, for those of you that are older, it's never too late. It's never too late. Start saving now. Peeling profit out of your business. I'm doing it now religiously. I got to be diversified. Well, folks, that's my top 10. Ooh, boy, that hurt. Jack, did you learn anything? You know all those?

That was great. No, there was a lot of new stories there. It was great.

Did I blow my image entirely with you? Okay, now, I want to say this. For those of you that are finding this. We're going to do some Q and A here. The rest of the time is yours. But a year and a half ago, I started the Main Street Tax Pro certification for business owners that want to go to the next level and understand their business tax strategies, asset protection, privacy, real estate, crypto partnerships, IRAs, all of that. 12 modules, 80 classes, quizzes, weekly trainings. It's insane. There is no other program in the country like this. 10 grand, boom, you're in. And it could be less than that, too. You've got to check it out. It is a must. For any of you that are a small business owner, for those that want to build a tax advisory practice, maybe you're a young enrolled agent, old enrolled agent, cpa, attorney, financial advisor. I give you all the tools and business building skills to build an advisory practice. People, it's the holy grail. And there's so many people even just watching this live broadcast that'll go to the Mark Kohler Tax Pro network. I've got over 600 members now in just 18 months. It's crazy blowing up because people are dying for a tribe that has street smart stack tax strategies. Street smart tax strategies. There's a tongue Twister. Go to markjkohler.com and book a demo today. Take control of tax season. Take control of your practice or your business. If I don't save you in taxes, what you pay to join my program, I failed. I want to hear about it. We've got so many different guarantees in there. Great ways to build your business. Markjcolder.com all right, Jack, so what are some questions?

Okay, well, I think you just found mistake number 11 which is not joining the Main Street Tax Pro certification.

That's right. That's your mistake number 11, people. Join the program, make more money. And I love the I've got young college students that are like catching the vision of accounting and advisory. The barrier to entry is not what you think it is. You don't have to be a cpa. Love it. I am. But you don't have to join and become a tax advisor and start helping other business owners. They need you.

Okay, we got a ton of great questions. But before I got a question for you. Is the is the therapy required to recover from this YouTube video a write off?

Oh, yes, it is. Because therapy or even life coaching is going to qualify as a medical deduction. So your health savings account could pay for that or you could deduct it on your schedule A. By the way, check out my article and video on how to write off your dog. I think I got seven ways to do that. So yes, therapy is a tax deduction.

Okay. Cowboy in Korea asks, can I open a 529 for my child and then if my child doesn't use the entire amount and has a child of their own, can I change the beneficiary for the remaining amount to be for my grandchild?

Yes, you can change the beneficiary. There are some unique rules in this area. I don't want to give you the specific. I've written articles on this. I'd get over to one of my just search Kohler 529 and you can see some articles of mine on the details of this. But yes, you can change beneficiaries. There's going to be some timeframes in which you can do that. You want to be on top of it and understand the rules. By the way, I'm going to tell you, I'm not the biggest fan of the 529. I love the Coverdell Roth. And in fact, can we go whiteboard? People? Watch this. Or on whiteboard. I like. When it comes to college education, I want no student debt for my kids or grandkids. The college debt crisis is insane. So I want to fund college with a combination of three things. 529, it's okay, that's fine. Plus the Coverdell, which is like a supercharged Roth IRA for education. And I love these. You can't put as much money in them, but they grow tax free and come out tax free. You can change beneficiaries in those too. Plus the Roth, because any contributions to a Roth can come out penalty and tax free for college. And the growth continues to go. So when I have a child or children of a client, I want them building an account of every one of these. And then when it's time for college, we're going to distribute and kick it to another kid if we have to. So look at the combination of the 529 covered. Ellen Roth. I've got articles and videos on that.

Okay. Dan asks, can I put. Can I put child health Medicare separate than my plan as wages on my S Corp payroll?

Child health, child what?

I think he means child health care expenses as wages on my escort payroll for their child.

You could. I wouldn't want you to do that. Let's. Let me reframe the question. How do you write off medical expenses for your children? Okay, Love it. Medical write offs. There's several methods. I love the hsa, the HRA and the fsa. That's the health reimbursement arrangement, the health savings account and the flexible spending account. Now you're going to use them in different ways in different instances. And again, I've got videos and podcasts on this. Go to my Go to Main street business podcast. I've got over almost 500 podcasts now, millions of downloads. There's several shows just on medical, but you don't put your kid on payroll and you don't increase your payroll to pay it. We're going to pay for those medical expenses with one of those plans. The worst case scenario is putting on a schedule, a itemized deduction because it's just not good and you got the seven and a half AGI limitation and just stay away from that. So there's plenty of opportunity with the hsa, HRA and fsa, especially if you have an S Corp and kids. This is a chapter in my book for those that don't have it yet. It's on Amazon, the tax and legal playbook. I think we're almost to a thousand. Five star or it's incredible. You got to get over there. It's one of the best and it has a whole chapter on medical and you can get on a Kindle and audio

boosh. Love it. Okay. Christopher asks, trying to buy portfolio with my self directed IRA. 56,000 down seller, finance the property, good rate and cash flow. But I can't personally sign guarantee. How can I get around this without disqualified transaction?

