LLC or S-Corp: The Tax Decision That Could Make or Break Your Business in 2025

Foreign. Welcome everybody to a live broadcast just for you, the Main street business owner. My name is Mark Kohler, cpa, attorney, entrepreneur, real estate investor and just here loving Main Street America. I grew up in a small town, grew up on a farm. My dad was a small town business owner and I just love what I do and I love you, my followers that are trying to build your American dream. So today I am here for you to talk about the S Corporation versus LLC. I have done my 10,000 consultations. I am a licensed lawyer, a licensed certified public accountant. You're going to get straight answers today. There's a lot of influencers out there kind of talking about taxes and legal because they have sometimes nothing else better to talk about. And a lot of accountants that just are too conservative, they don't know where to push the envelope. Lawyers that don't understand taxes, it's hard to get a straight answer. Not today. I want you to type your questions in the platform that you're watching me on, whether it's YouTube, Instagram, X, I am here for you. I'm going to rapid fire answers as fast as I can today because I want you to get what you need to succeed in 2025. I think there's over 45 million small business owners now in America side hustles. You're getting a 1099, you get a 1099, selling stuff on eBay, your YouTube revenue influencer revenue consulting, any sort of small business 1099, you've got to report it as a small business. I want you to get as many write offs as you can and make the conversion from an LLC to an S corp when the time is right. So that's what it's all about today. And I'm all yours. Now. We're going to start, I'm going to go to the whiteboard and I've got to get on the table our platform for how this all comes together and this is revolutionary. I've trademarked this, I've been teaching this from stage for 10 years now and I have clients that are worth a hundred million dollars. They've been paying thousands and thousands of dollars to lawyers every year and accountants and I draw up a trifecta for them and they're like holy crap. I've never, never had anybody present it that way. That makes so much sense. And I do the same thing for my brand new small business owner sometimes in high school, all the way to successful seven, eight, nine figure clients. And they love it the same. So I need you to adopt this. You're going to love it. And I want to build a trifecta for you. Our office does it every day for clients around the country. On it's amazing. So here's how it works. Your foundation is going to be this revocable living trust. You may have heard of a trust structure for you as a small business owner. Everybody needs one, whether you have kids or not, married or not, business or not, rich or not, doesn't matter. The trust is your foundation for your legacy you want to leave. This is also where all your money flows. It all flows down into your 1040 tax return. And everybody has to do a tax return every year. And water in my mind flows downhill, just like money flows downhill into your tax return. We're going to split your life in half. So this is your foundation. This is the first part of your trifecta. This is your legacy and is your tax return. This is where it all comes together. Okay, now on the left side, we're going to put your operations. And on the right side, we're going to put your assets on the right side. Think of this as passive income, which we all love. At night, your money's making money. For you, operations is ordinary income. And that's you working your ass off. That's you working so hard to create revenue. Now, you might have a day job over here or you or your spouse. And that's a W2. That's cool. But that's outside the box. That's going to come in here and feed your 1040 tax return. You also might have it go up here into a 401k and you get your match at work. Love that. I want you to get your match. And here, let's make sure we looks pretty. So there's your 401k. You get your match. And then we're going to build IRAs and Roths and HSAs along the way. Okay, so this is our trifecta. This trifecta is the map of how we build your assets. Over here is going to be your operational business. It might start out as an LLC and then convert to an S corporation. Over here you might have an LLC that owns a rental property, owns some bitcoin, owns an investment, has a note, whatever. Whatever you're using to build wealth is going to typically go to an llc. This LLC is owned by your trust. Your LLC or S Corp is owned by your trust. That's your trifecta. Simple. This example, this is a Realtor. A realtor has an S corp. They have an LLC with their rental property. It all flows down into their trust. They feed a solo 401k, feed their Roth IRA