Live Open Forum Q&A with Mark J. Kohler

Live. My name is Mark Kohler. We are here. We I've got an amazing team behind the camera here helping put together our new set. Today we're giving this a shot. It's kind of cool looking, feeling all professional. Glad you're here. Please don't go anywhere and tell you, tell you a little bit more about this live broadcast. So I'm a CPA and an attorney, partner in a law firm, accounting firm, also CFO of directed ira. We're helping clients around the country save taxes, build wealth and protect it. And you're getting straight answers from a real cpa, a real attorney where we literally sign off on our clients projects and stand behind it and we're affordable and simple and we love Main Street. Not a big fan of Wall Street. So I'm here today. This is our every other week we'll do a Facebook Live, YouTube Live with Q and A. So this is an open forum and I've already got some questions here and we're going to dive into it and we're going to also give away some books. We're going to try to make this happen, make it fun. So if you have a question, please type it down below. And I'm going to hit it. I've got my team here filled in questions off Instagram, YouTube and Facebook and I think LinkedIn as well. And I want to say thanks to my team, it's been a stressful day getting all the new tech set up here. All right, so this question and I'm going to jump to this one first because it's probably the most urgent one of all these questions. Mark J. I won't read the last names but this is Mark J says I set up a corporation with your firm this last year. My question is do I give myself a 1099 or a W2? I'm the only employee. Oh gosh. MARK J. Well bless your heart bud. And anybody out there that has a corporation, an S corporation and you say you're the only employee. Employees do not get 1099s. Employees get W2. So your first answer there is Mark, anybody out there, if you have an S corporation you need to be issuing yourself a W2. We can go to the board but it's pretty straightforward. Mark. The deadline is in 24 hours. I'm not kidding. And the penalty is not fun. I try to put this in our newsletter every week with important deadlines, reminders. We hold year end tax strategy sessions, my business owner workshop and all of you watching if you haven't already picked it up, it's 99 bucks. Seven hours of content. You can watch watch it over and over again recorded in December for the 2020 laws. That owner, that business owner workshop. Mark, you've got to pay attention to these sorts of things. I don't know if you can pull this off in the next 24 hours, but you've got to issue yourself a W2 for the dollar amount. You got to read up on my payroll matrix, the whole chapter on S corporations and the tax and legal playbook. Pull it out right now and start reading it. You've got hundreds, if not maybe thousand dollars or more of damage or penalties that you're going to face if you don't get this done. So anybody out there get on it? All right, next question was Mark H. He said, boy, all these marks, I love it. We got a Mike and Kris here. But then we're going to get to our live questions. Okay, Mark H. Says, I appreciate your video on the sweet spot for moving out of a traditional IRA into a Roth ira. And so what we recommend is many of our clients that have that traditional ira, we want to chunk it, we want to start moving it year by year into a Roth IRA because Roth IRAs over time always outperform because of the time value of tax dollars. We want to pay the tax now, get it over with and build it tax free forever. But if you chunk too much, it puts you in a higher tax bracket. So I created this sweet spot and you can watch that video on my YouTube channel. Just get over there and type or just type in YouTube sweet spot, Roth IRA conversion, Mark Kohler, whatever. It'll come right up. Mark says if I fall into a higher tax bracket shown in your diagram in the video, should I move everything all at once and just get it over with? The thought here is everybody is, you want to stay in that sweet spot and just chunk every year and not go into the higher tax bracket. Now if you want to rip the band aid off and just do it all at once, pay the higher tax and that could work. That does that. You. This is a very individualized decision making process. But I want you to chunk at it every year until eventually 1 year, 3 years, 5 years, 10 years from now, everything's in a Roth position. So that's the answer, Marcus. Stay in the sweet spot. Unless you really want to do it all at once, then you're going to be in that higher bracket. We okay, ladies, or sorry to take a live question. We got one. Okay.

From Facebook, Eloy, can I take my employees or myself to get a haircut and be and it be a tax write off because it's part of the entire to be clean out.