Love it. Whiteboard. So what everybody first name again?

Christopher.

Chris. So Chris is doing what we call self directing and we love this. I own real estate in my hsa. I own a crypto mine in my ira. It's good stuff. So let's say you have an IRA and preferably I'm going to even go, I want a Roth. So here's your Roth IRA and Chris said he had like 60 grand, right? About 60k. All right. So you could go buy stocks, bonds and mutual funds and ETFs and blah blah blah, and if you're lucky get an 8% return. Right? But Kris sees better. He's like, I don't want to do that. I want to go buy real estate. So what he does is he takes his Roth and he forms an llc. And you form the LLC in the state where the property is going to be located, not in Wyoming, not in Delaware or Nevada or some BS like that. You form the LLC in the state where the rental is going to be located and you want to go buy this property and use the IRA money to fund the llc and then you're going to get a bank to pick up the difference. So we're going to use this as a down payment, the 60k and we're going to go buy this property. Now here's the problem Kris is running into. It is a prohibit. This is all good. You can do this all day long. In fact, Kris, I'll give you another idea here in a moment. The problem is he, Chris cannot down here. So here's Chris down here. As the beneficiary of the Roth, he cannot personally guarantee the loan. No personal guarantee. That is a prohibited transaction. So what is the workaround? Well, there's several. The first one is you do a non recourse loan and we've got lenders that if you go to directed ira.com, we have a list of lenders that you can get there and they will not require your credit check. They do not have. You sign on this now, you might pay an extra 1 or 2% interest and they may want a little bigger down payment, but it's not on your credit. And we have clients do this every freaking day. So a non recourse loan is option one. Option two is in order to get the non recourse loan or even get a private lender, you might need to put in more money. When you form the llc, you can be a partner. Now you can't do this after the fact. You have to do it upon formation. Now you're going to want to go to kkoslawyers.com We've been setting up these LLCs for 20 years. We're the best in the country on setting up LLCs to be owned by your Iraq. You get a comfort letter, you meet with a tax lawyer, the whole thing's put together, we stand behind it. You may only be out 1500 bucks. It's not that expensive. So you might put in more money and be a part owner. So in this situation, you might put in 40 grand and the IRA puts in 60 grand. You own 40%, the IRA owns 60%. Then you've got 100k to play with. Now most non recourse lenders want about a 40% down and a 10% reserve. So now you're buying a $200,000 property. So the 100k goes down to the bank with a non recourse loan and you just got a rental property at 200k. Plus you're going to get better cash flow because you've got a 40% loan to debt ratio. So I mean debt to equity ratio. So that's a good thing. Number three, bring in a partner. So you could bring in a partner and say, you call me up and you go, hey Mark, you don't have to put in any money, I'll give you 40% but you go sign on the loan. I'm like, all I have to do is sign on the loan. And someone that has great credit and maybe a little money would say, hey Kris, you're going to go find this property and manage it and run with it. Okay, cool, I'm in it. Now you can't manage the property because your IRA owns 60%. There's other prohibited transaction rules, but you don't have to sign on the loan. You get a partner to do it and you may go, well, I don't want to give up 40%. Well, maybe you find someone for 30%. But the point is, it's not on your credit anyway. Meet with one of the lawyers at kkos and they'll help you design the deal.

Okay.

You want to pull up?

Awesome.

Yeah.

Yeah, that was awesome. One thing though, he just added, I don't know if this changes the dynamic here is it's seller financing.

Oh, better yet, yeah, that's great seller financing. Just don't use sign as a guarantor and the seller may want you to. And you go, I'll put more money down. Oh, and the seller finance was like, okay, because they get a first trust deed anyway, so if you default, they get the property back. So just put a little more money down. But don't you dare sign on the loan personally. Then it's prohibited.

Okay. Brett asks, how does filing taxes work for a new business with no income?

