Building Corporate Credit Q&A

3, 2 and 1. You are good to go.

Welcome everybody. Facebook Live. My name is Mark Kohler. Excited to be here with you. I'm on location in Southern California. It's not blizzardy and snowy like Idaho. It's sunny and beautiful, which some of you pay for. Here in Southern California. There's a cost, trust me. Now I'm a CPA attorney, best selling author. Help folks across the country in our law firm, accounting firm and trust company. I've got amazing partners and employees really on the front lines helping clients every day. I'm learning from them, they're learning from me. We're a team for the small business owner in America on Main Street. Now today's topic is corporate credit. Don't go anywhere for a minute. I want to just dispel a few myths, a few lies, a few scams, a few issues. First, corporate credit definitionally is your LLC or your corporation S corp, C corp or LLC with its own credit score, its own paydex score. You as a person, you and I have what's called a FICO score. I think we all know that that's your credit score. A company can get a paydex score where it can get its own credit. When Microsoft goes and borrows money, I don't think they asked for Bill Gates credit score anymore and have him personally guarantee it. But there was a day where he had to make that transition from him signing on the loan to go buy more processing boards or whatever to when Microsoft could get its own loan. You can do that as a business owner as well. That's corporate credit number two. There are a lot of companies out there that scam small business owners saying, oh, you can buy this shelf corporation that already has corporate credit or for this X amount of dollars, we can get you so many unsecured lines of credit, meaning unsecured by you personally. I have never in my career in 21 years now as a lawyer, as a tax lawyer representing you, the small business owner seen a client get what they were promised. Spending 5, 10, 15 or $20,000 for this shelf credit crap out there. Be careful, get a second or third opinion Number three, today I'm not selling any corporate credit. I have no plan. I have no package. I have no, oh, you give me five grand or two grand or my boot camp in Vegas or book or whatever. None of that. I just want to forewarn you and teach you about corporate credit strategies. I want to share my screen. I got some PowerPoints, not like me, no whiteboard today, but we're going to do some PowerPoint slides as well. And I want to take your questions, your concerns from around the country, from around the world, on Facebook through Entrepreneur, my own Facebook and YouTube Live, helping you figure this thing out. Okay. So that, that the point of number three there was I'm not selling any garbage that you're going to have to worry about. I just want to answer questions of advice and give advice. From what I've seen, my clients and me, I have corporate credit on a couple of my companies. Number four, Dave Ramsey. Love him, does great things, done great things for me and my family. But Dave Ramsey believes credit is bad. And for some people it is. It's like a drug. It's like they're an alcoholic and alcohol is bad in their hands. Some people can have a drink and handle it. Some people can have credit and use it to make money. Not all credit is bad in my opinion. If you're using a business loan to build a business or credit to have a rental property that cash flows. Using credit to make money, not to pay for a cruise around the world. Pay for your accidents and injuries and medical bills and all that crap that happens. We need reserves. We need to have cash in the bank. We need to pay off debt everywhere in our lives. If you need a debt snowball, I give them away for free. I've got a debt Snowball video and Excel spreadsheet. All you have to do is email me, Mark Kohler markjkohler.com and type in the subject line, snowball. Corey, in our chats, everywhere back in the studio, I've got Corey White, my studio manager. He's going to come out and bring and read me the questions that you're asking from around the country. But also in those chats, Corey, just say for free debt Snowball, go email markjkohler.com and type in Snowball in the subject line and my assistant will send you out a sweet little video and spreadsheet. A debt snowball helps you get out of debt extremely fast. Dave Ramsey teaches it. Suze Orman teaches all. We, we all teach these things. They're great. But when it comes to your business, I think having credit line or credit can help you go to new levels, good levels, make more money and be more successful. But you got to be careful. You got to not overdo it. And you always got to be conscientious of too much debt and the right amount of debt. It's interesting. Wall street, when they value a company and share price and all those goodies, they'll look at how much debt a company has. Sometimes a company with not enough debt, they value them low because they're saying they're not using debt wisely. People with too much debt or companies with too much debt get their stock price can be valued less because they've got too much debt. There's an optimal level at any size of business, even you on Main Street America. A hair salon, a landscaper, an engineer, an accountant, lawyer, contractor, a realtor or broker. We want to make sure we're carrying the right amount of debt that keeps us lean, mean and efficient and successful. So today's topic is about building debt. Building your business with debt. Boy, that didn't sound good, did it? Building debt. Building your business with the right amount of corporate debt or corporate credit. All right, now I'm going to. Corey, you've said I can share screen, right? And I can point out a few items that might be helpful. So I am going to just show a few slides here. And Corey, I'm going to go to share screen, you tell me if things are looking good. So I'm going to minimize that. And Corey, you're seeing my slide deck, right?

