How to Start a Business! | Mark J Kohler LIVE |

Tax attorney. There are so many great professionals out there in the country and I rely on so many experts out there to gather information for my own team and our clients. And then I tried to disseminate it here for you. Every Thursday at 4:00', clock, we're Facebook Live, YouTube Live, Instagram Live, and recording some short vids for TikTok. We're trying to do it all in one shot, making our time very efficiently used. So anyway, as an entrepreneur, myself and a CPA and attorney with a firm that's really dedicated to you guys trying to help the small business owner. I'm generally anti Wall street, so I say that I'm going to get hate mail, whatever. I'm all about Main street versus Wall street, baby. So we've got a lot of questions here today and a few general topics that I want to just kick off with. And then we've got more questions than we can answer. Also, I have Darren Charrington, one of our tax attorneys here in the studio today. He's going to be answering questions live on the chat. So if you want to throw out, don't write a book, people, but if you want a paragraph at most and ask a question about your situation in your business and your personal tax return, type it up. Darren's gonna try to reply where he can and he's gonna throw out questions to me throughout the broadcast as well. We're gonna be here for one hour. This is all for you. Ooh, are we gonna give away some books today? Throw some books at me. So I've got several books on Amazon that are bestsellers in several categories and oh, here's one right here, what your CPA is telling you. This is a story gateway drug to learn and tax Strategies. You're gonna freaking love it. Someday it will be a made for TV movie. Then the Business Owner's Guide to Financial Freedom. We'll give away one of these. This is for my clients that are being, that are successful in business. They're making money now. They're kind of through that first three to five years of tough mucking it out in the trenches, you know, and what Wall street isn't telling you, what you can do with your business profits. Driving all the money back into your business always isn't the best thing to do. Next we got the Tax and Legal Playbook, second edition, Game Changing Strategies. Each chapter can be read independently on tax and legal strategies that you just read at your leisure. Got case studies in there, stories, tables. I try to make it very, very layman terms, user friendly. This is the best selling tax book in at Entrepreneur, Entrepreneur magazine. My publisher want to give them a shout out. So we'll give away that. And then finally my partner's book, the Self Directed IRA Handbook, 2nd Edition. So if you want to self direct your HSA, IRA, SEP 401k, even buy cryptocurrency inside your retirement account, buy gold, silver, stocks, anything small business in your retirement account, you're going to love it. So if you have a question on that, I will answer them. And also going to give away that book. Now, to win the drawing, you've got to give. You know what, Corey? Can we do it? Let's do this. We're here for 60 minutes. We're going to give away five books every 10 minutes. So we got our first 10. And we'll give away a book and we'll finish at the hour. So we'll give away five books every 10 minutes. But what you have to do to be eligible is you got to try to share your share the broadcast. They do that. Facebook, whatever, YouTube. Okay, you share it, people. Thank you so much. Okay, now the first topic today, by the way, I've got the word fiat up here because when you set up your typically a coinbase or a Gemini account to buy cryptocurrency, the currency you deposit is called fiat currency. So like US Dollars, Japanese yen, Mexican pesos, whatever you start your account with is called fiat currency. And then from there you can buy Bitcoin, Ethereum, Deutsche, whatever you're gonna buy. So that's that. So that's why it's up there. We were talking about cryptocurrency earlier. Okay, the big question in the title of today's webinar podcast, what are we doing live? Social media live is what do you need to file legally to have your business up and going? Now, that's a tricky one. Let's go through some different options here. I haven't answered that question. And my marketing team was like, you got to answer that question. I'm like, all right, so let's see what we can do. Oh, there. My bike's fine. Okay, the first option is you can be a sole proprietor with your own Social Security number and you can just. I'm going to call that option one. So option one, the sole prop with your Social Security number. I know that looks a little ugly. Let's clean that up. And so Social Security number. My producer is getting in here, fixing my mic. I'm all jacked up. Huh? What happened? There we go. All right, I'm Gonna let him do that while we're here. Now, sole prop, Social Security number. Do you need a business license? Oftentimes you don't. You can start selling jeans on ebay or selling on Craigslist or whatever you're gonna do just right as a sole proprietor. So depending on the type of business, you're off to the races. Now, let's say you're selling a product. So if you're selling a product and you're a sole proprietor, you can still do that, but you're going to need to get a sales tax ID number and you're going to have to collect sales tax generally. Now if you say, well, I'm selling it on the web, I don't have to. Well, different states are starting to crack down on that. So you want to research your state and what the rules are. If you're going to sell on the web, and many times states say at least you have to collect sales tax on the people in the state where your business is based. And if you go, well, I'm based out of Nevada. No, if you're working out of your basement in Arizona, you're doing business in Arizona. Don't think you're going to get away with that. You ultimately get caught. Not good. So if you're selling product, you'll need to get a sales tax ID number, sometimes called a resell ID number that's going to allow you to buy product wholesale, even at Costco. You won't have to pay sales tax at Costco because you're going to quote, unquote, resell it. That's the theory. So you're off to the races. Do you need a business license? Again, that's a local, city, county thing. There's many times the city or county, I've been in business for years, sometimes I don't have business license. Fine, go pay 50 bucks. I mean, it's just another way for the city or county to get money for, you know, local type business services, I guess. But you're not going to jail if you don't get a business license. Now where it starts to get a little trickier is when you say, I want asset protection. I've got my lemonade stand. I'm just a sole proprietor and I'm. I want to get protection. That's when we start to form an entity. And when you form an entity, we go into realm. I'm going to call this number four because I missed a three. I want to talk about if you're going to form an entity, whether it's an LLC or a corporation, you're going to have to file with the state and you're going to have to get a tax ID number and you're going to have to have a registered agent address. That's where someone can accept mail at a street address. You can't do it all PO Box. And you're going to have to have a company address which can oftentimes be a P.O. box. So you can have a P.O. box with your street address. But when you go down the entity route, there's. There's all this and more bylaws, minutes, membership or stock certificates. And this is where we have a service at 450 bucks, $800 to meet with an attorney at the high end here and get it designed and set up in your state. We had someone recently come to our offices, spent three or four thousand dollars on an entity, and then came to our office and asked, what do I do next? And they were really. It was really kind of frustrating or sad. But we try to be extremely affordable. We haven't raised our rates on setting up an entity in 10 years. We're just trying to get more efficient and helping you get started. Now that's option four. So let's make that option four and we can answer some questions there. And I've already got a couple questions on this topic from