LLC vs S-Corp: The Debate - With LIVE Q&A | Mark Kohler and Mat Sorensen LIVE |

To

welcome everybody to another live broadcast on the YouTube channel for Mark J. Kohler, Matt Sorenson, Facebook, and especially Entrepreneur. We love you. Thanks, everybody, for what you do there at Entrepreneur to help small business owners around America. And we are your tax and legal authority. Mark Kohler and Mr. Matt Sorenson in the house. We're here together live. This is, like, really uncommon. And we're here disturbing all of our employees here at the directed IRA headquarters. I had to represent today and put on a polo shirt with the logo Matt. Yeah, he's always a little more styling than me.

I learned about this, like, this morning that we were doing this. Oh, I'd already gotten dressed, and, you know, I got laundry issues. I don't want to go backwards already.

Yeah, you've got your rotation.

Yeah, I've got. I've got a. I'm not working with a lot.

So, yeah, we're challenged. Remember, we're just tax lawyers who are pretty much nerds in the space of high fashion, so they don't. They don't do GQ magazines for us. Okay, so today's topic. Don't go anywhere, anyone. This is for you. And we want to do as much live Q and A as we can. We're talking about the LLC versus S Corp. We got the whiteboard here. We're going to hit it. We want to make sure you know when to make the switch from an LLC to an S Corp. And let me start with a statement that's going to freak out a lot of you. LLC is do not save taxes. Yep. Did you hear that? Matt even knew where I was going. Llc, do not save taxes. Period. Sue me. I'll win there. I've written how many articles? We've done so much publication on this. Now, an LLC taxed as an S Corp is not an LLC. It's an S Corp. So LLCs, just plain vanilla LLCs do not save taxes. And we've already got some sweet questions. People are like, well, I'm already maxing out my fico. Should I switch anyway? Oh, we're gonna save you money, people, if we don't save you money with this podcast, we're screwed up.

Now, just because an LLC doesn't save you taxes doesn't mean it's not the right entity for you. There's many reasons to use an llc. It's like the Swiss army knife of business entities for business owners. So you may want to use it for certain purposes. We'll break it down now. If this is the LLC vs S Corp debate, do I have to pick a position. Are you one? Am I. I don't know.

That's true. We're going to have to duke it out here. Okay, so that's the debate. Maybe we both take sides at times.

Okay. Okay.

We'll see how it goes. I've also got to suck it in here because this camera angle is not flattering for me.

So I tried to work it and you guys moved it back.

But so anyway, well, here also we're going to do. We're here every week live on Thursdays at 4pm Mountain. We're actually in Phoenix today, which is Pacific time, three in the afternoon. But at direct at IRA headquarters, we're going to be giving away some books today. So here's what we got. The self directed IRA handbook written by me. Yeah, what I was going to say. The infamous Matt Sorensen. Matt's like me, some other guy here. And then my tax and legal playbook. The game changing 38 strategies that you can use to save money in your small business. I don't know. Should I give away a financial freedom? I probably should.

It's up here. What else are we going to do?

Yeah, let's give it away. Give away a Diet Coke.

No one buys them. We got to give them away.

All right, now, as nerdy accountant lawyers, we want to try to keep this lively. So at some point here, I'll give you the phone number for directed ira. If you want to set up a crypto Roth, so easy, so simple, you can be buying cryptocurrency inside your Roth IRA within 24 hours. So I'll give you the phone number here and anybody that opens a new account. I think we're going to do the first five new accounts today after the show will get their choice of one of these three books. Obviously you'll probably choose mine, but someone make Matt feel good and throw me a bone.

Mom. Anyone out there?

Matt's mom? You do not count. Okay, all right, so we'll give you a phone number here for that, but we'll give away some books too. Okay, well, Matt, you came out and said the LLC is the Swiss army knife. So why don't you argue for the llc, okay? And I'll. And I'll start the trifecta here on the board.

Okay, now we're assuming you're a business owner in this conversation. Okay? So when to use an LLC or versus an escort? Here's why I say that LLC is a Swiss army knife. 1 It's affordable. I guess the Swiss army knives kind of affordable.

Yeah. It's expensive. It's not like Rolex or anything.