No, I'm not seeing anything just yet.

Okay, let's see. Maybe I need to go to presentation mode. Let me know. Anything there? Seeing my slide deck now?

Nothing yet.

I'm going to try one more and share. Let's see if this does it. There we go. Corey, I think I got it. All right, how about now you see in a slide deck.

Yes, we got it. We got it.

Okay, thanks everybody. I know there's a little echo when Corey comes out. That's just the way it is. So I appreciate your patience. So what I said and a couple slides that we talked about. Good debt versus bad debt, reductive debt, credit cards, auto loans, debt that isn't making you money. Productive debt may be helping you purchase your first home which I want you to pay off as quickly as you can. A rental property or even business credit. It's a good thing getting out of reductive debt. Build a debt snowball. The average American has credit card debt of $6354. USA Today. It's going to vary every month, every day, every year. But there's a school quote that might be helpful. Email me debt snowball please in the subject line. And I've got a video with the co author of my book, the Financial Freedom Book. Also I was going to say this. I've got two books that talk about debt. First in Financial Freedom, chapter seven is on dealing with debt as an entrepreneur. And also chapter seven in building corporate credit. I don't know how they both ended up on chapter seven. I don't even have to confirm that. But anyway, those books, those chapters can be so helpful on why entrepreneurs can get into problems with debt trying to manage their cash flow. I think you'll find you get both those books on Amazon can be very, very helpful. All right, now I want to use just a. You can go back and watch this and you know, go back and this would be available on Facebook and YouTube. So try to watch this. But here's a good example of not using debt wisely. I had some clients that had a home in California rental property worth 695 grand. It was pretty much a shack, right? But they had a mortgage of 245 and equity of 450. They had rent of 3,300amonth, net cash flow of 245amonth, cash flow of three grand a year. Now if you took the annual cash flow and divided it by the equity, that's 3,000 divided by 450 grand. Their rate of return was 6, 10 of 1%. Terrible. If they paid off the home. And that's why they came to see me. They're like, mark, we need to pay off this home because we're going to get 3,003, you know, 3,000 times 12. We're going to have 36 grand a year in cash flow. And I said, let's say you paid off the home and you took all that cash flow divided by your equity of 695. Look at that 5.6% rate of return. It's terrible. And they're like, huh, we never looked at it that way. And I said, Option two, let's sell the California home, take that 400 grand. Because after selling costs, we're going to have 50 grand of selling costs. Maybe let's take that 400 grand. We could go out and buy five rental properties of 200 grand each or $1 million multi unit or commercial property with 400,000 down. Now we've got 80,000 down on each property or a 600 120,000 down on a $600,000 mortgage on each of these. We got all sorts of options, right? Just look at these numbers. So 400k down? Oh yeah, that's right. 400k down and a $600,000 mortgage. And I just. This looks weird. I'm going to do it this way. 6, 400k down, 600k mortgage. Let's make sure, this makes more sense. I kind of confused the two lines. You're going to love this example though. This is very good. Or I was going to put down 40k down on these five properties. I could take this 80k mortgage and on five properties and have 120k equity. Alright, see I kind of screwed that up. I apologize about that. Now look at this. I'm going to get an 8% cash on cash return. That's 32,000 a year in annual cash flow. Now I'm getting the same cash flow but I'm using debt wisely to do it. And these are a couple examples on one big property or five little properties. And I think this is a really good way to look at things to try to make sense of it. All right, point management, whole other topic. I have a lot of people that try to maintain points for a reason and if they can do that in their business, points are not taxed and you can get a write off for business expenses to build points and redeem personally tax free. Pretty cool thing. Now I'm going to stop the screen here for one second because I want to make an important point. All right, so in this world of corporate credit and then I'm going to take your questions but I just want to get this point out there with a few more slides. When you're trying to build corporate credit, you can always do it faster when your credit is good because you're going to kind of piggyback your own credit to make your business credit grow faster. Some people are like Mark, I don't even want to use my personal credit or I have bad personal credit, I just want to build my business credit. Okay, that's fine, but I'm being blunt and being honest. When you start co signing on your business credit, you'll get credit faster and then you can step away personally in, in the future, might be a year from now, might be three years from now. But if you want to fast track your corporate credit, maintaining your own personal credit and getting it as best as making it the best you can have it the better. So