I like it. Deloitte. What's the name? Aloy. Aloy says, I want to take everybody to the salon and get a haircut. And now two years ago we could have done an entertainment expense, and that's true. You could take, you could go to the spa, you could go get pedicures, manicures, or do a get haircuts and it would be an entertainment expense. Now it is no longer a business expense at all. So going out to the salon or getting a haircut, even though you expect your employees or your business partners to look good, unless there's an entertainment exception. So if any of you are an actor, actress, Broadway, TV commercials, your hair and makeup and all that good stuff is a write off. Now even with my amazing YouTube video genre of tax and legal, this ain't a write off. I wish. So I wish I could go get my haircut as a tax write off. But until I'm, you know, a little more legit, maybe in Hollywood, then I could use the entertainment exception. So Aloy. No way. Sorry. Okay, let's go over to Chris. He says, love your show. I'm a happy customer of your team. But buying a house in California from an older family member. Family member is planning on gifting approximately 20% off. So let's say it's a million dollar house because it's California and we're going to gift 20% to this family member and sell it to him for 800,000. And he says, I want to avoid any unnecessary fees as this family exchange. But what would be the best people to involve in this transfer? Above board, title company, lawyer, et cetera. First home purchase. So new the home buying process really, Kris, and this is for everybody out there. If your parents, if your grandma, your grandpa, family member gives you a discount on the sale of a home, just take the discount, get the appraisal, and that's going to drive your deposit with the bank for your mortgage. And I'm not really going to document a gift unless it's pretty dramatic. It is true. If you gift someone a certain dollar amount and this year it's over $15,000, you need to file a tax return for that. But on a real estate transaction, just take the discount. So maybe the house is listed for 600 and they're going to sell it to you at a 20% discount. That would be 120 grand off. So they're going to sell it to you for 480. Go to the bank and say, I'm going to. I need a mortgage for 480. They do an appraisal and find out it's worth 600, you're good to go. Maybe you don't have to do any down payment. If you want to file a gift tax return, you could, you know, do that 790 tax return. Talk to your accountant. I don't know if I'd rush out to do that, Kris. It's really very, very low audit risk and they discounted the price taken and run. Go to the bank and get an appraisal. Just work with your normal, normal realtor, the title company. I don't think you should stress too much about it. If you hear something weird and you're concerned, call my office and let's get a consult. Rosalie, comment?

Yes, I have Gustavo on YouTube. What is the best tax structure for a limo company? Two employees, husband and wife.

Okay, now, first name Gustavo. Now, are the two employees the husband and wife? Okay, well, Gustavo, I don't know if I want you and your wife to both be employees, but here's the structure. Got to get to the whiteboard here. If you're going to run a limo company, is that operations or holdings, people? Right, it's operations. So we're going to be over on this side of the equation. Over here we put our holdings and this is where we're going to put our real estate. So operations we're going to set up and I'm going to ask Gustavo how much money you can make this year. If he says we're going to make 30, 40, 50 grand profit, then I'm going to want him to be in an S corporation. If we're not sure yet, we're going to start out as an LLC and then convert to the S corp when we see how much money they're making. But most of my transportation companies are going to be S corporations. That's the structure, Gustavo. And you and your spouse would Normally get a W2 and then we take the profit all out the bottom. Now, the question is, do both. You need to be on a W2. How much should your W2 be? Are you going to fund a 401k in the process? There's a lot to talk about here. So normally what I do in this situation is I make one of you the employee and the other the spouse. Gustavo, you or your wife shouldn't feel left out. We're going to take your pay as profit. The only time I'm going to put the spouse on payroll is if I want to fund the 401k. Now I've got a great video out on YouTube talking about the sweet spot to pay my spouse on in 401k. So get over there and search that on YouTube. Do not search for sweet spot on my spouse. Make sure you put in their payroll for my spouse. I don't want to be liable for what you might see. Okay, next comment.

Efren Ortiz from Facebook says, can we have a Roth IRA and sep? If so, so what are the limitations?