It's affordable to set up and to maintain. Okay, so when we get to the S Corp. One of the downsides of an S corp is you've got to do quarterly payroll and you have a corporate 1120s tax return. But an LLC, if you're a brand new business owner, you're just starting out, you don't have profit yet. Cool. You have an llc, you've got asset protection of the llc, but there's no tax return required. Everything's going to flow down to the llc, down to your personal return on schedule C, which is where you file as a sole proprietor for tax purposes. So in summary, the LLC is more simple. Simple.

Okay. So simple. I'm going to debate this with him here.

Less tax filings.

You have to do Affordable, affordable. No tax return.

No tax return. And I'll add, it can be changed. So if you decide, you know what, I should be an S Corp. You can go from LLC to S Corp. It's very hard to go from S Corp back to llc. It's almost impossible. LLC to S Corp is very common. Many business owners go that route.

Yeah. Now we're going to do Q and A here in a moment. So hang tight everybody. I'm going to repeat this if it's hard to see. Simple, affordable, no tax return and it's convertible. Plus you get that asset protection. So the asset protection is really, really powerful and it's a great way to start a small business. Now here's the con bringing it. You're not saving taxes, remember that point. So I'm going to use the red pen here. If you start making 20, 30, 40, $50,000 in net income. 50,000. Ooh, is this red? This red's not going to work. Let's see if we can do blue. Here we go. So if you net 50 grand, you're going to pay self employment tax of 15.3% which is going to be $7,500 in self employment tax right out of the gate. Then you pay your state and your fed. So the llc, although it's simple, it's easy, people can set them up. By the way, it's not just one sheet of paper online, have all the pieces and parts to have a legit llc, but you're not saving taxes. So that's the con. But I like this convertible point.

Yeah. Now remember, as a business owner or someone self employed, you pay income tax like Mark said here, that's your state and fed. But you're Also paying self employment tax. 15.3% you're paying, that's Medicare and Social Security. When you're an employee. Right. You get a check your paycheck and there's 7.65% taken out of your paycheck. That's going into Medicare and Social Security. The company you work for is also putting that money, that same amount of money in from their bank account to the into Medicare and Social Security. When you're self employed, what do you get to do? Oh, you're an employer and employee. They think the IRS lets you out of it?

Nope.

You got, they make you pay both. That's why you get the 15.3%.

Now here's a few questions I know people are already going to ask. You get the same write offs in an LLC or an S Corp. Dining, travel, auto, home office, computers, electronics, cell phone, all of those are a write off in both companies. But the S Corp has a unique benefit of saving on this self employment tax, the dreaded fica. And you want to say what the fica. I know because you want to swear about it, but that's a, that's a very, that's a fine word. We don't get the E rating on our broadcast by saying what the FICA. Now, where do LLCs fit best? Now you could argue they have a good spot. Yeah. So tell us how that might work.

Well, one very common structure for an LLC is the rental property owner. What are you primarily looking for from a business entity? I want asset protection. If something happens on the rental, I want them to be able to sue the LLC and get what the LLC has. But I don't want them to come after me or my home or into my retirement account or garnish my paycheck or get any of my personal assets. So the llc, which stands for limited liability company, they sue the llc, they're stuck there. They can't come down to the other assets. So assets like rental property, some people use them for other, you know, personal assets you may have, whether they're investment or not. So it's a good asset protection tool.

Yep. Now so we like the LLC for holding property, think rental. We also like the LLC to be owned by Roth IRAs or 401ks. We call these kind of a special purpose IRA, LLC, if some of you have heard about that, that's why we're here at Directed ira. We love it. But here, down here is your trust. And your trust is going to own this llc. The trust might be the beneficiary of your Roth or ira. You might have an LLC up here doing other investing like crypto or who knows what you're going to do. This is the problem area. We've got this self employment tax we want to solve. So I'm going to say what I like about the S Corp. Yeah, can

I make one note? I forgot to say over on the rental, some people will be like, well Matt, but what if I'm making a lot of rental income on that llc? I don't want to. Should I use an S corp? Do I pay self employment tax over here on the rental? No.

Okay.