another deep concept. Now I'm going to take questions here on any tax and legal matter that I can help you with. And that's what I'm good at is tax and legal. But this corporate credit thing is a big part of this and I just want to finish this short presentation and then we'll go to your questions whether they're on credit or not. So going down here to I want to get over to my slideshow and talking about building business credit. All right, so sharing my screen again. Boom, bada bang. And Corey, we should be good. And we back up to my screen, okay? The building business credit process. Seven steps. Number one, you got to have a legitimate business. A lot of people think, oh, if I just open an llc, I can build corporate credit. No, you got to have income, gotta have expenses. You gotta have a business purpose. If you're not making money, you can't build corporate credit. That's number one. Number two, understand that your business is gonna register with Dun and Bradsteet, Dun and Bradstreet. And be careful going to their website. You're going to get deluged with, oh, corporate building. This 500 bucks. 200 bucks here, 200 there. You just want to register with Dun and Bradstreet. Get in, get out. Now, if you see a service there that you want to pay for, that's cool. But you don't have to do all that. All you need is a Dun and Bradstreet number. Just get registered there. Then you're going to start building a paydex score, like a FICO score. Hang with me. The way you build that paydex score is by opening trade lines in the name of your business. A lot of them are really easy. The first ones you're going to get like home depot, Staples, Verizon, Sherwin Williams office supply stores. And you're going to go in with your tax id, number your company and say, I want a line of credit here. Not in my own name. I want it under my business. And sometimes you have to fight for this. Sometimes it's complicated. I'm not saying it's easy. This takes work, and it's not going to happen overnight. That's why a lot of scam artists try to sell you on these immediate lines of credit for five grand or ten grand shelf corporation crap. You want to go for it? Great. If it works for you, let me know. I'll buy you a steak dinner. If it actually works, be careful. But these trade lines are easy to set up. And they, they gonna, they're gonna start reporting to Dun and Bradstreet and paydex to create that score. That's what happens. Once you've been around for a little bit, maybe six months with these vendor lines, Then you're going to apply for business credit cards because they're going to run your credit, your business's credit score. And if you haven't had trade lines, you're not going to get a credit card. Now you can go out and search for the best credit cards for business and start calling him going, do you need my personal credit? Yes. Bye. You're gonna have to fight for this. Now some people, and this is on step five, I'm gonna put step six. Sorry, I'll come back to five. Some people will pay for a credit coaching company. I've always liked credit nerds. I like Eric Counts out there. I'm gonna give him a shout out. I've referred to him in my book and I think using a credit coach, they're going to help you find the right credit cards, the right vendor lines and they're going to have a fee. Make sure the fee is acceptable to you. Be careful, get a second opinion. If you're any company out there is again charging a large amount that you would think would be excessive. I don't want you to go in more debt to get debt. See what I mean? Be careful there. Back to step five. Ensure that your creditors are reporting your to Dun and Bradstreet your paydex score, maybe your Equifax score. This is saying that your company always pays within 30 days. I've had an American Express business card, I've had a credit line at Wells Fargo and I pay my bill on time and they report my credit score on my business tax ID number, not my social. Practice good habits. Make timely payments, don't ever get behind or else you're going to kill your credit score real quick. Now I want to be careful here before I go to that next slide. I had some extra info on there want to be cautious about. Okay now I'm going to go back just sharing my screen here and because I'm not offering a discount with any vendor or anything and I had a little something there from a prior presentation. So here we go. So number seven was practice good habits. Don't max out your cards. Same principles of principles as building your personal credit score. Make timely payments, yada yada. So those are my seven steps to to build corporate credit. Now there's people that give full day classes on this, people that have written books on this, people that sell this service. That's okay. Just beware of schemes. I'm just telling you my seven steps that I've seen clients use, I've used and it takes time to build corporate credit. It doesn't happen overnight. It takes time. Be patient and try not to get so suckered by paying big fees up front to get corporate credit in kind of a too good to be true manner. All right, Corey. Well I'm going To go back to you now and I'm just going to drop my screen there and we'll just kind of go back to answering questions here for the next little bit. And I hope I can be of service to some of you. So Corey, what do you got?