Patty Arthur. This is good. So we're going to come to a lot of those questions here. Now, number three, the reason why I skipped over one is if you're forming a business, there might be some regulatory filing that you have to do with what's called doppel to Department of Professional Licensing. For example, let's say you're a realtor. You're going to have to get licensed with the state so you could be a sole proprietor for federal purposes. Maybe you don't even get a business license, a business license for county purposes. And you don't get a sales tax ID number because you're not selling product. But you're a Realtor. So the division of real estate wants to monitor you. You could be. So I'm going to put a professional license here and think of all of them, right? You could be a doctor, a dentist, a lawyer, a realtor, architects, engineers, physical therapist, chiropractor. All these people might have to get marriage licensed, marriage and family therapist. All these people have to get licenses to be legal. So you might have to check with your state on regarding the professional license. Also, when I said the word lemonade stand, there's been cities across the country and oftentimes I get an interesting post on social media where cities have come and shut down kids because they didn't have a business license. And you're like, really? Or who else might go after a lemonade stand? Who might. I'm asking my team in here. Well, it might be the food department, right? They're going to come and go. You're not sanitary. This is a mess. You're going to make someone sick. So whenever you're selling food in a food truck or at a fair or at a farmers market, you might have to get licensed with the local food department. For lack of a better word, they're going to have different names around the country before you can sell food. So all of these unique licenses to be legal are. You're going to have to look based on your certain type of business. All right. The last thing I'm going to just say is, let's see, 1, 2, 3. Maybe I should change this so it looks a little more normal. Make that three and this four. Okay, so we have three up here. Have an entity professional license. A business license, again, is a county or city thing. To be legal, you might need to get insurance. Some people are required to get insurance. The more formal your business is like a bank or a trust company. You have to get licensed with the feds or the state, typically. Let's see how it goes. Let's see what questions you might have about being a legal business. Now, saving taxes doesn't mean you to be legal. You're going to do something to save taxes. Those don't go hand in hand. You might say, mark, what should I do to save taxes? Well, that's a different question than what do I have to do to be legal to run my business? But here's the big one. I just want to say this in summary and I'm all yours. For Q and A is if you're going to start selling product or services. I was telling some neighbor kids, go out there and start cleaning garbage cans. Go out and detail a car. Go out and mow a lawn. That sole prop mentality of just getting out there with under your Social Security number, nine times out of 10, you're going to be fine just getting out there. But when you start to have employees, you start to sell product. It's a professional license. You might need to get insurance. You're worried about liability. That's when we're going to start doing these other things. But I tell so many people, just get out and go. Just start driving for Uber. Just get out there okay, Lots. Oh, look at this. Colleen says an HOA shut down my child's lemonade stand. It was probably Boca Vista. The Boca Vista Homeowners Association. Colleen, you know who I'm talking about. Yes. That was where Jerry Seinfeld's parents moved in Florida was to the Boca Vista hoa. And, boy, we knew how bad that went. Right, Colleen? Thanks for sharing that, hoas. Okay, well, I'm going to do a few questions that relate to this topic. One of them was from Patty out in Northern California. Love you, Patty. She says, does every LLC really need its own bank account? Yes. If you're going to have a business, you've got to open a bank account because that's where you get the separation of liability. So let's look at our trifecta here. So let's say this is your trust, married or single, and this is your day job. And then you have this little side hustle over here. So you have this side hustle, and maybe it's a sole prop, maybe it's an llc, maybe it's an S corp. So you could be any one of these things, your little side hustle. Well, if I open up an llc, I've got to get a bank account and treat it separately with its own set of books and respect the corporate bail. Because if I want protection, having separate accounting is one of the first things to do. So down here, I have my personal 1040 and my personal bank account. But then up here, I have my business bank accounts. And then if I have a rental property, you. It has its own bank account. And then here's my little rental over here. So, Patty, great question. Sorry, everybody, Every LLC needs its own bank account. Okay, Darren, when you want, you give me a note. When you want to throw out a question From Facebook or YouTube, I'll just keep plugging along here on Instagram. Can I have a nominee officer for my Wyoming S Corp? Now, Arthur, this is an interesting question because a lot of people said 15, 20 years ago, Nevada came up with this, and people started to kind of abuse this, and Nevada said, no more. Is that people would say, I don't want anybody to know that I own this company. So I'm going to appoint a different person as manager or officer of my corporation. So if I have this S Corp over here, I would appoint someone as a nominee officer or a nominee manager in almost all the states. No one's going to know who the owner is. I can hide the owner. That's easy. But what Arthur is saying is, can I have a Nominee officer. And he says, specifically, Wyoming. Here's the deal. Could you hire me to be your officer of your company on public record? Sure. I'm kind of your nominee officer. You've made me to be your officer, But I'm not going to do anything without talking to you. So you can put other people's name down on a company filing as the manager or the officer of your company with their approval in an agreement. Because think about it. You just don't want to slap me on there without talking to me. Because now I'm the officer of your company. I can do whatever. You know, I could go open a bank account in your company's name, theoretically. So you got to be careful making someone an officer your company, just to hide yourself. Now, here's something cool about Wyoming, everybody, and I love it. I can set up a Wyoming LLC as the incorporator, but no one knows who the manager is or the member until I file my statement of information. Sometimes I've had clients get away without listing their statement of information for up to two years. And if all of a sudden they want it, you go, you know what? I'll dissolve the LLC and set up a new one. That four or five hundred bucks is well worth the privacy. See, in my life, this is just me, Mark Kohler. If you want to know my corporation, it's out there. I'll tell you right now the name of my corporation. Mark J. Kohler, Inc. Yeah, it's really unique. I really was thinking on that one. But that's my brand. That's me. I want you to know the name of my corporation. I want you to hire my corporation, our law firm, accounting firm, blah, blah, blah. That's my corporation. But you want to find my rental property? Good luck. See, that's where over on this side of the wall, I have LLCs that have nothing to do with my name. I have property deeded to these LLCs. I have trust as owners of the LLC. If I can. I'm going to hide who the manager is. And so this is where camouflage comes into play. And asset protection even more so. So think of it that way. All right, Darren, you got a question? Yeah. I'm gonna crack my rockstar here. I am now officially. Well, I want to be sponsored by Rockstar. I love Rockstar. And I really felt I was sponsored because every convenience store I went to, I got two for $3. I thought that was kind of cool. All right, Darren, what do we got?