Okay, now in this example, this is a good one. We're going to leave Gustavo up here and they're talking about doing a SEP and a Roth. Can you have both? The answer is yes. Now, the SEP is kind of like the stepping stone to doing a 401k. I'll tell you, 90% of my clients, we're going to be trying to get into a solo 401k. In fact, I have another video on YouTube titled I screwed up and did a SEP. How do I get to a 401k? So I'm not a big fan of the SEP, but here's the theory. In a SEP, what you would do is you would create this self employed pension and we would come up with a percentage of the W2 and you can deposit approximately 25% of the salary into a SEP on the side. You can also have a Roth IRA. They're totally separate. If you make too much money, we call it a backdoor Roth IRA. I got a YouTube video on that. But I just want to answer these questions quickly here so everybody listening. I want to contribute to my 401k and do a Roth on the side. And I may do the same with my wife Jennifer. We're going to have two W2s. We're going to fund the 401k, then do a Roth on the side. I want a Roth for each one of my kids and then we can partner together in some sort of LLC and do some business. Okay, the question should I, can I do a SEP and a Roth? The answer is yes. The real issue is should you be doing a sep? Normally not. What I'd like to do is see you in a 401k where this year you can do 19 5. Oh, in my calendar here, we've got all these cool dates in my new calendar and all the tax deduction strategies here. And I want to make sure that I'm always accurate with my numbers. So we could do 19,500 plus 25% of my W2. See now Watch this, everybody. With a SEP, I can do 25% of my payroll. With a 401K, I can do 19. 5 plus 25% of my payroll. It's like being in a race and you get to 19,000 foot head start. That's literally how cool a 401k is compared to a SEP. Now if. What was her first name? Maria Efren. If you only want to put away 5 or 10 or 15 grand, I might stay in the SEP. But if you want to put away more than 10 grand to 15 to 20, we're going to jump over to the 401K. Don't waste your time in the SEP, but you can always have a Roth on the side. Isn't this awesome, guys? Isn't this fun? We're just rocking. Got my rock star. We're rocking little of everything. All right, should I do. I got one more question here. This is from Clark Bailey. And this is a quick, easy answer. Mark, what can I write off as a W2 truck driver? Nothing. Absolutely nothing. When you're a W2 employee now, unreimbursed employee expenses are no longer a write off either. Clark starts a small business on the side. When you're on the road in your truck, you could be selling crap on Amazon. You could be delivering product of your own. You could be doing small business somehow, some way when you're on the road. But there's no deduction as a W2 truck driver. Last question here on LinkedIn was from Mike Max. Oh, I don't want to say last names. Privacy. Mike M. I didn't finish his whole last name says Mark. I just saw your YouTube video on using IRAs to fund real estate. I am building a property and would like to use my IRA to fund the construction. Is that possible? Probably not. But let me say what your options are. So let's do a new piece of paper here. It's going to be a little noisy as I rip this off. There we go. Okay, so everybody listening. This is really important. So if we go back to our diagram and let's say you've got this 401k and this is wife, and then we've got 401k husband and we've got wife Roth, Ira and we've got husband Roth. Okay. And we can even have the kids in the mix. But let's say we have have these four retirement accounts, could we take whatever dollar amount we wanted and make them all partners in an LLC and go do a fix and flip a rehab, buy a mobile home, buy a rental property. The answer is yes, you, you can do it all day long. The problem, Mike, I think in this situation is Mike saying, well, I'm building a house over here and maybe it's in his little S Corp or an llc. I don't know if it's going to be a rental or a fix and flip, but let's just say he's already started building a house. Can his IRA fund a house he's building? No. Can Mike's Roth IRA loan me money to build a house? Sure, but it can't loan yourself money. So Mike, that's where we're going to have a problem. Now if you say, darn it, I already started this house, I'm screwed. Well, finish the deal. Borrow hard money. Borrow from other family. You may even be able to borrow from other family members retirement accounts. But next time on project number two, you're going to start fresh and you're going to give us a call and we're going to structure it the right way so you can use all your retirement money for project number two. All right, that's my pre event questions in the can. Look at this. Bam. Look at that. It's cool. I got a little hole here. I can just throw crap. This is awesome.

All right, brother Lee, I have Debbie. Hi, Mark. Debbie from Dallas here.

Ah, Debbie. I know Debbie. Regular listener. Thank you.

Move from Texas to Florida. Should I keep my series LLC in Texas since Florida doesn't recognize them any? Best practice. Thank you. As always.

Now Debbie is using what's called the series llc. And here's Debbie. I would ask her more questions, so I'm going to make some assumptions. So Debbie's living in Texas when she set up her llc. So she sets up this series llc. And with the series llc, she's got baby series. And these little baby series own different rentals. That's why we do it. So let's just assume for a moment that Debbie has Texas rentals with a Texas LLC in this Texas project and she moves to Florida. I don't change a thing. Keep it. Keep doing what you're doing. Your rentals are in Texas. Your series LLC is in Texas. Your tenants are in Texas. You move to Florida, I do not care. And what's cool about Debbie's situation? There's no state tax in Florida or in Texas. So she's avoiding state tax on both angles. Now if she says, well, I sold all my property in Texas and now I'm in Florida. Okay, where are you going to buy your next rental? Well, I don't know. Well, if you're going to buy in Texas, let's keep the Texas LLC and pop in the new rentals. If you're going to not have Texas property and you've got a Texas LLC just sitting there, kill it. You don't need it. So Debbie, a lot of this is in a conversation about what your future may hold and where your current rentals are and where they're going to be in the future. Schedule a half hour with one of my tax lawyers and they can straighten you out real quick and you can decide which way to go. Maria, who's next?