and they can even form LLCs and go invest with their retirement accounts. You've got an online influencer. Online influencer is an S corp. They're going to have a rental property llc. It's all owned by their trust. Now let's say this is a dentist or you're a small business or landscaper, architect, a contractor. And you've got a building, a shop, you lease it to your own business. That's called a dash four election. A great write off. So your building is rented to your business. Now you can take tax write offs for the rent, write off the depreciation and you're making money. Boom, boom, boom. Your best renter is always yourself. So this is the trifecta left and right now the big debate. And this is the part we're going to unpack. And I want you guys to ask questions, okay? In fact, come back to me, Dane. Okay, everybody take a breath. I know this is a lot. That's the trifecta. I want to build a picture for you when you can see your future and see how you're going to build wealth and see how it's going to come together. It motivates you, it gives you energy, it gives you power. When you feel that future coming alive, that's the fuel you need to wake up next morning and kick ass. A trifecta gives you a picture. Rather than some lawyer, blah blah, blah, accountant, blah, blah blah. You got a picture and that picture. I have clients. Put it up on the wall. I've got mine on my laptop. I love my trifecta. I put it with colors. I've got little real estate deals, I got cows, I got rental properties, I got businesses. I want my trifecta. I got a boat, I got an rv, I got toys, I got a four wheeler, whatever. That's your trifecta. Okay? Now you start that small business. Every small business owner, in my opinion should at least start out with an LLC, a limited liability company. Now, LLCs do not save taxes, but they build a foundation to transition to an S corporation. They give you a tax ID number. They help you be legitimate as a business owner. You, you can start branding your name and that LLC becomes your parent company for your operations. That LLC can be transitioned to an S corporation when the time is right. So even if you're getting a 1099 driving Uber, I would like to put that in an llc. Now, I know some of you in California are like, oh, My gosh, Mark, it's $800. The franchise tax Board. You have no idea. No, I lived in California. I know the frickin idea. I get it. But that LLC becomes a platform to make more and more money. The $800 is an operational cost. You don't like $800, move out of frickin California. Don't not do the LLC. You chose to live in California. I got out about five years ago. I'm sorry, I'm just being blunt. You know, the taxes are off the chart. Traffic, people, costs, properties act. It's nuts. But you love the Sea Breeze and you love In N Out Burger. I get it. Enjoy the ride. But you're going to pay 800 bucks for that LLC, and it's going to be your platform to grow. Okay, now, so that's. Now let's get to the whiteboard and let me explain how the LLC works to the S Corporation. And then I'm just going to answer your questions, see where we go from there. If you need a consultation, I'll give you a link to our law firm. My team is so affordable. You meet with a real lawyer on Zoom. Build your plan and your trifecta and get it going. Clean up your old entities. You've got to do this boi report. You got to do minutes, you got to do all these little things. I will help you get there. I don't want you just clicking on a website and freaking doing this and then having to fix it later. So let's do it right. Okay, so you start your small business, let's say, yeah, you're a landscaper. You're going to start doing a little landscaping, make a little money on the side. Maybe it's janitorial or some little service business. Doesn't take a lot of capital to start. You're getting some cash flow going. Maybe you're selling a product on ebay or Etsy at night. Fine. Influencing. Fine. You've got a little 1099, some cash coming in. You start out as an LLC. All right? Now with that, when you start to start out as an llc, let's say you get lucky and things are cranking and you're rocking and you're making. Man, I'd love to see you make about eight grand a month. It gets going, you make 100 grand. $100,000. But you're going to have a lot of expenses, which I want you to write off. I want to write off home, office, I want to write off auto. I want to write off your computer. I want to write off cell phones, I want to write off your kids, I want to write off dining, travel, all these great write offs. So we write off all these things. Let's say we write off $25,000 worth of all this good stuff. It could even be more, but it's 25 grand. You're going to keep track of all that and do your tax return for last year. I want to come up with as many write offs