Okay, Stanford. Okay, you set up my escort. If I now have different Several different businesses. Do I have to set up different LLCs under the S Corp or do different DBAs for the other ones?

Well, I am honored. Tessa at Stamford. Boy, she sounds very smart. She probably is. She says, mark, you set up my S corp. Okay, thank you very much. One of our team members and law firm associates I'm sure have to. Tessa. So there's the TESA S corp. Now let's say. What's Tessa doing? Oh, Tessa's doing consulting. She's doing hair and nails. She's doing drywall. She's import exporting. She just started an accounting firm. She just. Yeah, she could do all that. Those could be DBAs. They could be URLs, like a website. She could set up trademarks. Does she have to set up an LLC to have a subsidiary? Nope, she doesn't have to now. She might need to or want to. For example, let's say she's going to partner with me. She's like, mark, let's start a restaurant in San Francisco. I'm like, alright, so we start a restaurant. Well, that's ordinary income. I don't want to pay self employment tax on it. I already have one S corp, so does Tess. So what are we going to set up? Going to set up an LLC and my S corp is going to own part and her S corp is going to own part. Probably I'd own 60% and she'd own 40, but that, I'm just throwing that out test. So if you're interested, you let me know. But no, these LLCs are great for partnerships. Or she may say, I want to set up this as a subsidiary because I want to sell it. I have an exit strategy for that llc. Or it's got a lot of liability and I don't want to commingle it with the assets of the other. So you can do that too, Tess, but you do not have to have LLCs. Oh no. Am I in trouble? It's Tesha. Kesha. Kesha. Kesha. That's not my fault. That was Darren's fault because he said, he said Tess. And I was like, what? It is KE with a K as in Kohler. Okay, all right, I'm going to go over to some more Instagram for a quick second, then come back to Darren for an S corp. Can I write off after school programs for your kids? I need to work in the afternoons. No, not directly. Maria, here's what you guys can do. And I've been teaching this for years. Maria could hire the kids in her business and they Pay for their own after school program. Okay, everybody let that sink in. Let's say Maria's got three kids under age 18. She has an S corp or she has an LLC. I would pay the kids over here and the kids could pay for after school program. Or I'd set up a little sole proprietorship here and the S corp would hire the sole prop. And then I pay the kids out of here. I never want to hire kids under age 18 out of an S corp directly. Not a good move. So I'm going to use a little management company. But anyway, the three kids could be here and then they could pay for after school. So one quick example of this is my daughter Allison and her twin sister Sydney, one year wanted to go to prom. I don't know, go figure. Kind of a big deal, I guess. And they said, we need a little help. We need shoes, we need a dress, we need nails, we need hair. I mean, it's quite the big operation. And I was like, well, have you been working in the business? Have you been helping out? You've been doing your jobs? And they each had different jobs in the business. Alison was really good with QuickBooks and I should have worked them harder, but I did my best to provide my fair share of child labor in this country. And so I got them working hard. And so what I did is I paid them out of my business. Then they paid for prom. I got a write off for prom. See, I was gonna pay for it anyways. Don't tell Allison, but I mean, I was gonna help her anyway, but I paid her and she paid for prom. So now I got a write off for prom by paying her for the services in the business. So Maria, don't pay for the after school program. Get your kids helping in the business, pay them, take a tax write off. And your kids don't pay taxes on the first $12,500 this year. Then they can pay for it themselves. I think that's 12,550. I got to go to the trusty, handy dandy mark Kohler calendar. 12,550. All right. Darren, you got another question?

Yes, from Wade David Twitchell. I want to set up an online business and incorporate in Delaware. However, I live in California. Do I still have to pay state taxes in California even though it's in the cloud and I don't have a physical location in California?

First name again? Wade. Wade. You're gonna hate me. I'm sorry. Don't kill the player. Just hate the game. I'm just delivering the Football here. No. You like? Yes, you will pay taxes in freaking California. No, you do not want to set up in Delaware. Unless you've got a partner in Delaware, do not set up in Delaware. I do know how many Companies over our 20 years we've had to dissolve in Nevada or Delaware because someone in California got sold this. And this isn't your fault, Wade. Someone's pitched you on this whether you saw it on the web or not. Whoever's telling you to set up in Delaware is probably selling you a Delaware company. Run, Forest Run. Get out of there. You live in California. Just because your business is in the cloud, I have a feeling you've typed a little bit on your computer, returned an email, done something to manage the business in the basement in your underwear. California considers that doing business in California. You're done. Now you're paying tax in California. Wade, don't try to play this game. It's not worth it. I have a place in California. We lived in California for eight years. I love California. It's expensive, I get it. But you're going to have to pay tax on that period. And you want to save self employment tax too. You're going to want to be an S corp. You're not. Delaware is going to cost you thousands of dollars in the long run. Get out of there. If you want to set up a call with one of my attorneys, they'll walk you through it. We'll set up the whole entity where it's supposed to be for 800 bucks plus filing fee. And you can have an hour with one of my attorneys. 435-586-9366. So people, here's the takeaway. Here's my trifecta again. Here's my trust. Here's my little company to pay the kids. Here's my rental property in an LLC. Here's my IRA or Roth, maybe a 401K. And then over here is my day job. W2, there's my side hustle. Now if I'm going to set up an entity to sell online, I'm going to set it up. And it could be an LLC or corp. I'm going to set it up in the state where I live, where I'm running the business from. You're not going to get away from this. So this is going to be set up in California. And Wade's example, now let's say Wade calls me up and says, well, I'm setting up rental in Tennessee. Then we set up a Tennessee llc because that's where the property is located, you'll have to pay the Secretary of State a franchise fee of $800. But it's no more than that because they just want their 800 bucks. But you're not doing business in California, so it's limited to that. But you don't have to register in California, Just have to pay the tax on a 568 for form 568. So set up the LLC where your rentals are. Set up the business where you live. Sorry, Wade. All right. Wait, Darren. What are we then we're gonna do? Gone. We missed two books. It had to been 20 minutes. We into this? 20 minutes. Okay, two names. Winners. Okay. This is a tax and legal playbook. Who wins it?