Rental income and other investment income is exempt from self employment tax to begin with. It doesn't matter. You're not paying it from the beginning so you're cool, don't stress about it. But business income over here from operations, selling goods or services, commissions, whatever, that's all going to be business income which is subject to self employment.

Yeah, not good. Okay, now I'm going to just make a couple arguments of when to use the escorp and then we're going to go to you. So start typing your questions down below in YouTube, Facebook, whatever platform you're there watching. Thank you for being here. We want to save you money. We're your resident tax lawyers helping small business owners in America. So we love this stuff. Okay, the S corp comes into play to help save the self employment tax. Now you're going to have to say what's bad about the S corp here in a minute or whatever. So you can convert this LLC to an S corp. S corp. Now it's an S corp, not an S corp like some ridiculous person might get in Vegas. This is an S corporation, so remember that.

Not advocating, I thought you're talking about the Ford car. Yeah, oh, Ford Escort.

So you know I'm always, I'm thinking of the bad things. All right, okay, so here's your S corp. Now in this example, you made 50 grand. You're paying FICA on the whole amount. If I can make the same 50 grand after my expenses. So say you brought in 75 grand and you have 25 in expenses and you're going to pay the self employment tax right off the bat here. When I make the same 75, I spend the same 25 and I net 50. We have a matrix we'd follow at this level. We're probably going to split your income into two pieces. Part W2, part K1 or pass through. Now we already have questions of people that are like, Mark, I'm taking a salary of 130, 140. Why would I do this? We're coming to that. All right, this is the basics. So I'm going to take this 50 grand and call half of it W2, and the other half, K1, which is kind of like a dividend, again, pass through ownership. There's no FICA here, no corporate tax, no Obamacare. This is where the S corp, the more money you make, the more you save. But this W2, you do pay what? The FICA. I got to pay my FICA. But the beauty in the end is we cut the 7,500 in half. So the story is by splitting my income in an S corp, part payroll, part dividend, I Now save on FICA. And in this example, $3,250. Well, some of you in California are like, well, my S Corp cost me $800. I gotta file a tax return. Let me see, spend a thousand, spend $2,000, save $3,200. I know that's hard math, but the more you make, the more you save. So don't stress about spending a thousand or two thousand dollars for an S corp when you're saving four, six, ten or more thousands in fica, Medicare, Social Security. So, Matt, what do you think? But what are the cons, I guess, of the S corp?

So one other thing to think about here is every 10,000 that you can push into profit or dividend, you save 1500 bucks. Okay, so let's say this was 100 grand. Let's just take another example. It was 100 grand net, all right? And you took a $40,000 W2 salary. The other 60,000 came down to just as profit or dividend. You're saving 15% on 60,000. So that is. So that is 9,000 bucks. Okay? That's a pretty big tax savings.

All right?

This is why for small business owners, this is the number one strategy. Now, who else loves the escort? Remember Donald Trump?

Okay, we were.

I mean, can you remember him, our former president, whether you like him or not, right? We were all obsessed about his taxes. Or some people were.

Yeah, we appreciate that.

Now, Biden, Joe Biden, had he disclosed all of his taxes? You can see all of his tax stuff. What is one of the one things we learned about his taxes? Joe Biden used an S corp because when he wrote books and he was speaking all that income, he wasn't going to take it in an llc. He wasn't going to sure as heck wasn't going to take as a sole proprietor. He used the S corporation tax strategy for this sole Reason.

Yeah. And he had about 13 million in net income and took about a $700,000 salary. That's a big savings on Medicare and FICA now. And we're not trying to be political here. On. Donald Trump was using.

I'm just trying to say it's not a crazy strategy.

Yeah.

Okay, so president used it.

Don't be sending hate mail here. We. We want everybody, Democrat or Republican, to be using the best tax strategy now. Okay, I know some of you out there, your CPAs, your attorneys or enrolled agents, you're getting mad right now. You're going, guys, you're showing a very aggressive salary. That's not right. You're making this look more lucrative. And it's too aggressive. The position you're taking.

Wrong.