as I can for last year. 2024 going forward. In 2025, let's say you've got 100 grand, 25 in expenses and you net $75,000. That's your net. Okay? Now here's the problem with this. You're going to have 15.3% in what's called self employment tax. It's the F word. Fica. What the Fica. Hate Fica. Fica. 10 grand in self employment tax. Then you're going to pay state and you're going to pay federal. You're going to get hit three times some levels with my clients. Depending on their income, this could be 5% here, another 20% here, 15% here. You're at 40% in taxes. Holy crap. Number one cost in your life and no one wants to talk about it. It adds up. So when do we transition to an S corp? I would say this is ripe for an S corporation. Now. Here's why. So if we could take it now and convert to an S corporation. And by the way, it's super expensive. I know. It's out of control. We charge 200 bucks. I think it's 250 at most. Talk to a paralegal, 200 bucks to convert to an S corp. Same company name, same ein, same filing. None of that changes. You're just going to change it from blue to red. Red to blue. You're going to become an S corporation with one form, the irs. Okay? Now look what happens. You make the same hundred grand, you write off the same 25 in expenses. Everything is the same income and expenses. But when you net that 75, we're going to split it and we're going to take in this example, I'll say 37. 5 as a W2 salary. Because you're going to work for your own corporation and you're gonna take 37,500 as a K1. Okay? So now I've got my income split into two buckets and it's gonna come down to my tax return. Now look it, I still made 75 grand. I still made 75 grand. Here you're paying three levels of taxes. I still pay state and fed. Okay, well, what's the trick, Mark? Well, the trick is you're only paying the FICA on the W2 portion. Now, some of you accounts there are already freaking out. You're saying, mark, that's way too aggressive. Oh, my gosh. You got to do reasonable comp in 25 years. I'm going to say this real quick. You regular business owners, you're, like, wondering why I'm freaking out. Because there's accountants out there, CPAs, enrolled agents, tax lawyers that are literally typing hate mail right now. They are saying, mark, this is way too aggressive. Okay, well, guess what? I've taught countless continuing education courses on reasonable comp. I read every reasonable comp case. I'm licensed in multiple states as a CPA and lawyer. I'm a member of the AICPA in the bar. I read every case on reasonable comp. I teach classes on reasonable comp. I've never, ever, ever had a client in 25 years audited for doing the payroll matrix that Mark Kohler teaches. Never. I've interviewed prior IRS agents on my podcast. People, Accountants. I'm sorry, my accountants. You are far too conservative. Here. Pull your head out of your butt. It's okay. I can be aggressive with payroll. What's the worst case? I get a bill for some more fica. That's it. No one's going to freaking jail. Jeez. Okay. Sorry, everybody. That was me talking to accountants who I love. My Main street tax pros. I teach you how to do this and 90 other strategies. I want you to go to advisory. Making more money per month and helping more clients and enjoying life. Please do a demo. My tax pros, I love you and all of you business owners out there. I have a team, a thousand tax pros around the country. The Speakmark Kohler. Okay, so you can. Here's a QR code if you want to do a demo and learn about my tax pro program. Accountants out there, go check it out. Okay, now back to my diagram. Back to the diagram, Dana. Okay, so you do a W2. Look at this. You do a W2 for half of your income. So I'm going to pay FICA. It's 15.3% on 37,500. So what I've done, essentially, is I've taken this 10 grand and split it in half. So I'm going to spend five grand on my fica. I'm going to own up. I got to pay my fair share. Done. No fica, no corporate tax no Obamacare. Boom, boom, boom. I just saved five grand switching to an S corp. Yeah, you Californians spend $800, do it right and save five grand. That's the point. We're going to spend money to make money. That's okay. So people, if we go back to this here and I put this together in our trifecta, what I have as many, many clients. Start out as an LLC and convert to the S corp when the time is right. We still have LLCs for the rentals. Two different LLCs. We have our IRAs, we have our Roths. Everything flows downhill. River runs through it into my revocable living trust. Boom, bada bang. And we're going to convert to an S corp when we're about 50 grand net income when you're making 4 to 5 grand a month. I want to go to an S corp and I can pay for it with the cost of doing the tax return. I'm going to save that much or more in taxes. That's it guys. Pen drop.