John from Facebook says love your videos. Mark, I'm from Maryland. I got a well paid paying job and then outside business that nets between 10 to 25k. Should I change the LLC to an S corp for taxes, no employees, a few 1099 contractors. Thank you.

And he's brought in 25,000.

He, he nets between 10 to 25K.

Okay. And he has a day job in Maryland.

Yes.

Okay, so our, and thank you John for your compliments about the videos. I appreciate it. So John's in Maryland, has a great day job. I bet you 80 cents on the dollar that he's working for the government somewhere. Everybody In Maryland and D.C. works for the gov. And that's cool. Great job, great pension, probably so on the side. John's got a small business. Alright, that's cool. Now John may be a sole proprietor or John may be an LLC and that's where I would normally start John. And what's he doing? He's making about 10 to 20 grand. Alright, that's cool. And his question is, and we're going to by the way, what my book and my YouTube videos and my podcast and what everything's about is taking advantage of all the write offs. I want John writing off as much as he can. And so when I was talking about our truck driver that has a W2, same thing here. John has a W2 up here. A day job. All right, that's cool. And he's making money and now he's got a side business. Why aren't we taking John's side business and funding a retirement account and buying more real estate? You can have both, John, you can have a government pension and a personal pension set up in your own business. So we could maybe wipe out this whole 20 grand. Now let's say John takes all the write offs he can and he still only nets 20 grand. Probably not going to be at an S corp level. I got to look at his W2. Is he married? Is he single? Does he have kids? What's his long term plans? Can we find other write offs? But I'll tell you, it's probably a 95% chance going to leave you, John, right here. When I want you to get an S corp is when you're making so much money here that we've got a FICA problem. And you're already paying FICA with your W2 day job. So I just don't see it. John, I think you're fine just based on the few facts that you shared. Okay, Marie? Oh, sorry. Rosalie.

I have Michael Strong from YouTube. How do I minimize my dreaded FICA? I have a corporation tax as an S corp. As CPA said it would limit self employment tax.

It would limit. Yes, okay, and that's Mike.

You said Michael.

Michael on YouTube says, How do I limit my FICA? And I've got an S corp. So we're going to do. We're going to do two little pictures here. Now remember, we've got short term and long term. Now if Michael was buying rentals, they'd be over here, we'd have an LLC like Debbie in Texas. We have our little llc. Now over here, Michael has an S corp and he's like, I need to save on fica. Now what's interesting here, now this is really important, everybody. If you're out there with a small business and you've got a sole prop or an LLC and you're going to make 50 grand, you're going to pay FICA on everything. That's 15.3%. So times 15.3%, that's going to be $7,500 in extra tax. Well, Michael already has caught on. He's an S corp, so he's running the same money and the same expenses through an S corp. That's great. Now he's making 50 grand. Over in an S corp, nothing changes. We're comparing apples to apples. Now what do we do in an S corp? What we do is we kill the profit and we create two pieces. We create a W2 for 25 grand and a K1 for 25 grand. Now by doing that, we're only paying FICA for this portion. What did we do? We cut this in half. We just saved Michael $3,200. So Michael, the way you save taxes, this is the easy answer for everybody. The way we're going to save Michael taxes is by limiting his payroll. But we have to do it at a safe level. And in 22 years, we've never had a client audited for taking too little of payroll. If we help you determine your payroll and you get audited, we'll pay the penalty. And that's what all accounting firms should do. And that's why they're scared of their own shadow. And they never let you be too aggressive here because they don't want to take that risk. We're comfortable with a certain level of risk. So the other diagram that you can find out here in my book, Tax and Legal Playbook over on Amazon, or just get out on some of my blog articles on this is we're going to create a matrix, and based on your income, and as your income goes up, so this would be your income right along here, your payroll actually goes down. And that's as a percentage of your payroll. So your payroll percentage. So right here at 50 grand, I might have 50 grand of income, and I'm going to do a 50% payroll. But as Michael makes more money, his payroll would actually go down further. So if he makes 100 grand, I might be at a 33% payroll. So this is a diagram that I teach again in my book and in my business owner workshop. Get again over to my website, marcjkolar.com and check out the business owner workshop, where I go into this in more detail. So, Michael, that's how you do it. You just got to limit your payroll, make sure your accountant and you talk about your payroll level. And on that note, it's just kind of interesting. I had a meeting today with a client, and I said, so you have a small business? Yep. And I go, you Nescorp, you said? Yep. I go, how much payroll you taking? I don't know, people. This is your business. You need to know. And you go, well, I let my accountant take care of it. I don't care if you're the captain of the ship. You don't just sit down in your little captain's chair and say, oh, first mate, take care of it. I don't know. I don't care. No, you know what's going on on your ship. Don't let your account drive the ship. You're the captain. All right, what do we got?