All right, all right. From a JMac, if I make 30k a year. From a side hustle, should I start with an S Corp?

Okay, J. Mac, here's. This is good for everybody. The questions I would ask J. Mac in a consult would be, is that 30 grand gross or 30 grand net after expenses? If J. Mac and I'll answer both of them if Jmax says, Nope, I'm making 30 grand gross driving for Uber. I know clients that make 30 grand or more driving for Uber, but that's gross. See, we're going to write off computer, cell phones, mileage, maybe even depreciate your car bonus depreciation. It could be an suv. I mean, we got a lot of write offs. Home Office. If it's 30 grand gross, you're probably only going to net 15 to 20 when I get done with all your write offs. So I would not see the need for an s corp with 30 grand gross in a side hustle. Now let's say gmax. No, no, no, Mark, I'm bringing in 50 grand and I've got 20 grand in expenses. I'm netting 30. Okay, I'm going to start asking, what state are you in? How's the business looking? Do you think it could go up before the end of year? And he goes, J. Mac says, yeah, I could be making 40 or 50 net by the end of the year. Here's what I do. I'd set up an LLC immediately because I can backdate an LLC into an S Corp. If you do hit 40 or 50 grand. Most of my clients, the break even point for when an S Corp makes sense is 40 grand net, not gross. So they're bringing in 60, 20 grand in expense expenses. We're netting 40. Boom. I'm going S Corp in JMac. If you set up an LLC right now in the first quarter of the year, I can backdate it to an S Corp. If you wait till the end of 20, 21 and go, Mark, I did it. I made 40 or 50 grand. I can't freaking backdate that. You've already, you've already been doing business and there's no LLC there. You're just a sole prop. So I call it S Corp insurance. Set up an LLC now, be ready to convert it to an S Corp. Later if you need a consult. And this is not an infomercial. That's why entrepreneur lets me go live on their Facebook and our YouTube and all this because we're not out here to just sell, sell, sell. But if you do need a consult, work with our law firm. Set up a half hour with one of our tax lawyers. It could be as low as 150, 300 bucks to just get on a call and say, here's my numbers, here's where I live, here's my business. Tell me what entity I should set up. Too many people just go online and go, ooh, I'll just set up a LLC online because it's cheap. It's 150 bucks. And then they end up calling us later. What the freak did I do? And it's a mess. So be careful. Jmac, get a consult for a half hour to an hour with an attorney. We include that console in the setup of any entity in any state for 800 bucks. So that way. And shop around. I'm not saying you can use us. You can shop around to find the right price. All right, Corey, next question.

Yes. Awesome. This is from YouTube. A Ronald Anderson. I plan on starting a holding company for my trucking company. Should I establish business credit in both companies?

Wow. Okay, this is good. Usually the business credit is only going to be. And Corey, I'm going to go back. I've got my business owner workshop that you can still buy on my website. I'm going to pull up the slides and I can jump around into some of those slides. So Corey, I hope that's okay. I'm going to share screen again here. I think some of you will love these slides. If you have went to my business owner's workshop, these slides are going to look really familiar. This is the trifecta that I've been teaching for years. And so if we're setting up a trucking company, sometimes clients put the trucks over here in the LLC and lease them back to the trucking company that provides the services. See, we have assets on the right, operations on the left. Usually I don't build corporate credit up for assets. When you're buying trucks, rental property, land, VRBOs, Airbnb, vacation property, you're going to be signing on that credit. Corporate credit really works on the operations side for a credit line. Maybe you are going to buy some trailers. Maybe you're going to buy some copy machines, some equipment, some tools. You're going to get a snap on tool package and you're going to be putting in a Shop. And did you say his name was Ronald Corey, Is that right?