It doesn't if you're a new business with zero revenue. Now, when you say income, I don't know if you mean profit or gross revenue. So let's just assume it's no gross revenue. So you open up a lemonade stand in 2023, build a beautiful lemonade stand. Bought ice, bought sugar, bought. You even went to country time lemonade school. You were ready to go, but the winter came, you set up your stand and no one bought any lemonade in November and December in a blizzard. So you had no income, but you had all these expenses. Do you get to write off those expenses? Sure. In 2024 when you have revenue, you don't get the write off. In 23, I am so sorry. You have to have income gross. Sell one cup of lemonade, you unlock the write offs. But if you had zero revenue at the top, that business is in startup mode. You don't get to report it. Now, if you had at least a dollar of income and you have write offs and you have a loss, if you're a brand new business owner, one of the 40 million side hustles out there, you're going to report on a schedule C, as in Charlie, report all the expenses. La la. Now I'll tell you this too. Please go to my tax pro network and get a new accountant. You do not want to play around with your business in the first year on TurboTax. Love TurboTax love tax layer. They're great. But when you're a brand new business owner, there's so many things you're going to miss. Hire a decent accountant to help you scale your business. When you hire a good accountant, you should double your business growth or the Speed at which you grow because you're getting better advice and better support. So hopefully that helps you there.

Yeah, he also threw out. It's a multi member llc.

Okay. You have a multi member LLC with a bunch of people and had no revenue. You're filing a 1065. Once you file a multi member LLC, even if you don't have revenue, the IRS requires a tax return. And what's their first name?

Brett?

Bryce. I hate to tell you. Brad or Bryce. Brett. I'm sorry. Brett. Brett. The deadline for your LLC tax return was two weeks ago. Well, March 15th. And if you miss that deadline, you've. You've got to file right away. You're going to file 0, 1065. Get an accountant to help you do this. The penalty for not filing your extension a week ago or filing is $220 per member of your LLC per month or part thereof. So as soon as you hit April 1st, it's 220 ding times your three partners again. So these penalties are going to add up fast. Get that freaking 1065 filed. You're not going to get any write offs because you have revenue. It's going to still be pushed to the next year. But the IRS still wants a tax return.

Okay? Decon Auto detailing asks or says, I tried to get you guys to do my taxes, but on your website there are no certified accountants slash advisors in my area.

Oh, that's great. Did you hear that everybody? And this is cool. I'm being a little mean here. I don't care if your accountant is in Alaska and you're in Florida. It doesn't matter. I don't even. I had a different accountant last year because I don't want to prepare my own taxes. Brain on brain. My accountant was in Texas. I've never even been to his office. I do not care. People with Zoom, FedEx, fax, email, bleh. Your accountant should relate to you, speak to you, understand you and your business. You could be in New Jersey and your accountants in Phoenix. You could be in North Carolina and your accountants in Seattle. Don't worry about it. Find an advisor, an accountant that you can relate with. Young, old, male, female, big firm, little firm, ea, cpa, whatever. I've got it all on my network page. But don't worry if they're in your local area. Do not care.

Okay. JM asks an amazing question. If you hit the max FICA tax for the year with W2 income, do you still have to pay self employment tax from A Side Business LLC with 15k of net income with what?

15 what?

15k of net income?

Yes. Let me explain. Okay, let's whiteboard now. By the way, if you guys don't have my calendar, it's 25 bucks. 25 bucks. On my website, it's the March a Kohler 2024 trifecta calendar. I've got tax data, I've got the tax tables, a map of the country and which LLCs are best in which state for what and where you're at. And I've got all the calendars with all the deadlines of when you need to file things. It's huge resource. Okay, so I'm going there. I carry out my own calendar here now. What's their first name?

It's just J.M.

j. Okay, so here's the deal, everybody. So J. I'll just say J. Is that okay? So Jay has a day job, W2, and I'm going to assume he's single. Let's just play with that. And this could be a male or female, I don't know. So It's J, male, W2, and he's making north of 200 grand on a W2. Then he has a side hustle over here. Very common. 40 million side hustles today. And on the side hustle, he brought in 40 grand, spent 25 in expenses and netted 15. Okay, so he's got a net tax. He's got to get taxed on this 15 grand. Now he's going to get income tax. Remember everybody, you got income tax, fed and state tax, fed plus state on how much? 215 grand. Now we could take out age, you know, your standard deduction and a few things like that, but let's just hold it Constant. You got 200 grand on a W2 and 15 on a schedule C. All right, so you're going to pay tax on 215 grand before your Schedule 2 and 1 and Schedule A and all that good stuff. Okay, so 215 grand. But do you pay self employment tax on that 15 grand? Well, this year or you pay in 2024, you pay FICA. And here's the schedule. This is important, Jay, Everybody, you pay 15.3% on the first 168 grand. Then in this situation, when you're single, everything over. 200 grand. You pay 2.9% everything over. Actually, when you're single, okay, if you're married, it's 2.9% on. This is so tricky to explain. I'm just going to explain it this way. It's going to be 3.8%. There's a phase out in here. Between 168 and 200 grand. But everything over 200 grand plus is 3.8%. So 3.8% times 15,000, it's 570, $570. So Jay, you're going to pay $570 in self employment tax on the 15 grand plus your state and fed. So this is where, when I have clients that are making an extra hundred and fifty grand, let's say net, they're going to still want to run that through an S Corp because the 3.8% adds up quick. 3.8% times 150,000. Come on, Siri, help me out. 150,000 times 3.8%, it's 5,700. So now we're up to 5,700 and that's worth an S corp. And so we'd want to S corp you up. So anyway, everybody, you still pay FICA, it's 15.3% on this first amount, whether it's your day job or a small business. Then it goes to 2.9, then it goes to 3.8 because what you're doing is you're paying Medicare and then Obamacare. And that's how it plays out. All right, Jack.