That's it.

That's it. It does not have to be that complicated. But accountants and lawyers over complicate this to sell. Forgive my French. Any kids in the car, cover their ears. They sell you shit in Wyoming, in Nevada, Delaware, C corp, it's garbage. Or you need a package with $20,000 to have unlimited LLCs. No, just set up the freaking entity you need affordably right now with someone that understands your business. That's it. And let's get to work and go build our American dream. Alright now that's the concept today. I'm so passionate about it. I love it. I love being here. This is my favorite spot. And now the time is yours. Live with a real tax lawyer that cares about you and wants to save you money. I'm going to take your questions and go as fast as I can. Dane. And what do we got?

Alright, our first question is we are a plumbing company and are an llc. What are your immediate thoughts?

Okay, let's go back to the dry factor. I have right now. They're a plumbing company first of all I'd say how much money are you making? If they're making more than 50,000 a year, which plumbers kill it. I love Moonstruck is one of the best movies with Cher, Nicolas, Cage. The dad is a plumber in there. It is hilarious. Go watch Moonstruck. It's a classic from the 80s. Anyway, my plumbers know what I'm talking about. You should immediately be an S corporation if you're a plumber. Making less than 50 grand a year. Who are you? Okay, so you're going to be an S corporation. Absolutely. We're going to convert you over to an S corp. Also, do you have kids under age 18? Do you have kids 18 or older? We're going to start paying your kids properly. Want to write off all your trucks and your auto and your dining and your travel. Want to set up a Solo 401 or Safe Harbor 401 with your employees? There is so much I could do with you as a plumber it is insane. If you're making more than 50 grand, which you better if you're a plumber, you need to be an S corporation. You can go to my network, markjkohler.com go to up to the services, go to the network and you can search for an accountant anywhere in the country. They don't have to live in your frickin town. Find someone that speaks your language and let's get you taken care of. Dana, next question.

Another person in here commented and wants to know, wants to hear you talk a little bit about asset protection as it relates to LLCs versus S Corps.

Okay, so asset protection I'm not too focused on today, but let's hit it in a side note. When you set up your operational business, let's say you're an LLC taxed as an S corp. Plumbers, we charge you 250 bucks. Get over to our law firm. You go to kkoslawyers.com youm'll love our team. You're gonna get protection if anything goes wrong in your business. So you're protected. If one of your plumbing trucks hurt someone and there's an accident and there's a problem, you're protected. The LLC always protects you unless you're drunk driving or negligent, reckless, whatever. Now over here, where we typically use LLCs for asset protection and not tax planning is for my rental properties. You might have multiple LLCs. This is where LLCs can have two way protection so no one can sue you and get at your LLC or sue you inside your llc. Big conversation. I would get a comprehensive trifecta plan with one of my tax lawyers. They can build your trifecta, find out what assets you've got, where your risks are and then meet with them once a year. It, it's a tax write off. We want it. If we don't save you 10 times what you're paying us, there's a problem because we want you coming back and back to build your dream and make sure you got tax and legal. So do an asset protection review, a comprehensive trifecta. You're going to be protected with these LLCs. And the LLC may even protect the rentals from you. Because you're looking for two way protection, outside and inside. That's what you're going for. All right, next question.

Up next, we have a question here. Says I've been watching for over a year now. I'm 23, from Texas. I've made my LLC and I want to concentrate on transportation, cargo and passengers or transporting cargo and passengers. How would that look like in terms of asset protection? Another asset protection.

Yeah, I know. Bless your heart, everybody. Don't get geeked out on asset protection. If. Okay, he's listening. And this is being totally blunt. Sometimes blunt, honest, effing truth is what we want, right? So let me tell you, this guy's 23 years old. He's doing transportation of people and equipment. He's probably not sitting on a million dollars. I hope he is. I wasn't at age 23, but maybe he is. But let's just assume a 23 year old, a 23 year old driving limo, doing Uber, doing some trucking. They're not a billionaire, they're not a millionaire yet. They're 23 freaking years old. And I, gosh darn it, bless your heart for being an entrepreneur out there and kicking your butt and going for it. I love you, but does he need asset protection? No. Oh, you've got a million dollar rental property. You've got a fourplex, you got a duplex, you got a commercial building, you got a million dollars of bitcoin over here. Okay, let's talk asset protection. Oh, you don't. Then freaking don't worry about it. Get an S corp, get your LLC in place, convert it to an S corp, do all your transportation revenue up here. Write off everything under the sun. Go make some effing money. Go and deploy it over here and buy some real estate. Buy some stocks and bonds. Buy some crypto, fund your Roth IRA, fund your solo 401k. Build some wealth, buy a home. Your home should be owned by your trust. Oh my gosh. Go out there and just make some money. The word asset protection shouldn't even come up. Get your trust, get your S corp. Go now. When you start making more money and have some assets, then we're going to worry about protection for those assets. I'm not going to worry about protection for you going out and trucking. Yeah, you're going to have an LLC or S corp. It'll protect you fine. Make sense, I hope. Hard truth. Hard truth. Next question.

Next question mark. Do you think the BOI reporting will have will defeat the purpose of the LLC and S Corps for small businesses?