Yes.

Oh man, I guessed right. So Ronald, I get normally what I see. Nine times out of 90% of the time you're going to build the corporate credit on the S Corp side. That's what I've done. The S Corp side, when you're getting your operations for the trucking company going, the trucks, the rental property, the shop, the truck bay, the building where you repair all your trucks, that's gonna be on the LLC side, typically without corporate credit. So that's kind of how that goes.

Hey Mark, go to the back of the camera and press that little button on the, on the camera real fast.

Oh, the info again. Yep.

No, no, no, on the camera. Go to the camera.

Uh huh. I'm on the camera. And just turn it off. Okay, there we go. And I'll get rid of all those, right? Yep, there we go. Okay, so this is when I'm on location, people. I don't have Corey White on the other side of the camera. So I gotta, you know, do this. But look at that, look at that. Bam. That's nice. Focus makes me look good. All right, Cory, next question.

All righty, we got your firm just did my taxes and I filed joint with my husband. Can I buy our personal home and buy a rental property at the same time?

Oh yeah, I love it. So. Yeah, absolutely. So when you go to buy a rental property, if you're married, you might put the rental property loan under the primary wage earner. That might be you, you have a stay at home husband or his job is part time and he's building a side business or building the business at home and you've got the W2. So you're going to go get maybe the loan for the home and the rental property in your name or one or the other. So everybody be careful. This is an important technique is don't always go apply for loans in a husband and wife name because now it's going to show up on both of your credit. So one of you might go get the home loan for the primary residence and one of you might go get the rental property loan. Those are on two different credit scores, two different reports. You can do both, one or the other. Also Corey, I got a question here on. This is from Instagram, from Shaelyn, you sent it over. She said, can a sole proprietor. This is from Will Grandos. Can a sole prop with a registered ein build corporate credit? Generally, no, you're going to need to get an LLC with an EIN at Bare minimum. And sometimes it's better to just go the INC route. If your business is legit and you're making money, just pony up. I did Mark J. Kohler Inc. You know Mark J. Kohler Professional Corp. Got my ein. Got a credit line right out of the gate. Wells Fargo Chase B of A, they have credit lines for small business owners. Go in and see what they need. You will personally guarantee it, but it won't show up on your FICO score. It won't show up on your credit report if it truly is a business line of credit. That's the beauty. See, if you've got a good credit score, it helps your credit get the. Your company get the credit line, but it doesn't show up on your credit score, which I love. All right, Corey, go ahead.

All right. I have one from YouTube. Ya boy. Diesel, how much do you charge for CPA tax services to do the S Corp dividend tax write off on an llc?

Okay, Du Bois, and this is, I wanted to tell you our prices and then you go out and compare them and I'll tell you kind of what to expect. Okay. Now folks, if you set up an LLC for your small business, our first question, I can't remember their name, but if you're setting up an LLC and you're not ready to make the S election, you're just doing the S corp insurance. So you have the llc, you start building credit, you get your ein, okay? A single member LLC without an S election that's going to go on your 1040. Our charge for a personal return with a schedule C might be around 800 bucks. And it depends on how messy your books are and if you need some strategy sessions and all that. But I think any of you out there shopping around whenever you have a small business on your 1040 and you're going to someone that's sharing some strategies, you're going to be anywhere from 400 to 800, maybe a thousand dollars on the high end for a 1040 tax return with a small business inside of it on a schedule C. If you go to kind of more of the strip mall level like an HR Block or some or Liberty tax, you might get that as low as 2 to $400. But they're just plugging in numbers and getting you out the door, which is fine. Some people just want that. They don't want any strategy, they just want it done. And hopefully right now, once you take your LLC and make an S election, now you're an S Corp, we charge 150 bucks for an S election. So when the time's right, you got to do the 2553 and you're going to file that form, we take care of it for you to make sure it's done right. Then you're going to do an S corp tax return. Our S corp tax returns are 1200 bucks. Now again, on the low end you might find someone doing them for $800, maybe a strip mall strategy for $600. But again, you're not going to get much support and advice in that. And you want to make sure you're really maximizing the self employment tax savings. So the person doing your tax return, if they're not even adopting some of the strategies I've shared on in my book, and cramming down that payroll to this the proper level, it can be constant. Cost you more in self employment tax than what you're really saving. Going with someone cheap, you may say, well mark, you charge 1200 bucks, I can get someone to do it for 600. I'm like sure, you save 600 bucks. I want to save you three grand in self employment tax. And if we tell you what payroll to take and you lose or there's a problem, we'll pay the penalty in tax. Whoa. Okay. So sometimes paying for a little bit more service for a tax return, we're hoping to save you three or four times that. So shop around. But I think you're going to pay for an S corp tax return easily 6 to $800 and somewhere 12, 1500, you may spend 2, 3. We've got clients, we charge 4 or 5 grand but they have lots of transactions and lots of things going on. So it's not a flat fee. It depends on how big your business is. I'm sure a public company is going to spend two or three hundred grand on a tax return. So there's just more moving parts. Now everybody, don't forget, if you have an S corp, the tax return at the end of the year is that average of 1,000 or so. But you've got to do payroll reports every quarter. Even Costco has this service. So for S corp owners, but you're going to spend about 150 bucks a quarter just doing your payroll reports. So if you think about it, an S corp is going to cost you two grand a year. I want to be saving you three times. That's. So before we make the jump to an S corp, let's make sure we're seeing the savings. Okay, Corey.