Ian Diegler.

Ian Dietler. Ian Dietler. You've got to email Corey right now. Corey.com. and he will get your personal info. And I will sign this right now. Cory, this. Get this off to Mr. Dietler. Here we go. There it is. Okay, next book, let's do a Financial Freedom. Who's the other winner?

Yvette Jones.

Yvette Jones. Winner. Email Cory Arkjkohler. He's written down your name and your handle. Corey will get your personal info and send you a book free with no shipping. There's no catch, people. I'm here for you. I've got such a great team. We're not going anywhere. I just want you. We want to give as much free content as we can. And when you need specific help, we want to be affordable. And I love entrepreneur who's a huge help to get this information out. Okay, Darren, question. What do we got?

Okay, we've got one from Rachel, the great boy.

Wow. Rachel. Okay,

Jess, can you pay yourself a salary or draw from your business bank account? If so, does that mean I'm on a 1040 and a 1099?

This is Rachel. Okay. On what? Facebook or YouTube? Okay, Rachel, right now. Hurry. Start typing. What is your business entity? Are you a sole prop or an S corp? And you could be an llc. S Corp or an llc. Sole prop. Which one are you? So we need to know Rachel, so I can answer your question. Brandon, I know you want the books. I want to hook you up. And look it. This little kid there is doing a lemonade stand. I am so proud of him. That is. I love that picture. Remember? Hashtag support a lemonade stand. I started that hashtag 10 years ago. I try to use it all the time. Hashtag supportlemonadestand. Where's Rachel? Rachel? I can't answer it. I'M going to go to another one. Rachel, what type of entity are you in? And I wouldn't hurt what state?

Llc.

S corp. Oh, llc, S corp. Okay, so Rachel, your question. I have a feeling, don't be offended that you did not set up your S corp with us because in that hour where Darren across the camera from me here would be on a phone call with you, he would have answered these questions. So some people go online and set up their entity and then they call us and pay for the questions. And in the end they're at the same spot financially. But it's okay. It's okay. So Rachel says, I've got an S corp. And she said, how do I pay myself? Do I take a W2? Do I take a draw? Does this mean I'm getting a 1099? Okay, this is how it works everybody. This is how an S corp, okay, let's do a sole proprietor compared to an S corp. Now an LLC can be taxed as an S corp or a sole prop. Could be either one could be the other one. So let's say Rachel brings in 100 grand on in both examples, same story, brought in 100 grand in sales. She spends 25 grand in expenses. Cell phone, auto marketing, travel, dining. Okay, so what's her net, everybody? What's her net income? 75 grand. That's her net. See, in a sole proprietor or an S corp you're going to get the same write offs. Don't do a C corp disaster, just do your S Corp. Okay, so 75 grand is your net. Now if you're a sole proprietor, people or an llc, whatever money you make, you just take it out anytime you want. And it's called, I don't know, Darren, which I call it distribution, draw, profit. Any of those names are fine. Distribution, draw, profit, you just take it out. It's a Sole Prop, LLC. But you're going to pay self employment tax of 15.3%. In this example, that's 10 grand. 10 grand before you pay state or federal tax. Not good. All right, so we come over to the S corp and Rachel's an S corp. So Rachel, you've got an extra step, but it's going to save you big time. You're going to take all your money out and it's going to be called a draw. Anytime you want, you just take a draw and you never ever, ever are going to get a 1099. Forget about it. That's what you give other people you hire that are subcontractors. Okay? No, 1099s for you. You're going to take a draw. Then quarterly, we're going to decide how much of that draw is payroll. Now, in a 75 grand example, I'm just going to. This is a semi aggressive. Well, I'm going to do 30 grand. I'm going to. This is. This is probably what we do at our firm. In the draw, we're going to allocate 30 grand to a W2, and we're going to allocate the other 45 grand to what's called a K1 or profit or distribution. Well, I don't even want to call it distribution. I'm going to call it K1 or profit. Now, everybody, why is this so good for Rachel? She only pays fica. The F word. Fica. What? The fica. She only pays it over here. So in this example, you're paying FICA on the entire amount, but over here, we're only paying FICA on the 30. Now, Rachel, you're not going to give yourself a paycheck. You're just going to take a draw. Today I took a draw. I went online on my S Corp and transferred it into my personal bank account. I just transferred it right into my personal bank account. Cool. I took a draw, but four times during the year. Going to do a payroll report, and that's April, July, October, and then in January next year, I'm going to do a report. And in that report, I'm going to claim how much payroll you and your accountant decide on. And in this example, you're doing 30. So that would be around, what, eight grand or so? Nine. Eight to nine grand. So you would take eight grand in payroll every. To be closer to seven. Sorry, seven grand in payroll every quarter. But you're not going to wait for a W2. You're not going to get a 1099. And the beauty of this, everybody, in summary, is she only pays FICA. Here we save 15% on $45,000. That's going to be close to at least nine. Nine grand in savings. Right? 15% on 75,000 is 10 grand. 15% on four. Oh, no, that's going to be about six grand. We're going to save about six. Boy, my math today. So this is why, Wade, in California, you're gonna go, I hate California. It's too expensive. Dude, the $800 for an S corp, we just saved six grand. If you set up in Delaware, you still got to set up in California, because you can't be in California and do payroll without being set up in California. So you're set up in Delaware for no good reason. So anyway, Rachel, I don't know where she's at, in what state, but this is why you're an S corp. You're going to take a draw, talk to my payroll team, call Nadette and get on the payroll team. If you need that help, make sure your accountant knows what you're doing. And everybody, we're all good. Okay. Should I give away another book? Is it time? And then we got to do gone in 60 seconds. I'm going to do five questions as fast as I can in 60 seconds or less. Now these are. These are going to be good.