No, no, absolutely not. The BOI report is just you telling the federal government you own the freaking llc. That's it. You're still going to run your llc. You're going to make money, you're going to pay taxes, you're going to build wealth. I'm going to hide you from the public if necessary. When you hold assets, I can hide your address. I could even hide you as an owner when necessary. The BUI report is to FinCEN, the financial crimes Enforcement Network. That's the sister in the Treasury Department to the irs. They're sick and tired of money launderers and drug dealers and scam artists and child traffickers and they're saying, ha, I want to know in America who owns these 40 million LLCs. And we're going to go after the losers that don't tell us. That's not you. The penalty is $500 a day. The deadline is March 19th. You've got to get your BOI business owner information report in. If you don't know where to go, go to Main Street Business Services. That's our firm, Main Street Business Services again. It's super expensive, but we'll do it for you. It's 200 bucks. 200 bucks and all that crap's taken care of. But it doesn't ruin your llc. It makes it stronger, it makes it better. It makes you legit. So go to Main Street Business Services. Call up. You're going to talk to Brigham, my new client administrator director. He's incredible. Just say I want Brigham. He's the best. Google. Talk to Brigham. Get your BOI report done. Get your LLC or S Corp dialed in. You got three weeks. Three weeks and then it's a $500 a day penalty. Can my team, can you put the Main Street Business Services link down there? Just click on it and make an appointment. Right now it's a free appointment. Just call them up and talk to them. The most they're going to charge you is 200 bucks if you decide to move forward. It's a no brainer, people. Okay, next question.

Next we have a question about what is the best way to write off auto as a single member LLC taxed

as an S corp. Well, I thought you were going to ask if I like long walks on a beach. And I do. And I love to snuggle in front of a fire. But I just got married last month to my beautiful Patty and it's the love of my life. And a little shout out to Patty, I love you. We're still honeymooning and I want a honeymoon the rest of my life. And. Okay, but we'll talk about auto. Okay, so here's how the auto expense works. When you set up your trifecta. You got your entity, let's say your plumbing company. Let's stick with our plumbers. So they have an LLC and an S corp and they're doing plumbing. Okay. Now let's think about it. What are they going to have? They're going to have a truck and they may have a car. Ooh, maybe they have a motorcycle. Oh, you know what I'd love them to have? They also have an RV over here. This is cool. They got an rv, they got their motorcycle, they got their car, their truck. Oh, my gosh. This is so cool. Right? Okay, I want to write off all of these vehicles to some degree. Okay. Do you hear me? I'm going to game this out with you guys. So we're going to take this one at a time. So what we'll do is typically their plumbing truck. We're going to write off the truck as actual. Because I bet you they're using the truck 50% or more in the plumbing business. We're going to depreciate the truck. 179 bonus. If Congress comes through and it does what Trump asks, we're going to get bonus depreciation. That's cool. We're going to write off the truck like crazy. Gas, repairs, tires. Oh, my gosh. Love it. We're going to write the shit. We're going to write this off tons. Okay. Oh, the husband or wife. Now typically plumber. I don't see a lot of female plumbers out there. God bless you. So let's say this guy's a plumber. Married. His wife's driving the car, but she's going to run over to Staples on occasion. Kinko's. She's going to go to meetings, she's going to go to Chamber of commerce. She's going to run errands, she's going to pick up food and take it to the crew. Well, we're going to ride off the car. We'll probably do mileage on the car. Mileage on the car is going to be a great write off. Okay. This year it's 70 cents a mile. It's going to be a great write off. Right now he has a motorcycle. Now I've got a realtor that has a cool business. They brand themselves as the Harley Davidson realtor in town. It's cool little brand. So they'll go out and show properties as a realtor on their Harley Davidson motorcycle, cruise around, look at properties. It's kind of the little mo. Well, let's say this plumber, he's like, I'm the Harley plumber. I'm going to drive my motorcycle, my Harley Davidson out to plumbing jobs to bid them and then send my crew in the truck. But my motorcycle, the only time I drive my motorcycle now, yeah, I'll do a little drive in the hills, but 90% of that motorcycle I'm driving out to jobs. And I'm trying to impress people that I'm cool and kick ass and I'm a plumber. That's hip hop. And I'm going to write off my motorcycle. All right, you can write off. In that example, you could write off 90% of the motorcycle with depreciation and blah, blah, blah. Or I could do mileage. You get to choose because I'm using it 90% for business, going out on deals. Oh, well, on the side of the house, we've got this RV just parked there. How many people have an RV parked on the side of the road? Or I mean, on the side of the house not doing anything. They said, you know what, we only use it a couple weeks out of the year. Let's put it in Waverly, and we're going to go on Waverly and list our RV for rent, and we're going to use it two weeks out of the year, 14 days. And if I use it less than 14 days, I can make it 100% rental. I can write off 100% of this RV on the year I put it into service, even if I've owned it for two or three years. So now I'm right on off 100% of the RV. I'm riding 90% off of the motorcycle. I'm writing off mileage on the car to run around business errands. And I'm writing off over 50% of the truck. Holy crap. That's how I do it. And it's legitimate. This is not unethical. It's honest. Going to ask any client, all the tax lawyers on my team, we have 14 tax lawyers doing four to five calls a day all around the country. Boutique helping small business owners. And we say how to use your vehicles in your house. Oh, you got teenage drivers. Do they ever help in the business? Oh, you're married, single. Rv, motorcycle, truck, car, Turo Waverly, we get you. That's how we save money. That's how we save taxes, that's how we build wealth.