Awesome. Awesome. Okay, I got one from a genie. What is the DTI threshold for a small business LLC. I'm an RE investor with consistent private money loans. My LLC is 3 years old and I have a few vendor accounts and one bank bank credit card.

Well, okay, the DTI ratio is your debt to income ratio. And different banks when you go to apply for a loan might want a lower debt to income ratio. They're like, we're more conservative. Other places are like we don't care as much and they may charge a higher interest rate. So places that want a lower debt to income ratio are usually going to give you a better terms on the loan. People with a willing to take a higher debt to income ratio are going to charge a higher interest rate. So the first thing I'd say is there's no perfect debt to income ratio. It depends on what you're doing. What I try to do in my rental properties is I always want to have at least 20% down. I want to be showing 20 to 30 or 40% equity on any of my rentals. It's safer. I'm usually getting cash flow because I have a lower debt to income or the rental ratio. If you just put 5% down, you've got a really high debt to income ratio. So you may not cash flow. In fact, you could be negative cash flow and you could be paying mortgage insurance premiums. You don't want that on when you're trying to cash flow. So Jeanne, I would just. It was. It's Jeanne, right? Corey?

That's correct.

Oh man, I'm being, I'm getting lucky today. So Jeanne, I should write it down as soon as you give me their name. But Jeanne, I would say and regrettably this isn't what you want to hear. It depends on, it depends on your objectives. There may be a property worth going into a higher debt to income ratio because you know you got a killer deal and you'll be able to put in some repairs and refinance in a year and then lower that debt to income ratio. I think back in 2005, 6 and 7 is when people really learned the hard lesson of not caring about debt to income. They put zero down and just get a loan. And then when the values dropped, they were screwed. So this is where Dave Ramsey and say you shouldn't even worry about it. You should save up the money, pay for the property in cash. Okay. Now Dave, I don't know if I want to go that far. So there's a balance and it's everybody's different where they're going to meet somewhere in the middle. All right, now I want to look over at this from Ashland. Sent over another question on Instagram. Does my personal credit is my personal. This is the question I believe. Is my personal credit required to get corporate credit? No, but like I said earlier, it will expedite your corporate credit. If you want to get corporate credit going co sign a little bit, make sure your personal credit score is better and that's going to really expedite the process. Then you can pull back your personal guarantees on those things. Another question. What is considered a home based business? How do you build corporate credit with no pg? No pg? Corporate credit with no pg. I better. I don't even know what if I know what that means? And I'm going to just do a quick, you know, the good old Google search to see if I can figure out what they mean. Credit with no pg. Oh, personal credit. Maybe that meant PC. Oh, no personal guarantee. Okay, embarrassing. Okay, now I see what you're saying. Sorry, everybody has these little acronyms. They do this. Okay, so I'm going to repeat Nick's question. What is considered a home based business? Okay, that's question one. And then number two. How do you build corporate credit with no personal guarantee? Okay. Home based business. You have a home and you're doing business. Boom. Easy schmeasy. You could be driving Uber. You have a home based business. Grubhub. Home based business. You're selling crap on ebay. Home based business. You're selling as an affiliate on Amazon. You're an engineer, you're a corporate credit counselor. You're a, a realtor with a home office. Anything you're doing where you're getting a 1099 as a subcontractor, small business owner. And you have a home office, which I want you to have. You got a home based business, you're rocking it. And I love, love, love, love home based business. Okay, the second question was, how do you build corporate credit with no personal guarantee? Very slowly. It's very hard. You're going to start out with low vendor lines, like I said at Home Depot, Verizon, anywhere you can. A lot of times you're going to put cash down as a deposit. If you say I'm not going to sign a personal guarantee, then Verizon may say we want 500 bucks down as credit on, as cash on the account before we give you a corporate account with no personal guarantee. And there's different platforms, places that will go that route. So it takes time. And I do your research, I call Eric counts at credit Nerds. You can just google that credit nerds. Eric counts say Mark Kohler sent you. You might get a little extra love. Can't promise that in a discount or anything like that, but just say Mark Kohler sent me and ask him that question. I need corporate credit with no personal guarantee and I know Eric said I'm not going to charge $20,000 to get give you crap. I wouldn't refer him if he would do that. But be careful going out and asking people for that and get a second or third opinion if anyone wants big money up front. Okay, Go ahead, Corey.