Got a book.

I got a book. We're going to give away that IRA handbook, which some of you may go. Well, I don't even know how to do that. You're going to love the book. Okay, Corey, who's our winner?

Angela Vandermeer.

Angela Vandermeer. Angela Vandermeer is the winner of the SDIRA handbook written by Matt Sorensen and signed by Mark Kohler. Sorry, Matt. Anyway, so it's going to be worth more because I signed it. I'm just joking. All right. Okay. 60 second videos. Okay, Corey, you're going to give me the timer. Okay, Darren, you're going to have to ask me. Think of a good one. I can answer in 60 seconds. I'm going to come to you in a minute. I'm going to do one over here. Okay, I'm waiting. Cory, you tell me. Go.

One, two, three, go.

Okay, quick question from Christian. What happens to rental real estate losses? Passive active status accumulated that are not used. We go to the whiteboard. Make sure we're on the whiteboard, Ali. So Christian over here has his trust. He's got his trifecta. He's got his W2 and his small business over here. But over here he has a rental property. That's where rental losses are created. So when this rental property pays cash flow, the tax free, we're going to write off depreciation, travel, dining, home office, PDAs, laptops, computers, electronics, all these goodies. It's going to generate a loss. That loss goes into a carry forward bucket. You can keep it the rest of your life and you dump out the bucket. I can dump this out when I sell any real estate in the future. Now, if you do qualify as a real estate professional, I can deduct these losses and against my ordinary income. I've got a whole chapter of that in my book. Tax and legal playbook. Gone in 60 seconds. Bam. There it went. Woo. Man, that was tough. I did not pre practice that answer. This is very difficult. Okay, Darren, you got a quick question you got to ask. You ask it now so I can repeat it on camera. Okay, so tell me what the question's going to be. Okay.

This is from Tanner Gibbs. I want to launch a marketing agency, but I live in Mississippi and move to Colorado in three months. Should I just get the business going now or wait to set up an LLC or S corp when I get there first name? Tanner.

Okay, Tanner has a question. He says gone in 60 seconds. Right here is his answer. He is in Missouri. He is going to be moving. To where? Colorado. And he's got a small business in sales and marketing. He says, should I set up my LLC now in Missouri and then move it to Colorado when I get there? Actually to what it's called as domestication. It's not that expensive to move an entity to another state. Call my assistant at the office, Susan Compey, and she can give you a quote of what the filing fee might be. Really 2 or $300 if you're out selling already. I want you to get that LLC going. Start building corporate credit, get a tax ID number, get a bank account, get everything going, start making some sales. When you go to Colorado, file articles of domestication, three or 400 bucks, then you're done. Or I'd say option two, set it up in Colorado now, start doing business, see how it goes. You're moving anyway and just start out in Colorado. There you go. Bam. That's two. I can only do two more. This is so stressful. Okay. All right. Oh, I like this one. This one's from Nick. Okay, we ready? This is from Nick. 2000, 506. He says, Can I contribute yearly the maximum amount to 2 self directed HSA, Roth, IRA, 401ks, even if I have a rental each year. Okay, first, Nick, you can do a lot here, but you've kind of bundled them all into one. So let's go back to our trifecta. This is where it all starts, everybody. And so he's got his day job, he's got a small business. He's over. Over here. He says he has a rental. It sounds like already in a retirement account. Don't worry about what you already have. Let's worry about how much you can contribute. So let's say you have a 401k at your day job or a 401k in your small business. You are allowed to contribute $19,500 this year, I don't know how old you are, but if you're over age 50, you could do more. Now, next, can you do a 401k and a Roth? The answer is yes. You can do a Roth over here for six grand. You can even do an HSA over here. So you could do one, two, three. Boom. That was a hard one. I didn't think it was gonna be that hard. Okay. All right, Darren, give me the question, I'll repeat it. And this is our last fast one, everybody. And Rick says, what is the best source to contact angel investors? Get on Shark Tank. I don't know. No, Rick, angel investors are so hard to get. What would you say, Darren? Oh, that's good. Darren says go to a local investor group, start pitching your ideas. You know what I think is best? Go to your next family reunion, set up a booth and tell everybody, hey, who wants to give me money and see how it goes? I don't know. You know what? In my whole career, in 20 years, I've never even met an angel investor. Except my dad, who helped me start a business when I was 20. I never paid him back. He's kind of an angel. So angel investors are hard, Nick. Just freaking. Might be easier. Just go traditional. Okay, what's the question, Darren? Okay.

From Ian Dietler from Sacramento, California. I did a fix and flip last year. How do I do my taxes if most of the work I hired out was under the table pay?

First name Ian. He says he's in California. He did a fix and flip rehab last year. So he's following in the steps of Chip and Joanna and Waco, Texas. So he's got an entity. I would hope he'd have at least an llc. He buys a property, he puts a bunch of repairs in it, and then he's got this new property and he sells it and makes a profit. And he says, how do I do my taxes when I wrote off a lot of it under disabled pay to other people? Oh, under the table pay. Oh, my gosh. You're not going to get a write off because you didn't 1099, you get audited, you're screwed. So I hate to tell you, do not pay people under the table. You don't get a write off. And if they get hurt on the job, you are so screwed. I've had clients that have been lawsuits for years because they hired some guy under the table to put on some siding. Please. You get no write off. You're going to pay more in taxes. Maybe you saved more on Your labor. I hope you did. Sorry. Okay. Boy. Someone said use Slido. What's Slido? Slido. Cool. It's another broadcasting software. Whoever mentioned that? We'll look at. Look at that. And Sarah, thanks for the shout out. Sarah's like so active on here. I appreciate it. Love your pick. You're into it, Kenzie. Thank you. Donna says I want a book. Too bad. No, I'm just joking. I don't know. Corey could have called your name. Are we ready to give away another book? Maureen says never hire under the table. Maureen, great sage advice. I could tell you stories, but we don't have enough time. Okay. We're going to give away. You know, probably the foundational book that I really like, everybody have, is a tax and legal playbook. We just got a huge pallet of them at our office yesterday. So we're ready to ship some out. William Reed. William Reed, you're there. So now everybody. So you know, Corey does take bribes. I think that's what's going on back here. Is that right? Yes. No, he's not. He is doing this completely random now. Lindsay says. So angel investors are a bad idea? No, they're just. Okay here, everybody. In fact, I'm doing a webinar. What's the date on that? March 18th or something. I'm doing a live webinar for an hour and a half in about two weeks for entrepreneur.com. if you go to entrepreneur.com right now, you can sign up for the webinar and it's free. Cory, make sure you put the link in the chat. Can you do that on several of the chats? Maybe. But if you go to entrepreneur.com you can find the webinar and it's how to raise money. I think I'm going to go through 15 ways to find money for your business. Angel investors are one of those. Now, Shark Tank are not angel investors. They would be considered kind of a private investor that's going to. Some people might call them. What is it, Darren? Institutional investor. A jv. They're going to come in and be a partner with you in your business and they're going to want a piece of the action. An angel investor is a great idea, just finding them. Angel investors are people that don't want to get paid back. There's not a lot of those around. I don't know. I mean, you could start Googling how to find an angel investor and you might be able to find someone willing to give you some money. But I'm not saying it's a Bad idea. I'm just saying I've never seen them, they're hard to come by. So.