Next question, up next is how do you set up a truck driver who is basically paid 1099 but works for a company as a driver?

I love it. Think of this, you could be an influencer getting a 1099 from YouTube. You could be a truck driver getting a 1099 from. Oh my gosh. It just came to me. They're here in Phoenix. It starts with an S. What's their name? Oh my gosh.

Truck company.

Oh my gosh. I can't believe I just forgot their name. I've got to get through. I can't even do this without. So anyway, if you're a trucker and you're getting a swift. So I'm Swift Trucking and I'm getting a 1099. I could be driving for England out of Salt Lake, but I'm driving truck. I get a 1099. I'm an influencer, I get a 1099. I'm on Upwork as a consultant. I get a 1099. I'M A DENTIST that's a subcontractor for a dental group. I get a 1099. Any of you 41 million Americans this year are going to get a 1099 for 2024. The answer is the same. I drop it into a schedule C. This is option one, I drop it into a schedule C, which you're going to do for 2024. We take a write off for every expense we can think of and you're going to pay tax on the net. This is baseline, not great. Option two, you do an llc, you run it through a schedule C. That's how it works, same write offs. I pay my tax. If you're going to make more than 50 grand with your 1099 and we're going to take some expenses, but if you net more than 40 after all your expenses, then we're going to take your LLC and convert it to an S corp and then we're going to do what I was just telling you. You're going to take a W2, you're going to take a dividend or a K1 and we're going to split it and we're going to save you money. So this is beautiful. So Trucker 1099. Now you can't write off the truck because you don't own the truck. Doesn't matter, you got a 1099, we're going to write off your dining supplies, equipment marketing, your cell phone, your computer, your laptop. La la la. You're not going to have a lot of write offs. That's why I want you to get into the YES Corporation and save you on fica. Next question.

I am a therapist in the state of California and cannot become an llc.

Yes.

Thoughts?