Awesome. This is from John Wyden on Facebook. I have five restaurants with five separate LLCs in Tennessee and I think I'm well overdue for an S corp. Are we too late in the year to set up an S corp?

Maybe. Now that was John, right? Yes, John, thanks for listening and watching. I appreciate that. By the way, I've been knee deep in Tennessee on the fonts exemption today, so I've got a good article on the fonts exemption. F O N C E. I suspect you already very well know what that is and you're making the exemption election. It's due by May 17th unless you extend. So look into that, John. Absolutely. I can suspect you're well beyond, far beyond. You need to be thinking S corp immediately get a consult with any of my tax attorneys for just a half hour to an hour and if we do some additional work that's flat fee, we'll apply that retainer for an hour towards it. So well worth it. And we want to work with your current cpa. Except I don't know why they haven't already got you into an S corp. So you might have to reconsider who your accountant is. But so whoever you go to as a tax lawyer, as a tax law firm, they should be willing to work with your current accountant and bookkeeper. So that's another point. Is it too late to be an s Corp for 2021? Hell no. You can make that S election anytime this year and make it effective 11:21. We're good. The question is, could we make you an S election back to 1120? Maybe. It's going to depend on your payroll structure for yourself. You shouldn't be taking a payroll for yourself out of llc. That's not allowed. But again, your accountant has kind of dropped the ball on making you an S corp, so they may be doing some other things wrong. I get a review right away, especially before you file for 2020. We can maybe backdate that into an s Corp for 2020 major savings. I usually. What I do, John, and everybody is I have a parent company that would own all the restaurants and that would be the S corp. So, John, you're going to keep the four LLCs or five LLCs and let them do their own merchant accounts and eins and banking maybe. I don't know how you're structured. You might be a series LLC with sub series in Tennessee. So there's lots to talk about. John, make sure you talk to one of my higher level tax attorneys. We've got senior associates and junior associates. You're going to want a senior associate for that question. Okay, let me get one other question on Instagram here. And I think Instagram's covered. I just see, I need to put my glasses on. Okay. I just filed my LLC last month working with a regional bank for banking. What next? I just filed my LLC last month working with a regional bank for banking. Now when Mike says he just filed his llc, I have a feeling he just filed and created the llc, not filed the tax return for the LLC which would have been for 2020. So Mike's saying I just filed my LLC and set it up a month ago. And I'm working with a regional bank. What next? Oh my gosh, Mike, I'm just, I'm going to share my screen for a minute and I'm going to try to. I'm not trying to be too salesy here, but I got, I got to tell you, what I want you to do is I would like you to go watch my business owner workshop. I'm not kidding. You would love this. So we, what I do every year is a business owner's workshop. This was December 4th. I go for two days and I do building a financial, managing your business, legal and tax structures, top 10 business track strategies. This is what we're going to cover over two days. I have a workbook here with how many slides, 82 slides we're building in grandkids and paying kids under age 18. We're talking about the travel write off, auto, SUV, new auto deductions, home, office, electronics and more. Dining. All the new strategies with dining checkbooks for how many rental properties you own. All this over two days. I think it's, I think it's currently 199 or 299. And you can get it on my website. I almost took it down this last week and a client called and was really upset. They're like, mark, I just bought this a month ago. I'm still watching this So I put it back up. But this fall I'll be doing five locations again. And so I just recommend Mike, any of you out there that just don't know where to go next, that's very affordable. Two or three hundred dollars and you got two days of just content. If you can put up with me and I got, I do Q and A through the whole thing, you'll freaking love it. So you get the PowerPoint with it too. All right, Corey, go ahead.