I will tell you right now, I am. Matt, we go to every continuing education course throughout the year on reasonable comp, which is what they call the salary level for an S cord reasonable comp. We have never had a client in 20 years get audited for taking too low of a salary. We've got our limits. We're not doing a $10,000 salary and 200 grand in K1, but we have an ex IRS agent in our office as a partner in our firm. We interview IRS agents. We do represent people that come to us that need help with the irs. We go to all the conferences on this topic. We stand behind our allocation. If we do your tax return and you get audited for too low of a salary, we'll pay the bill. So for any of you that are a little upset by this, or you're saying, well, my accountant said that's too low of a salary or whatever, get a second opinion, people. We'll stand behind it.

Yeah. And so now you can't go to zero. And Mark, hit a keyword there, reasonable compensation. So see, if you think about what you're doing here in an S corporation is you're saying, all right, I get to make money as a business owner in two ways. One, I am the employee working in the business, and I got to pay Medicare and Social Security on that. Being an employee, that's to start how our system's built. But I'm also the business owner, so can I get the profits out of the business without having to consider all wages and salary? Yes, but only in an S corp. And the IRS says you must still take a reasonable salary. So you can't take a zero salary and then just push everything out in profit because you have to have this reasonable compensation test. And that's what's you know, in the Internal Revenue code. So that's what Mark's referring to there.

Okay, now we're going to turn to questions for all of you. And this phone number here is if any of you want to start self directing a crypto IRA immediately. Very affordable, simple and easy. It's like Game changer and who Sliced bread. We're slicing crypto up in your Roth so you can make those decisions immediately and you don't have to have millions of dollars to do it. So if you'd like to call again, the first five people that set up a Roth IRA crypto account, you're going to get your choice of any of these free books. All right, now I've got some questions already here on Instagram. Corey, do you want to come out and throw out some questions as well?

Yeah, totally. So I have a question from Alex Arnold. I would like to open an S Corp for trading stock futures right now. I would be the sole owner, but will likely add my fiance after we are married. Do you see any problems with the setup?

Okay. And Corey, I will ask. He said he's going to be trading stock futures.

Yes, he did.

Yeah. Okay, well, I'll take the stab and you can comment too. By the way, folks, Matt and I, my amazing partner here, we have a two weekly podcast each week. So we're good to bantering back and forth. And you want to get over to Main Street Business podcast or directed IRA podcast?

Thousand.

Well, I want to say millions of downloads and close to probably 500, 600 shows. So over the last 10 years. So lots of good stuff there. Okay. If you're trading stock, if you're trading futures, that's considered investment income. That's not ordinary income. And generally you don't want to classify yourself as a trader. You want to keep that passive. So I'm not going to run trading income through an S Corp unless I have to.

Yeah.

Now some of you say, well, someone told me to do it because I need to do this and I want to take write offs for my trading. Get a second opinion. Those write offs may not be worth the extra tax you're going to pay.

Yeah, generally from a tax standpoint, you'd rather just run it through on your personal return or even through a single member LLC over here. I put trades over here because you don't have to pay into Medicare and Social Security on your, you know, you're selling futures contracts for profits. Now if you're day trading this and you're, and you're, you want to be In a trade or business of it, where you want to expense things, you're going to conferences, you have employees and stuff like this. Okay, maybe let's come over here. Let's come to the S Corporation. But if this is just some investment stuff you do on the side, I probably wouldn't get in the S Corp. It's not worth the cost. Because remember, the S Corporation we're doing to save taxes. There's nothing to save yet. You're not even in the mix. You're not in the crosshairs yet.

I wouldn't worry about it. Also, there was a note here that if you're gonna set up a Roth account, when you call, make sure you hit number one and then again extension one. So you're gonna get number one option, then number one option, and you'll get a live person. Believe it or not, there's a lot of apps out there and companies setting up IRA accounts where you never get to talk to your human. You can actually talk to some people right over here. I feel like, as a Jerry Lewis telethon. All right, I had a question here on Instagram. Corey, let me do that one first. Garrett. Oh, this is when you had two. This is a good one. Okay. Garrett in Kansas City says, are there continued tax benefits for an S Corp filing? If my business income is 4 to 500 grand, I already take a salary of 154 so I can max out my 401k, which we love, by the way. Yeah. So he's doing the 19, 5 employee and around 38 grand for the employer portion. He says my FICA max for 20, 21 is $142,800. I'm not saving any FICA if I max this out. Now let's put this on the board so we get. So everybody can understand what he's talking about. So here in this S Corp situation, let's create a little more space here so we can see this. Garrett says, I've got my S Corp and I'm netting, he said, four to five hundred grand. So let's put 450 here. And he says he's already splitting that into two pieces. He's taking a salary of 154. I'm going to put 150, which means he's taking a K1 of 300.