Yes. We have been setting up professional corporations for lfmts. That's a licensed family marriage therapist for years. You're going to go to the Department of Professional Licensing for California. And I know California is red tape more than any other state. Now hang with me. This is important. Any of you that are a licensed individual as a professional architect, engineer, lawyer, accountant, dentist, lfmt, licensed therapist, you're going to go to Doppel, the Department of Professional Licensing in your state and you're going to do whatever form you need to get them off your back, right? You might have to do continuing education. Pay your damn fee every year. Do not care. Tell them whatever they want. People do not get sucked into the red tape of America that stops you from being an American citizen and making money. Pay the fee, do the regulations, do the right thing and get the hell out. Do not think they control your life. Give them the forms. They want to make Department of Professional Licensing happy. Now, in some states, and you're right, California is a pain in the ass. And you can say, well, I'm going to do a PC, a professional corporation or a pllc, a professional limited liability company. I know this, my paralegals do this every day. And you're going to get the right entity and submit it to the state. Maybe if they make you. I do not care. What are they going to do? Tell you you can't practice? You might have. You just need to check the boxes, give them the paperwork they want. Now what I like to do is in California, you're going to do the professional corporation. Wonder if you could grab Max for a second. What do you see? If he's free, one of my lawyers down the hall or even Ashley say if they could talk about a PC for an LFMT in California. PC, LFMT in California. Have him come in. Okay, I'm gonna pull one of the lawyers down the hall from my office. I'm in my law office right now. I'm not in like some studio in a building, in a warehouse. I'm in my law firm right now. I want to help you guys out. And this is important for all of you listening because you got to pay your dues with the licensing department of the state and then set up the right corporation as a lawyer. I had to set up a professional corporation and I registered with the state. Your S election to be an S corp is with the irs. The state of California does not care. So whether you're an llc, a pllc, a PC, an inc, A company, I do not care. Do whatever the hell the Department of Professional Licensing wants you to do as an LFMT, then file your S Corp your S election a 2553 form with the IRS and you're off to the races. I have done this over and over and over again. And yes, it's a moving target with California and the Franchise Tax Board. I get it. But don't listen to some lawyer that says you can't do it. Get a second or a third opinion. Backs are good. Have you set up a professional therapist in California recently? Yeah. And you just do a PC? Do you do a professional corp? Do you mind coming on camera for a minute? Okay, so this is one of my lawyers here. This is Max here. You lean in. You know, we got our camera here. This is one of my lawyers here down the hall. He was like in between appointments. So if we have a professional licensed therapist in California, Texas, New Jersey, wherever they're going to go to Doppel and do, find out the entity they need to do and make the selection with the irs. Any thoughts or concerns or questions? Like when you work with someone on that?

Yeah, the first thing I always suggest is go, go talk to the board. Go to the Board of Licensing, whoever that may be, go talk to them first.

Or go to the state website. Right. Before you call them.

Right, go to the state website. But you've had to bring your license into them regardless to be registered there as a licensed therapist. So going there, talking to them and saying, what entity do I need? And they'll tell you, do you need a PC? Because some states don't require it for these licenses. And so. But California, for example, very strict. You've got to meet the recommendations of what are not recommendations but what they require. So going to the state website, talking to someone there. But then from the federal.

Can I say don't tell them your name when you call?

Yeah, no, that's probably good.

Just say, I'm new, give them an alias. It does not matter. Right, right.

But then once they tell you, yeah, you've got to be a professional corporation. We set those up all the time. And then from a federal standpoint, you're just making an S election on that entity.

Yeah. So yeah, it's not that hard. And whether it's a pllc, a PC, an llc, an inc, realtors have the same problem too. And brokers are like, well, I'm not going to 1099 your LLC or your PC. Fine, 1099 me personally. I'll transfer it over to my escort.

Yeah, okay, cool, perfect.

Thanks, bud. Thanks for sticking your head in. Appreciate it. Okay, now I do want to say that if some of you get a 1099 personally and your Social Security number, we're just going to transfer that over to your S corp. Let me show you how we do that on the whiteboard. So, and any of you accountants out there, this is what we teach you in the Main street tax pros. So if you have your S corp, so let's say you have an llc, S corp, PC, pllc, do not care, but you are an S Corp with the IRS. And you go work for someone or even on YouTube or Amazon affiliate, whatever, they 1099 you personally to your Social Security number, okay? And you're freaking out. Very common. You're going to go, whoa, whoa, whoa. I'll do my schedule c on my 1040 tax return. I'll do a schedule C and I'll pick up that income. And then on page two, you accountants know what I'm talking about. As an other expense, you're going to nominee and essentially 1099 your own S Corp. So the IRS is happy. The money came in, the money went out. And you're going to put the ein on that line on page two of other expenses. Okay? So now that you've just audit proofed your tax return, everything's cool there, the IRS is happy. And then you pick up the income over here on your 1120s. Then on the 1120s, you've got the income, you take all your write offs, you do your W2, you do your K1. Now why did we do that? Because you only pay FICA here. This just saved you 15.3%. The more money you make, the more money you save. I have clients all the time. They make 100 grand here. I just saved you $15,000 that you're going to pay otherwise, which we don't want to do. Okay, a couple more questions. Dan,

Our photography business earns about $140,000 per year. Would an LLC or S Corp be better? Should I pay myself a salary? And how should I handle assistant wages?

