Mark Kohler presents his payroll matrix for determining W-2 salary based on business profit, built around a revocable living trust that owns both a rental LLC and an S corporation. The S corp pays salary while remaining profit flows to the owner's 1040 return, a structure Kohler uses with high-net-worth clients.
Chapters
I have developed what's called the Kohler payroll matrix. And what it does is it gives you a rule of thumb of what your payroll should be based on the profit you take out of your business. In the trifecta, the foundation is your revocable living trust. It's also kind of where I'd like all your money to go, called your 1040 tax return. We're then going to split your life in half. And over here, we're going to have operations and assets. Now, over here is where you might have an LLC that owns your rental properties. It's going to be owned by your trust. Trust owns your llc. LLC owns the rentals. And you're going to have your own checkbook over here for that type of stuff. Passive income. We are never going to put an S Corporation over here. On this side, we might have an LLC that we graduate and transition to an S Corp. I have another video on when, where, why, and how to use an S corporation. Please go back and watch it if you haven't already done so. But in this S Corp is where we're going to peg our W2 or this salary. And then all the rest of the profit comes down here into our 1040. And our s Corp is owned also by our trust. This is the trifecta, an S Corp, an LLC split in half, owned by my trust. That is the foundation of every wealthy client I have and how they build more and more wealth.