Janie says, what percentage of your profit from your side business should you set aside to pay for taxes? P.S. i miss working for you and the firm from Cedar City, Utah.

Oh, and this is who?

Jamie, girl.

Oh, Jamie girl. Oh, Jamie, you're so kind. It's nice. See? Isn't it great? We're not a Perfect firm. But when you have a prior employee still following us and asking questions, saying kind words, maybe we're doing something right once in a while. So Jamie, thank you. Okay, so what was your question?

What percentage of your.

Okay, okay. All right, so we got a side business. All right, so well, here's in this example. So let's say Michael, he said he's an S corp, but let's say he's a sole proprietor or an S corp and Michael has this little side business. So Jamie, what we're going to do is, and this is good for all you self employed individuals out there, you want to set up a separate bank account. And this little bank account is where you're going to put what you think you're going to owe in taxes. And what I normally tell clients is to take about 20%. It's a safe bet. Just take 20% of whatever you take out of the business, put it into a tax savings account and then if you owe taxes, we can pull it out of there. If we get you tax savings or a refund, you get to go buy a rental property with it. So take about 20% of your net people, and that's a great place to start.

All right, I have hidden unknown from YouTube. How do you pay kids? Do they have bank accounts of their own and you transfer money from the FMC to their personal account or do they have cards from FMC cars?

Oh wow, man. Threw in a loop there. First name again.

She goes by hidden unknown.

Hidden unknown. My hidden unknown. That's. You're very mysterious. Okay, and you think it's a her? You said she. We don't know if it's a man or a woman. They want to pay their kids. All right, hidden unknown. The first question is, are the kids over age 18 or under age 18? Do you have an S corp? What kind of business do you have? Just going to give one example. Now I have a whole other chapter in here on how to pay family members. And so you would want to get over there and read that whole chapter on paying kids. And it's going to be just an excellent chapter for all of you that are in a family situation. So that is chapter 12. I have a whole section on paying kids. So in this example, just going to pay kids under age 12, under age 18. So if they're under age 18, you have three options. You might have a sole proprietorship, you might have an S corp, or you might have a little rental property, llc. You could just pay your kids outside labor, outside labor or outside labor now let me say everybody, your kids have to have a bank account. You have to pay them out of the business. And you're not going to send them a W2 and you're not going to send them a 1099. So no W2, no 1099. We want to make sure that we just call it outside labor. This year you can pay your kids up to $12,000 and there's no tax. So that's wonderful. You get a write off. Your kids don't even have to file a tax return or pay taxes, which is a really nice deal. So you can pay those kids that way. If you have an S corporation. We set up this little family management company. You call it a management fee and you transfer the money over here. Then you pay the kids and all the kids have to their own bank accounts. If you're trying to write off auto for kids, we're normally going to book it as mileage probably in the main company and not write it off in the family management company. But we can talk about that. But there's a lot here. I don't know how much money you're making. I don't know what your structures like, how old your kids are, how much you want to pay them. Are we going to fund Roth IRAs for the kids? But this is where a little planning session for a half an hour. We can knock it out of the park. Let's get you get with your accountant. If not, call us, right?

Yes, I have. Ruben, I just purchased your new book. How can I make contact with your office looking for your services?