Holy crap. Yes, you should be an S corp. You're bringing in 140 grand as a photographer. Now let's say this photographer, they write off their equipment, all their new gear, tripods, cameras, cell phones, travel, dining, auto. Now, I'll tell you on 140K. I bet you you're making 100 grand. I bet you I'm within 5%, maybe 10. So you're going to do an LLC, taxes and S Corp. And let's do this real quick for everybody to see the difference. Let's say that they don't. Let's say that they stay as a regular LLC. They make the same 140, spend 40 grand, net 100. Kirby, this was like you as a realtor, right? I mean, same story. I got my marketing director in here. Sorry, my PR director in here. I say marketing PR. She's in here helping me. And with 100 grand, well, you have a choice if you're an LLC. This photographer, they're going to pay 15.3%. 15 grand in taxes, then state, then fed. Okay? Now, if I do an S corp, I'll probably take 40 grand in W2 and 60 grand in K1. So now I just saved 15.3% on 60 grand. I just saved $9,000. That's it. Okay, guys, it's not rocket science. Every dentist, doctor, lawyer, accountant, attorney, cpa, engineer, influencer, landscaper, plumber, restaurant owner. We're all S Corps. We're all S Corps. We've been doing this for years. If your account says this is high risk. If your account says, oh, the IRS is going to audit this. If your account is freaking out, you've got the wrong account. And if you're an accountant feeling that, please, please come check out my Main street tax pros. Come do a demo. Come hang out with us. I would never teach anything that would put you in harm's way. I know this is legit and you'll be okay and you're gonna help so many small business owners. Maybe one more question. What do you got, Dana?

Let's see a good one to end on, by the way. We want to just invite everybody to subscribe. Most of these comments and questions that we're getting have been answered on previous videos before. And so definitely, if your question isn't being answered.

Yeah, please get over to YouTube, subscribe, and hit the bell. Icon. I go live twice a week. Every Thursday, I'm doing breaking news on IRS issues. We've got a leak at the irs. We're getting layoffs at the irs. We got Doge at the irs. We've got the Senate and House and joint committee right now coming up with the new tax legislation. We've got Trump talking about no tax on tips, no tax on Social Security. The list goes on and on. Every Thursday, I'm live with breaking news about the IRS and tax reform. Please listen in. I'll take care of you. And when I go live on YouTube, I go live on Instagram and X and TikTok everywhere. Okay, Danian, last question.

My accountant set us up my rental LLC to be taxed as an S corp. But do I do not expect to have more than $20,000 in net? Should I, can I go back to an llc?

You definitely should. Sorry. You definitely can go back to an S corp. Okay, let's back up. You should never have rental property in an S corporation. And you're already feeling that. And I'm sorry, you already know the answer. You got to get that rental property out of that S corp or revoke the S election is what it's called. The problem is, should you do it is the question. Because if it's already been in there a year or two, if there's any built in gain, you're going to pay tax when you revoke that S election or you've got to hold for five years. I would do a consult with one of our tax lawyers or one of our tax advisors in our network. Tell them you're thinking about doing a S revocation. What are the ramifications of doing that? But you've got to look at it. You do not want that rental in there. In an S corp with a rental, it just doesn't work. Now is it the end of the world? If you plan on just selling the rental in the next few years and not doing a 1031 exchange, fine. But if you're going to keep it for a while or you want to get creative or you want to do a 1031, the sooner you get it out of that S corp and rip the band aid off, the better. So I would do that. Okay, everybody, The American dream is alive and real. I'm not going anywhere. If you need a lawyer to help, do a comprehensive plan and just help you out, we're here for you at KQS Lawyers. If you're an accountant, an enrolled agent, a cpa, a tax lawyer, a financial advisor, an insurance agent, please look at the Main Street Tax Pro advisory program. We'll certify you as advisor. We'll get you clients. The many, many hundreds of people are watching this video going, where in the hell do I get an advisor like you, Mark? Go to the network. So if you want to be in our network, if you want to start a business as a tax advisor, as an accountant. Please check it out. Thanks, everybody, for being here Thursday. I'll be giving you breaking news on IRS issues and answering questions as well. I'm going to be here throughout the entire year with this exciting tax reform year to help you better live your American dream. And thanks so much. Have a great night.