Awesome. This is from a sassy exec. What's the best way to qualify for a house at a particular price but minimizing taxes?

The best way to qualify for a

house

and then the best way to minimize taxes. Sissy, I would say. Or sassy. I say two different things. Let me repeat that for everybody. How do I qualify to buy a rental and how do I save taxes on the rental? Two different things. Now on that note, I guess the slide where you're just on there for a moment was this. Rental property tax benefits. I go through how to price a rental property and make sure that you're not buying a wrong property. I want to look at your ROI based on appreciation, mortgage reduction, tax deductions, cash flow. And then I look at all the write offs. Rent minus interest, property taxes, insurance, depreciation, hoa, other utilities, travel, dining. Ooh, entertaining is no longer a write off at the moment. I'm going to correct that. Home office tech. This is going to be a loss on paper. You're going to lose money on paper even though you're growing the property in value and you're cash flowing. It's just awesome. You might have carry forward passive losses, which is typical. And I love that. I own rental property myself and the rental properties go into an LLC and we're gonna just try to maximize all those write offs. I talk about checkbooks. How many checkbooks should you have for yourself and your trust, your rental, your S corp saving money for taxes? Oh, I love this slide. Asset protection. Do I do one LLC with all my rentals in one? Do I do three LLCs? And I'm just using Arizona, Idaho and Illinois. I could do series LLCs. I could do the parent cope entity. That's a charging order protection entity. So that's really cool. So Cissy, I think buying the rental and qualifying for it is really about the appraisal. How.

You're still going.

Oh, okay. I didn't know if everybody was to hear me. Screen look. Okay, we're all right.

I think it was just from WI Fi problems We're good.

Okay. Okay. Wi Fi problem. Thanks everybody for your patience. Here, here's what I would say. And all of you, you're gonna love this. I have two or three articles in a little video on analyzing a rental property and I give you a spreadsheet or two that I use. I'm not saying I'm perfect at it. There's people that teach week long classes on buying rentals. I buy rentals and I try to be as smart as I can about it. If you want to email me again mark@markj kohler.com and in the subject line put rental property analysis and I'll send you some free articles and a video and I think there's a video in there and then a spreadsheet. Check it out. I think you'll love it. And I think it could really help you help analyze your properties and then sase. I'm sorry, you're going to track all your expenses. Track them all. And that's where my little workshop for two days could be helpful too. Pick up my book, tax and legal playbook. Oh, I've got over 100 videos on YouTube. I don't know where to start there. We're going to save taxes on that rental. But it has nothing to do with. See everybody, the making the decision to buy a rental is different than once you buy it. Maximizing your write offs. Two different things. So remember that. Okay, Corey?

Awesome. Awesome. Okay, I got one more for you. What's better to get an equity loan or a mortgage loan, spreading out the payments longer than 30, 30 years.

Okay everybody, let's do a little, let's do some definitions. A mortgage is typically a first mortgage is the most common. Right? I'm going to go buy a property. I'm going to put down 20%. Let's say it's a $200,000 property. I'm going to put down 40,000.

Hey everybody, sorry, I think we're having some bad WI Fi problems. He's all the way out in California. So thank you guys for coming. If you guys want to check out anything on our channel, make sure to go to markjcohler.com go check out the business owners workshop. If you guys want to go ahead and grab that and you can see all of the slides and updates from throughout the year and everything we've been talking about this whole live session. All right, thank you guys so much for joining. We'll see you next week. Bye.