Man, Reuben, throw me a softball. Wants to get with our firm. Everybody probably the easiest. If you would like to work with our firm, just go to any of our main websites, the accounting firm website, my law firm website, the Mark Kohler website or in all the YouTube videos. There's a link down below and you can get our free e newsletter and put a little contact form and say contact me and Rosalie Maria and maybe four or five other administrative assistants. They'll give you a call and they'll say what do you want to do? Do you want a little interview to see how we operate? They can answer your questions. If you want to give us a call, you would go to 888-801-0010 and you can give us a call anytime. And most times we can get you in within a couple weeks. If it's urgent, let them know and we'll do our best to solve the problem. And that's working with the law firm in the accounting firm, it's getting busy. It's tax season. Probably file an extension, start working on your books and get you filed in later. Springs.

All right, I have next. I have hour full tube. Is it possible to put a residential rental property in an LLC after tenant moves in?

Yes, absolutely. And it's not possible. It's. It's almost absolutely necessary. I can't think of why you wouldn't do it. You need to do it. So I'm going to just. Let's put it in our diagram. You've got your short term, you got your long term and you're going to buy a rental and you close it in your name and you go to the bank and you get a loan and then you put tenants in it. So that's great. Now you form your llc. Some you may have the LLC set up before, some of you do it later. That's fine. Then we're going to deed the property to the llc. That's great. Don't worry about a due on sale clause. We've never had a client pay on the due on sale clause. Or worry about it with the bank. You just freaking move it, you're fine. And then let the tenant know to write their checks to the llc. And on future lease agreements, it's the LLC and the LLC is on title. The LLC has its own bank account, the LLC pays the mortgage and you're off to the races. Now you have asset protection and that's why we're doing an llc, is to make sure you're protected from a potential lawsuit. Maria.

Carlos. Hi, Mark. I'm starting to market. Since I'm going to be wholesaling and signing the contract. I registered a single membered LLC this year. I'll be filing taxes and I haven't made any money yet. Do I need an llc? And what would you recommend moving forward?

Thanks. Okay, so he's not an llc or. He is. He's going to be.

I'm registered as a single membered llc.

Then the question is, should I set up an llc?

Do I need an llc? And what would you recommend moving forward?

Okay, first name.

Carlos.

Okay, Carlos, your question is a little confusing because you say in one portion of the question you have a single member llc and then you ask me if you should set up an llc. If anybody out there, if you already have a limited liability company and you have a tax ID number, I'm going to ask you, what's your business? Are you doing long term investments with real estate? Are you doing short term business selling something on the web or an affiliate marketing or are you a dentist or a landscaper? I don't know. So if you already have an llc, Carlos, we're going to start using it right away, Maybe make an S election. I want to track, see how your expenses are going. So I think, Carlos, if the question you're asking is a little confusing, so I'd recommend a console. Just talk to your personal tax or legal planner or pay for a half an hour or an hour with one of my team members. And let's just make a plan for the year. Guys, when. When you work with some law firms, they're going to charge 5, 10, or $15,000 for these exorbitant, elaborate plans. Watch out for that at our law firm. And this is what you should be looking for out there. Not if you don't want to work with us. Just set up an hour. Maybe you're going to pay 2, 3, 4, $500 for that hour, but they better impress you. They better save you 10 times what you're paying them. And we want to make that commitment that we're going to save you and put together a plan for the year. Very often, I'd say 80% of the time we're done in an hour, you got a plan for the year, and we make a few action items and you're off to the races. Now, if I got a client with a lot of stuff going on, we may have some ongoing meetings and elaborate planning taking place, but they got to be worth a lot of money. So don't be afraid to do a little bit of planning, and it's a good thing. Now, I'm going to say this right now before any of you else go. We're going to give away this book, the tax and legal play. Is that okay, Rosalie? I'm giving away this book, tax and legal playbook. Anybody out there, if you share this YouTube video, share this on Facebook. Rosalie in the morning is going to look at all the shares. She's going to find out who shared this video, and she's going to randomly choose a winner. And I'm going to sign it right now, Mark Kohler. And then you will receive a little message from Rosalie and she will put a little package together and send this to you. And I'm going to date it. 1, 30, 20, boom. So there we go. So share this video. Please let everybody know what you're listening to or watching, and hopefully we can impact your life. And Rosalie will take this today. A few more questions.

All right, next question is from Dylan Kohler from Arizona. Are there certain requirements to meet in order to qualify for the home office deduction?