So approximately doing this. We can do the math, right?

Yeah. And frankly, I think your salary is a little high. I'd probably.

He's maxing out the solo K. He.

He's. He's trying to Max out the solo case. So that's his benefit. I think if you brought down this FICA to, I mean, your payroll to 125, you'd want to see how much less you got to put in your 401k. And it could be the savings of the FICA. But, yeah, let's leave it at 150. So what Garrett says is, I'm already paying all the FICA I have to this 300 that's coming out of the bottom. I'm still not paying FICA on that.

Oh, wrong.

You're paying Medicare. And Obamacare kicks in after 250 grand. So you've got close to 3% or more kicking in on this 300. I just now at the high end, 3% would be $9,000. 2%, we'd be around 5 to 6, $7,000. So, Garrett, I think the S Corp gives you better asset protection, better audit protection, and the ability to work with your salary here in a more creative way. Now, I am. I'm also a little confused, too, because you said, Garrett, you're doing a salary of 154. So it sounds like you already are an S Corp. You're just, like, wondering, is it really helping me? And I'd say absolutely, because you're saving on Medicare and Obamacare here. FICA is Social Security and Medicare. So anything you'd add.

Yeah, when. When Mark's saying FICA and Medicare, see, not 15.3%. About 12 of that is Social Security, which is what maxes out, as Garrett's mentioning here at the 154. You know, wherever they're. Sorry, the.

Yeah. 154.

Yeah. Or somewhere.

142. 142.

Yeah.

So what he's saying there is. Guys, I'm not saving that anymore because I've already maxed out how much Social Security, basically I have to pay in. But the rest of that is the Medicare. The 3% that you pay, there's no phase out on that. You always pay it. There's no cap. So you're at least saving that. You're saving the Obamacare credit. But let me say one other thing that's important. Between the LLC versus S Corp debate. Okay. That you just. You just glossed over. Yeah.

You just.

All right, you know, you kind of dip your toe into it, and I'm going to just push you in because this is a good one.

Okay.

Yeah. So you're like the kid on the. OR at the pool. You just dip your toe.

Yeah.

I'm the one that does this. Thank you.

I was the nerd that always that I happened to me.

I actually wasn't the guy doing that. I just want.

I just want to be clear. Okay.

I don't want any hate, Mel. So in an llc, remember, you're just taxed as a sole proprietor. This is flowing down to schedule C on your personal 1040 versus the S Corp, where you're filing a separate company corporate return, an 1120s. Now, the sole proprietorship tax return for a business, if you're an LLC and it's just flowing down to your sole proprietor, schedule c is audited 13 times more than an S corp tax return.

1300%.

Yeah. You're putting in more tickets, 13 more tickets into the audit lottery every year than you need to. Okay. You only want to throw one in. Okay. Don't throw any extras in. You do not want to be called on this one.

Now, let's do a timing question real quick. There's a question here from Susan on Instagram, and she said, when should I convert to an S corp? I don't know what my year is going to look like yet. And very common. Good. Good question. So if we're here in 2021, what I would say is get your LLC set up, if you haven't already, and then see how the year goes. You can plug along first quarter, second quarter, third quarter, and go, ooh, ooh, I'm starting to make 40, $50,000 or more net. And that's what we. Where we think the Cutoff is around 40,000 net. You go, holy crap, I'm in the money. Well, I can't set up a brand new S Corp in October for the whole year, But I can backdate an LLC to an S Corp. So when Matt said they're convertible, that's the really good thing with starts to rain. You can throw the top down.