Okay, they talked about some of this stuff on the directed IRA podcast.

Okay, self directed IRA podcast. Matt talked about this angel investor thing. I want to get Rose's question real quick. She says 18 year old daughter, 2020 has earned income. Is it best she starts her Roth with a local bank or self direct? Thank you, Rosa. Neither. Okay everybody, did you hear that? She says should my daughter who's 18, who just made money last year in 2020, should she set up her Roth at a bank or at my self directed IRA company? Now you may say, well Mark, aren't you trying to sell people on your self directed IRA company? I am. It's directed ira.com. but when Rose's daughter sets up her Roth IRA, what's she going to put in? Five or six grand. Now if she wants to buy some cryptocurrency, come over here. If she wants to loan it to someone and get some good interest rates, come over here. If you want to buy some gold or silver, come over here. But the reality is with five to six grand, doing self directing might not. You might need to pool that money. So if you're going to pool money in an LLC with other friends and family, Rosa, go over to Estra ira. But here's what I recommend you do. Set up the Roth at like a TD Ameritrade. I wish I got paid by TD Ameritrade. TD Ameritrade app is really user friendly. I like it. And she could drop her five or six grand in a Roth at TD Ameritrade, a local bank? Hell no. The interest rate's gonna. Oh my gosh. No, no, no. Do you know Keybank the other day had a banner on the side of their bank that said we're paying 1%. They literally printed for a banner to say they're paying 1%. You kidding me? So get over to TD Ameritrade and I would buy what's called an etf, a no load etf. It's called called an exchange traded fund. Very similar to a mutual fund. You can see rates of return from 5 to 10%. Get the money going there. Start with a TD Ameritra. You could do Scottrade, a Fidelity, any of those types of apps. I'm cool with that. Now meanwhile, I still want her doing her Acorns app and she's going to be saving daily. But when it comes to investing, it's really a three stage process. I get, I geek out on this. I'm going to be fast. Acorns is where we save. Then we invest in a two step process. We can go to an app and just buy ETFs and stock like I just explained. Then you go to directed IRA and you really start to investing, setting up LLC owned by your Roth. But you've got to have enough money here that you've got a way to go. So I want to start out with Acorns. I have an Acorns account. I save every day. I do round ups everywhere. I go and buy stuff. Then I invest in stocks and ETFs, but when I have enough, I bounce it over here. And our family just set up an LLC last month to do some investing. So anyway, that's the way I would go. All right, where should I go next? How much more time have I got? Oh, Daniel, you like Daniel's question? Daniel Lopez, open a cabinet wholesale business with a friend. What do you suggest for us to be an llc, an S Corp, LLP or others? Daniel, great question. Now everybody, let's think here. If he's doing a cabinet business, what tax am I worried about? Not sales tax. He's going to collect sales tax and remit it to the state. Hmm. Income tax. No entity is going to change that. He's going to pay tax on his income. What I'm worried about. You got it. Is the F word. Fica. So if he was doing a rental with a friend, there's no fica, because rental income is not subject to fica. But he's selling cabinets, all right, which is ordinary income. All right, so if we're worried about fica, if that's our number one concern, everybody, that's what we're really worried about is fica. What entity does Daniel have to use? Well, he has to use an S Corp. But do I want he and his partner to form an S corp? Hell no. No, no. Excuse my no. In fact, I have a whole chapter on partnering in my tax and legal playbook. Please go get it on Kindle, Daniel. Or maybe you'll be our last winner today. But what I would recommend is you set up an llc and when the time's right, each of you have your own S Corp. So you can start an LLC with just the two of you as individuals. Now, once you start making over 50 grand to 100 grand net, I'm going to bounce you to an S Corp immediately. Does it cost to transition? Just the legal fees to set it up. There's no tax. It's carryover Basis. And I would just slide you out and slide in your S corp, slide your partner out, and slide in his or her S corp. So AN LLC with 2s Corps is the way to go. Now think about this last thing, Mark Kohler. Me, I've got a wonderful team. A law firm, accounting firm. I bet you many of you would say, mark, I have. You probably have 10s corps. No, I have one. I have one S Corp. So in my trifecta, I have one S Corp. But my S corp owns part of an LLC that's a law firm, part of an LLC, that's an accounting firm, part of an LLC that does real estate development. So all of these LLCs that create ordinary income, they funnel into my S corp boom. But a bang. This is where I take my W2 and my K1 boom. And it's all based on my draw. So very, very simple. Every dentist, doctor, plumber, electrician, contractor, realtor, broker, fix, and flipper, we're all S corps. That's what we do. Online seller affiliates. We need to set up our rental property under llc. Tanya. Yes. Any of you. Once you buy a rental property, you're exposed. If anybody gets hurt, anybody's licking the walls with mold, asbestos is flying off the fan, the termites chew through the deck and someone falls to their death. Someone slips and falls because the railing on the sidewalk or the stairs is jacked up. Any possible lawsuit from a rental, they're going to come after your house, your income, and everything you own. We want an LLC to be the barrier. Now, as long as you're not a slum landlord, the LLC protects you. And our attorneys are out maybe a week to 10 days. They'll spend a whole hour with you on the phone. Walk through. Why you need an LLC where we're going to set it up, how you maintain it. 800 bucks plus filing fee. Done. If you go do it online, I have a feeling you're going to call and spend legal time to get help. So please, just maybe consider us from the start. Okay. Darren, another question. What do you got? Oh, giveaway. Okay. Which I give away? You choose. Which book Cory's gonna choose?