Kohler. What a cheese ball. That's my son and I love him. He was helping us put out some of our technical fires before we started. So are there requirements to qualify for the home office deduction? Yeah. Have a business done. Boom. I want everybody out there that has a small business to have home office deduction. Don't let your accountant freak you out and say, oh, you're going to get audited if you take the home office. No, Even having a rental property means you have a home office because you got to manage your rental property. So it's going to be some deduction. Now, don't get too aggressive, but there's got to be something on your return. One of the best home office deductions is the simplified version. You can write up up to $5 per square foot for 300 square feet. That's $1,500. Boom. Take it and run. $1500 deduction. There's no depreciation recapture. You can have an administrative office as well as a day office somewhere else. So you're fine. Just do it. Thanks, Dylan, for the question. Appreciate you, bud. All right.

All right, I have Manny. Can I depreciate my computer that I bought as a civilian, but then now as a business owner, use it every day.

Okay, so Manny bought a computer. Now this is a great question because we're doing with this with vehicles, too. Manny bought a computer before he had a business. Okay, have some of you done that? You may have bought a computer, a laptop, a drone, a GoPro. You bought supplies, equipment, a camera. Then you start your business. Dang it. I guess I can't write it off. Oh, no, Manny, you can. But we have to write it off at the fair market value the day your business starts. So I want you to make a list of all the crap you're going to put in the business and what's the fair market value right now? So maybe you get hit ebay, Craigslist, whatever, and be legit and say, here's the fair market value. Now you're going to book it into the business, and you may be able to write off the whole thing on all those items. It depends on percentage of personal use, how big is your business, how much money you're making. But the bottom line is I want to try to write it off, Manny. And so we're going to have to look at fair market value, put it in the business. You got a write off, baby. Love It. All right, Maria.

Robert from Facebook says I have an expense from 2019 that are for. Sorry, my phone just went off.

Oh, we just lost his question. Oh, no. Okay, please send us an email and we'll take care of you. It's been a crazy day. We lost some juice on that tablet. Okay, go ahead. Rosalie.

I have Ola. Wally, I have an S corp and I am the only employee. But my S corp has not made profit last year. Hence no salary was paid to myself. Do I still need to send myself a W2?

No. So this is very important, everybody. Ole has an S corp. And you're going to have years where your S corp makes a bunch of money and years where it doesn't. In fact, yesterday someone stopped me somewhere and asked Mark, my S corp didn't make money. Do I. Can I. Should I just dissolve it? No, no, no, keep it. You may make money next year, so keep your S corp going, but only if you've taken payroll in the past. You have to still file the forms. They're called 941s and 940s. You're going to still file the forms, but you're going to put a zero so you won't have to issue yourself a W2 because the 941 is going to show zero. But you've got to file the payroll reports. And most importantly, even if your S corp didn't make money, you have to file the 1120s, which is the tax return for the S corp. Everybody that's due March 15th. We're six weeks away. So you got to make sure you file an extension or file the tax return and file the payroll reports, which. Manny, those are due tomorrow. So get that form filed open. Sorry, Ole. Get that form filed, but you're going to put zeros on it. And it's all good. Just do your best. And by the way, there's no real penalty if you're a little late with that form. Ole. Because the penalty is based on the withholding and you didn't have any withholding. But don't mess around. You don't want the IRS sending you nasty letters. So just get all those forms filed and if you don't know where to go, get to your accountant. Or if you don't know what to do, get to your accountant or give us a call and we can help you out. All right, Maria.

Okay, I'm back with Robert. I have an expense from 2019 that are from my startup. I need to set up an LLC and be able to report those expenses on my 2019 tax return this year, where do I go from here?

Okay, now this is really important, Robert and everybody listening, we're going to just do two more questions. Is that all right ladies? Okay, now Robert said in 2019, now this is important. In 2019 he said some expenses. So I'm going to put minuses. He had some expenses now in 2020, he's off to the races in 2020 and he said I need to form an LLC so I can take some write offs for last year. Okay, Robert, I don't like that statement. Everybody listen, do LLC save taxes? No. Does Robert need an LLC to write off an expense? No. LLC is do not save taxes. Did. I'm going to ask Robert, you had expenses last year. Okay, cool. You were in startup mode or did you have any income at all? And if Robert says I didn't have any income, I just had expenses, can he write those off in 2019? No. Okay, let me give an example and I know many of you that follow me are sick of it. But you can share this with your family members. Let's say I'm going to go out and set up a lemonade stand. I buy my sugar, my cups, my ice, build my sign. Just like Robert, he was building his lemonade stand. Let's assume in 2019, was he in business? No. Because he didn't sell any lemonade. All he had to do was have $1 of income. Now we're in business. Now I can take a deduction for this. Does an LLC even matter?