Yeah, I was gonna have a different analogy. I was like, remember, Susan, this is the, you know, this is the Swiss army knife, the llc, of course. So it's like you kind of got started and you're using the Phillips head, you know, and you realize, oh, this job calls for the flathead. The Swiss army knife has that. So the, the llc, you can switch to the. To the Escort. But like Mark said, if, if you didn't do the LLC yet, you know, if you just stayed sole proprietor, like nothing was filed at all. You're just an individual out there doing business. You can start an S corp moving forward, but you can't backdate anything to pick up the S election. So get the LLC going and. And that I. That's a good recommendation for a lot of our business owners who are like, maybe you're. You have a side hustle and you're like, you know what? I don't know, maybe I'm going to make 10 or 20 grand a year on the side. Maybe I'll make five. I don't know. Do I want to go through the hassle of doing an S Corp? No, but I want to have an entity and be legit and, you know, have some. Some asset protection if whatever stuff I'm selling or service I'm providing go bad. But that also gives you the ability to add the S Corp election onto that LLC when you need it. You can grow into the structure. I love it.

Well, we just had a phone call over here. Someone's setting up a crypto. Roth going to make some money on bitcoin tonight. Heidi, no calls for you yet. Gosh. Oh, you put it on do not disturb during the telethon. Unbelievable. You know, this is. There's a promotion going on here. Okay. Anyway, for any of you that we'll give away some books there. Okay, Corey, give us another question here.

All right, I got an Adam F. Saying, is that Diet Coke? Rockstar's not going to be happy with you, Mark.

Oh, true. That's true. Well, we recorded our podcast at noon today. I drink my Rockstar during the podcast. So this is. This is Diet Coke. If I drink a rock star 3, 4, or 5 o', clock, not good. I could be up all night. So.

Yeah, and I want to just, you know, Rockstar was brought into the office because, you know, the team here knew Mark was coming, so there was. Rockstar was shipped in.

Yeah. So my Rockstar v. Rockstar VP of Marketing. Just know that the entire team knows when Mark comes to town, there's rock stars in the fridge. That's how much we love you. Okay. All right, Corey, next question.

All right, I got Giovanni. For a media company whose revenue is coming primarily from affiliate marketing, would an LLC work best? Even if our income is over $100,000 a year?

No. Okay, now this is good. This is a good question. Giovanni, let me make this point with the S Corp here, okay? Remember, we're going to divide your income into two worlds. Over here is your stock trading, your investing, your crypto, your rental properties. Over here are your operations. Let me just make it easy. Giovanni. Every dentist, doctor, engineer, affiliate marketer, realtor, broker, attorney, accountant, plumber, electrician. We're all S. Corporations. And if you're going to net. Now when someone says income of 100 grand, I don't know if you mean gross or net. I want to see net of 50,000 or more. So 50k or more. We're doing an S corp every time. So that means if you're bringing in a hundred and spending what, I don't know, 50 to 25. Your S Corp material. So affiliate marketing fits right into this model. You, you would not stay an llc. Absolutely not. Yeah.

If you are an llc, just do it. S election, you will convert into the S corporation. So an LLC taxed as an S corp is an S corp as far as we're concerned.

Okay.

You're still an LLC at the state, but for tax purposes, you are an S corporation.

Now if some of you need to make that election on an S corp, I'll give you another name and number. I want to Be resourceful here. 435586. 9366. You can talk to a paralegal, get this done for around 150 bucks. So it's very easy and affordable to become an S corp. And the paralegals are going to backdate it back to January 1, 2021 or if you set up your LLC in the last two or three months, as far back as we can. But Susan's at the law firm. We have our law firm. There's a resource to get your S election off and running if you need it. Okay, Corey, next question.

Awesome. Chris asked, when is the C corp good? I think I paid too much in tax and taxes even as an S corp because my income was so high and all the pass through income killed me.

Okay.

Never.

Yeah. When is the C corp good? When you want to sell stock on the New York Stock Exchange, the nasdaq. So if your company is going to go to the NASDAQ or a public exchange, maybe a C corp, it's used in weird tax strategies. Not weird in some tax strategies, but not to actually run the business. So we rarely set up C corporations. Remember, a C corp is you pay corporate tax of 21%.

Okay.