Financial Freedom.

Financial Freedom. Who's the winner?

Rachel Boyd.

Rachel Boyd. Oh, my gosh. The great Boyd Rachel. Wow. She's so pretty. I love her hair. Love it. Rachel, congrats. I will sign this now. Oh, I don't have another one at the desk. I will sign it when I have it. Rachel, it's all yours. So welcome. Okay. And I can do a couple more questions okay, Darren, go ahead. What do we got?

Okay, Mario on YouTube from Ohio, my wife and I have separate businesses. Hers is an LLC, sole proprietor, ME&S Corporation. She takes the home office deduction. Can my S corp also take the deduction? We have separate workspaces in the home.

You think everybody heard that, Corey? Yes. Okay. Darren has such a booming voice. Husband, wife, wife owns an llc. Okay. Llc, wife, husband has an S corp. I got a better recommendation for you. Wife takes home office and husband wants to take a home office deduction. Can they write off the same space in the office in the house? No, but first name, Mario. Mario said, whoa, whoa, whoa. Wife has her own space. I have my own space. You're golden. You both can take the write off. Now, please get to YouTube and type Kohler home Office. Because there's a different way to do it with an S Corp than with an LLC sole prop. Okay? So you got to learn the two different ways to do it. Okay. Also, I do not like husband and wife structure here, Mario. I don't like it. If we had time, I'd quiz everybody on what would you change? We're going to change it in this way. This would be my recommendation. Have the S Corp owned by husband and wife and the subsidiary is the LLC for wife's business. 100% owned by the S Corp. Now, she didn't describe what her husband's business was. If he's an anesthesiologist or a chiropractor, he may be restricted from making wife an owner of his S Corp. But if husband has a fairly general S corp, I am definitely going to have one S corp in the family. Two W2s. We're going to save a ton in taxes. Oh, my gosh, I'm loving it. So let's save in taxes and have wife's LLC be owned by the S Corp. You know you're going to reduce the chance of an audit by 15 times. So less chance of an audit, you're going to save more taxes. It'll be easier and simpler. So, Mario, look at doing a reorg. I'd probably backdate your wife's LLC to the S Corp to 1121. Now, when you do your 2021 tax return, it's all cleaned up. All right. Another question or two, I'm going to go back to Instagram for fun here. 23. Yo, CPA Maxwell, how do you know when to trust your knowledge in advising clients? Well, frankly, Maxwell, I just go for it. I don't even check my own knowledge. I just say Whatever comes to my mind. No, of course. Maxwell. Anybody out there? So, you know, it's really quite interesting. I subscribe to multiple newsletters of experts around the country. I'll give a shout out to Tom Bradford. I love Bradford Tax Institute. I get the RIA monthly newsletter, cch. Whenever there's a new tax tip that's out by anybody, I read it and then I cross check it. I read the law right here on my laptop. I've got the new 5,500 page tax bill that was signed by Trump on December 27th. I read that for fun. Yes, I'm a nut. But the point is, any advice you give, just double check it. Just double check it. Once you know that it's legit, it's yours, you own it. It's like a joke. Once you tell it and everybody laughs, it's yours. No, that's my own rule. But anyway, so just, just double check your info. You'll be okay. Max, can you borrow money from both the traditional and the Roth bucket of your solo 401? Kristian? Yes, you can. So if I have a 401k over here, you have to remember a 401k is like a honeycomb. Think of a honeycomb and you've got different sections. You've got the Roth side and you have the traditional side. When you put money in, you can choose to put it in either side. You can. The company match always goes on the traditional side. I've got a new video, an article coming out on the Mega 401K, which is pretty cool, but it's even better than this. Christian. I can invest the Roth one way and invest the traditional another way. I can borrow from the Roth side, I can borrow from the traditional side. I can borrow from both sides. So many options. This is why we love the Solo 401K. We set them up at our office, 999 and boom, you get an hour with the tax attorney handling it for you. Darren, any good question.

So, Andres Jimenez from Florida. I have an llc. I'm trying to open up a family management company, but the banks I've contacted are telling me that I have to have a DBA or sole proprietorship. What suggestion do you have to get around that?