Okay, Luis asks, I work at an accounting firm. Give me advice on how I can get my own clients so I can scrap the nine to five.

Oh, Luis, I love you. Okay, anybody out there that said enrolled agent CPA tax. In the tax industry, you can own your own practice and be making over 100 grand this year. I know it, I've seen it. And I promise it, you get involved, get engaged and get to work. You can do it. So how you start is get certified, come join the TaxPro network, and you're gonna go through these 80 sections or more, participate in weekly trainings, and then the business builder training is gonna help you start that practice. You're gonna get your own entity, your own billing system, you're going to get your own software going. And in our network, I don't take any of those client fees from you. Those are all yours. Soon as you're certified, you get on my network. We have, we have new advisors that are building their practice at 3x what they were making last year with new clients from the Mark Kohler network. And I just. There's so many people out there like Mark. I need an accountant that talks like you. You go to markjcohler.com, go to the network. Any of you that want to build a Practice. Come get certified. Now, Luis, once you're certified, your entity's set up and you're off to the races. You can start getting clients within a couple months, two to three months at the outset, and then you're building your client base. You're fine. You're quitting your day job before the fall, and you're making big money turning into next year. You can do it.

Okay. As a follow up tolo say asks what or how can I deduct the Main Street Tax Pro certification?

Oh, the Main Street Tax Pro certification is considered continuing education. And I do provide certificates of continuing education. By the way, it includes for free my two workshops a year. And for any of you that want to just kind of get a feel for me and the team and everybody in the community, I'm going to be in Salt Lake June 6th, 7th, 8th for the Tax and Legal 360 conference. And then it'll be in Phoenix in December. Premium tickets, $1,000, three days, 35 classes, 10 to 15 speakers, me on main stage every day. And we have a party, we have a music and band. It's so fun. If you're a member of the program, you get to come for free. Yeah. So please, any of you that are a business owner or a tax advisor, get on the calendar tax and legal360 and come in June and just get a better flavor of what we're doing. It's for real. It's legit. In our last. Our events are growing at 30% every time in attendance.

Okay, this is the last question here. Thomas asks, is there a number I can call to get a hold of your Main Street Tax Pro team?

Yes.

Ready?

Yes.

You give it to him here, write it down here.

I mean, all right, all right, all right.

Okay. 208-745-2865, 2865.

Please everybody call and just do a demo. The demo is free. It's like a half hour. You'll see what it's about as a business owner or as a tax advisor that want to be or your tax advisor now and you want to change. We have so many CPAs and enrolled agents that are like, I know tax advisory is the holy grail. How do we get there? Mark, I'll teach you and I'll give you the strategies to teach your clients on those calls. But here's the bottom line to just start consuming. Please, everybody, pick up my books on Amazon. Be here every week for my life. Go check out the podcast, Main Street Business podcast, the directed Ira podcast, and then get over to the websites, the law firm, my site. There's so much there. Blogs and weekly newsletters. I'm not going anywhere. I want to see you guys succeed. And I hope one of these 10 strategies that I shared you want to bring me back. I hope One of these 10 strategies I shared, 10 mistakes I shared hopefully endear yourself to me a little bit more rather than no judgment, please. And hopefully I'm going to help you not make those, any of those 10 mistakes just by hearing them. Be careful, be safe. Watch this again. Give it to a friend or family member or business partner. Say, oh, my gosh, mark Kohler shared 10 mistakes he made. They were pretty poignant and they were true. I didn't make those up. It hurt. They stung. So don't judge yourself. You're going to make mistakes. I make mistakes every freaking day. I'm reeling today from mistakes I made yesterday, frankly. We do it, but just wake up, dust yourself off, keep trying, don't give up. And just know that we're all out there trying to do our best and we're going to make mistakes as entrepreneurs. We're going to lose money from time to time. And a day job is not a bad thing. A day job could be a wonderful thing as you build your side business, but you should be investing. Have a business. And a day job. Don't put all your eggs in one basket. I think that was number three anyway.