No.

Did you have income? Did you have expenses? That's all I'm going to ask Robert. If he says no, I didn't have any income. All my income is coming in in 2020. Then these become a startup cost and I have to write them off next year. Now is Robert still going to get a write off? Yes. Don't be sad, Robert. Write them all down, give them to your accountant. But I got to write them off in 2020. So that's the trick.

Okay, I have Michael.

Hi Mark.

I have a seven figure business here in Florida looking for a tax consultant to do my taxes. Should I use a local CPA or is a long distance accountant like you? Is. Okay, thank you.

Okay. And first name again?

Michael.

Okay, so Michael, thank you for that kind question. And this is good for everybody listening. And let's talk about Michael's situation. He's got a seven figure business and many of you, it may be a six figure, a five figure, a three figure, whatever. If you're in the small Business arena. And you're watching this podcast. Obviously you're trying to captain your ship. So, Michael, I'm proud of you and anybody out there listening. You're trying to live the dream. You've got a small business on the side or you're a full time entrepreneur. That's great. I want you to know what your expenses are. I want you to understand your structure. Then you're going to go talk to your tax strategist, your tax return preparer, which should be the same, and they're going to massage it, they're going to talk to you and work through it. Now, Michael, I'll be honest. If you've got a great strategist, not just someone that plugs in numbers, but if you can go meet with your accountant, go, hey, Mark Kohler was talking about S Corps and the payroll level, and we were talking about home office, and he talked about ASAPs versus 401ks. And your accountant goes, well, I don't care. This is the way I do it. And a lot of accountants can be egotistical and jerks, but if they go, hey, that's cool, let me get Mark's book. And I know Mark. Yeah, yeah. He trains accountants all around the country. Yeah, let me see what he's doing. That's cool then. Michael, if your accountant is willing to let you be the captain and they're willing to strategize, stick with your local guy or gal. I'm good with that. And take my strategies and go have a conversation with them. But if any of you, not just Michael in Florida, if any of you go in to meet with your accountant and they berate you and talk down to you and they don't want to strategize, fire them. Get rid of your sister, because that spaghetti dinner and TurboTax ain't cutting it. But no, get rid of your accountant and shop around. And the last point is, does your accountant have to be local in your town?

No.

Does your accountant need to be in your state? No. You can have a lot. We've had clients for 10 years or more and I've never met them face to face. And that's okay. Phone, fax, FedEx, Zoom, Skype, GoToMeeting, whatever. It's okay. As long as your accountant has given you good strategies and they know what you're doing. Great work with them. I don't care if they're in Timbuktu now. With that said, Michael, it's already the end of January. We're pretty darn swamped. We'd love your business. Give us a call. We would probably file an extension. We'll get with you and see how it goes. And so it's a crazy time of year in tax season. But don't give up on us. We're growing just like any business. And we got to be careful. Making too many commitments. But we appreciate you guys. My tax lawyers are always available for a consult. It's just going into a tax return prep system can take a lot more time. And we got to be careful not to overload our staff. So give us a call. We'd love to do a review, make sure you're set up in the right structure. Make a plan for the new year. We're going to give away a book. And please subscribe to the channel. I've got so many great videos and hit the bell icon. And whenever I go live, you'll get a little ping. And next week I will not be here. On Thursday, I'm on the road. We're doing our annual training at our home office in southern Utah. I'm going to be with my team doing this very thing with my team, collaborating. So I'll be here in a couple of weeks after that, maybe. I don't even know that. Maybe I may be gone for a couple weeks. I am. There's some travel in there. I got to relax a little. I've been working too hard. So you'll see a note when we're going to come live again. Probably in three weeks from today. But I appreciate your business. Keep following and. And oh, yeah, last point. Company maintenance special ends in two weeks. And that is we can do your minutes, clean up your company, get it dialed in and structured properly. So you may have set up your company and never done minutes. That's your LLC or corporation. Hundred bucks. First year special for any and all of your entities. Hundred dollars each to get all of your minutes caught up in your corporate book. Give us a call, talk to Becky. And Becky Lloyd will get you on the team and get rolling. So thanks, everybody. Keep living the dream. And a big thanks to my team here. Working with a lot of technical problems getting this off the ground today. Thanks.