Okay, Mario. Right, Andre. Gosh, I was thinking of Mario. I'm going to go. Andre in Florida says he has an LLC and he's trying to set up a family management company and he calls the bank now. Everybody. This is so good. Andre asked this question. Andre, don't be offended. I'm Going to say it this way. Here's your first problem. Banks are on a need to know basis. When you call up a bank and go, hey, I need a family management company because I'm going to pay my kids and Mark Kohler says it's really cool, their brain explodes. They start hitting, picking up a red phone and they go, this person wants to set up a family management company. What the hell is this? You know, they freak out. They need your blood. They want to, you know, have your firstborn child. They're going to have you fill out ten pieces of paper. They've got to call their corporate office in Minnesota. Banks freak out if you don't fit into their bucket. So, people, if you're going to hire your kids, you're going to have this little management company in here and it's going to be right in the middle of your trifecta. When you set this up, don't call it a management company. Don't tell your bank the plans. Go in and say, I'm setting up a sole prop called Kohler Management, Kohler janitorial, Kohler Bookkeeping. Whatever the freak you want to call is a sole proprietor. A family management company is a sole proprietorship. Just go in and say, I just want to set up a sole proprietorship bank account. Now they may say, well, you need a dba. That's called a doing business. As when I walked literally two blocks this way several years ago when I moved to Idaho. I reset up my little sole prop to hire my kids. I walked into Wells Fargo and I said, I need a sole prop account. What's it for? None of your business. What are you going to do? Provide services to another company. What's the other company? You don't need to know. They don't. They go, okay, you need a dba. I go, really? I'm going to call it Mark Kohler Management. That's my name. No one can have my name. It's my name. I don't need a dba. They're like, oh, I think you're right. Manager, does Mark Kohler need a DBA for Mark Kohler Management? Nope. Okay, thanks. Done. They go, what's your aein? What's your tax ID number? I go, I don't need a tax ID number. I'm doing it under my Social Security number. Is that okay? Yes. Okay. Yep, you're okay. The 18 year old at the desk finally pulled their head out and said, okay, we're going to set up a sole proprietorship bank account for you. I'm Going to get a debit card and it's going to be called Mark Kohler Management. I literally, if I. I mean, got to be a little careful sharing private info here. But I'm not going to give you my bank account number. But that's what its name is. That's what I did, Andre. Just walk into a new freaking bank, go a different time, get a different manager, a different banker, and say, I need a sole proprietorship. Do you have a dba? Nope. It's going to be called Andre Jones Management. Okay, I don't want a dba. I don't need one. Do you have a business license? Don't need one. What's the company doing? You don't need to know. They're doing janitorial for another company. Okay. And set the thing up. Then you hire your kids. Sorry. I get excited, everybody, but it doesn't drive you crazy, right? Okay. What do you want me to ask? Okay, we're wrapping it up. Daniel's like wanting to ask all these great questions. Daniel, set up a console. Any of you out there? Where? I didn't answer your question. I'm sorry. Just set up a consult with our firm. Any of the attorneys. You might be out 10 days at most. Or you might be out 2 to 100 bucks for a half hour, 400 for an hour. We're going to save you 10 times what you pay us. We specialize in small business. Seriously, we don't want you to give us money unless we're saving you more than you're paying us. It's that simple. Really, so. But this is not an infomercial. But if you need help, call 435-586-9366. It's all good. This is KKOS Lawyers, our accounting firm. We do taxes, but we're already getting slammed. If you want to be in a client for our tax prep team, when you call, tell them and they'll transfer you over to the accounting side and we can see if we can help you out. There you go. We're just here for you. Okay, last question. Was Damie Lallow? Damie says, what penalty do I have to pay if I want to erect retroactively elect for an S corp? Oh, Damie. None. But there's baggage. So what Damie is saying is, here's his trifecta. He had an llc. Now why Damie's wanting to do this? I've been doing this for 20 years. In 2020, Damie had an LLC. Now, Damie, I'm going to assume you didn't get the PPP protection program money because if you did, that could jack up the whole plan here. So be careful. But let's say Damie's a 2020 LLC, no PPP, and he made profit. And Damien is. He's afraid. This is very common. He's going to say, mark, I don't want to pay self employment tax. And now I'm in the middle well of March in 2021 and I'm freaking out. He's like, what am I going to do? So in 2020, LLC, profit, self employment tax. And he said, and this is his strategy, he's saying, can I backdate into an S corp what he would file is called a 2553 and he would backdate it to 11 20. Now, can he do that? Yes. Does he have to attach a special revenue ruling and do it properly? Yes. We charge 150 bucks. So if you want us to do it, we could do it. Talk to the team, call that number, and you're going to ask for Susan. Susan is our business department paralegal and she'll get you with one of our paralegals and get this done. Okay? There's no penalty for that. But here's the problem, everybody. We talked about this with Rachel at the beginning. If I'm going to have an S corp and I want to save on fica, what do I have to take? Everybody remember I told Rachel she had to take a draw and then she was going to take what, a W2 and a K1. Well, the deadline for doing a W2 was January 31st. We're two months late. Well, about a month and a half late. So there's a penalty for that. The penalty is 15% of whatever the FICA is and it can be up to 25%. It kind of goes up over a couple of two, three months. So what you would want to do if you were in a client of ours, we would immediately find out what was your profit in your s Corp for 2020. And frankly, it's not as much profit as how much were your draws. We need to know what your draws were. Then we're going to do our Kohler payroll matrix and we're going to find where should your payroll be. We're going to find that perfect payroll amount. This is what our tax attorneys do. We're going to save you far more than you pay us again. So we're going to find the right amount of W2. Then we calculate your FICA at 15.3% and then multiply that by the appropriate penalty, which I think is going to be around right down 15% to 25%. It changes based on the number of months you're late. Whatever that dollar amount is, I'm going to compare it to the self employment tax you would pay if you didn't retroactively do your S Corp. See Danny, that's the trick. Now if your income is pretty high, this is going to be worth it because rather than pay self employment tax on the entire amount, I can pay a 15% penalty on a smaller amount. So it's going to be a fraction of your savings. So don't focus on the penalty, focus on the savings. Boom. Tell everybody. Watch my this is, this is how you learn how to do it on the Pepsi commercials. You make sure the logo is shown properly and then you go. That's how they pay you the big bucks when you can do it just like that. So Rockstar, call me. I need a case. I'll sing your praises every time I do a show. Everybody, I appreciate you. Thanks so much for being here. Now let me point out, next week, no live broadcast on Thursday. We will be doing the podcast on Wednesday and Thursday. You can get over to our two podcasts which are Main Street Business, Main Street Business Podcast or Main Street Podcast. And you can also get over to Directed Ira Podcast. Of course they're free and you will love those. And finally, if you'd like to sign up for my free newsletter that just goes out in an hour, you get over to Mark J. Kohler.com and if you need any help, give us a call at 435-586-9366. Quick shout out again to Entrepreneur Magazine, our sponsor here on their Facebook Today, my own YouTube followers. And Instagram and TikTok and Twitter. YouTube. I can't keep it all straight. My brain's gonna explode. Anyway. Keep living the dream. Don't give up. It's hard. It's hard. But sometimes, and a lot of times it's better to have that side hustle along with your day job to build wealth. Even my producer here was telling me about a side hustle today. Now, I don't want him to be too successful over there because then he'll quit his job. But we all want to keep our day job. I have a day job and my side hustle. That's what we're doing to build wealth. So keep doing it and I'll see you soon on the podcast or YouTube video or something. Thanks everyone.