Then you have to pay down the profits to you as a dividend which you pay income tax again at you pay a dividend tax on. So you're paying two levels of taxes in an S corp like he asked. And the question is, Chris right? It's like the pass through income killed me. Well, that's all there is. It's only one tax and you must have been in a high tax bracket and it must have made good Money. But yeah, I get it. You know, you may be paid the max rates. You know, maybe you're about 37%, and maybe you live in California and had to fork over 12 or 13. I don't know what they're at now. So you. So you basically, you know, you kept half of it at the end of the day, but. But you're what you will pay more by doing the C Corp. The C Corp never wins in small business.

No, it doesn't win.

The only people that do those anymore are people that became tax lawyers or accountants in the 70s, and they haven't paid attention to S Corps and LLCs and stuff that's happened in the last 20 years.

And this is a question someone asked, can I convert a C Corp back to an S Corp? And that's from Mars Q. Mars Q. Let me say one other thing to Krista. There's other ways to save taxes, and if you're struggling with that pass through income. We want to start talking about, are you paying family members? Are you paying your spouse? Are you married or single? Do you have rental properties and depreciation, Depreciation that may be able to offset income? Are you funding a solo 401k? Do you have other employees? Do we need to look at a safe harbor? Are you writing off all your travel, your dining? Are we looking at a DB plan or a cash balance plan? There's a lot of strategies we would still throw out there that would work perfect with an S Corp. So if your accountant isn't throwing down a bunch of ideas on top of the S Corp thing. Yeah, you need to get a second opinion.

Yeah. We recorded a podcast on the Main Street Business podcast. It's on all the podcast channels for over an hour, going over 2021 tax strategies for business owners, where we just started throwing out the ideas. Now, good tax planning is not just like, oh, I pushed the easy button, I got the lower tax bill. Okay, good tax planning is, what are the 20 or 25 strategies I need to look at? And maybe I do six or seven of them and each one might be worth a few thousand, maybe ones worth 10 or 20, but they add up. And so you learn those strategies that work in your structure and business and. But those things all add up and so you pay less tax.

And that podcast we recorded two days ago, or maybe it was yesterday, it should just be coming out. 25 different strategies a business owner should be thinking about for 2021. So, Chris, make sure you catch that on itunes. That'll be the Main Street Business podcast. Now, Mars Q says, can I convert a C Corp back to an S? Generally? Okay, technically, maybe. It depends on when you made the S selection. Was it at the outset of the formation of the C Corp? You have to look at built in gains. Do you have appreciated assets? Inventory or equipment? Depreciation, recapture. It is a mess. I've had my accountants in my accounting firm, they just are so frustrated when they have to tell people, the C Corp's costing you. We have to unwind it and it's an ugly band aid to rip off. I mean, there's triage, there's blood everywhere. I mean, it's not fun. So. So Mars Q, anybody of you that's in a C Corp, and heaven forbid someone sucked you into a C Corp in Nevada or a state you don't even live in, please get a second or third opinion. I'm not kidding. I'll put my money where my mouth is 98% of the time. That's not what you should have done. And you got maybe taken advantage of and I'm sorry, reporting to the Better. Better Business Bureau, the state Department of Professional Licensing or Department of Consumer Protection. Consumer protection. I get sick and tired of hearing people get ripped off like that. Okay, Cory, next question.

Awesome. This is from R. Gardner526. How does a trust own an LLC? Especially if I want to have an LLC for cryptocurrencies.

Oh, okay.

Okay. Let's just do the basic trust and then I'll let Matt answer the crypto.

Is that okay?

Yeah, Matt's our crypto expert and I'm mining for crypto right now, but it's a little complicated and it's exciting, but for the average person, that my wife said the other day, I don't want to mine, I just want to buy some Bitcoin, set her up a directed Ira Gemini account. That'll tell you how to do it. It's really, really simple. Okay, so the trust, everybody out there, the trust is a revocable living trust and it's not for asset protection. It is for privacy and estate planning. That's. It doesn't help with protection. It helps your family members inherit your property, your assets, brother, sisters, mom, dad, husband, wife, whoever, kids, good kids, bad kids. You got to have a plan for when things. When you pass away, because it's going to happen. I hate to break it to you. So the trust owns your S Corp, or it owns the LLC that's going to become the S Corp. It also owns the LLC that's going to own the rental property, it's going to own your home. Do not worry about the due on sale clause. Do not worry about the transfer costs. It very simple and easy. There are a few states where there might be a transfer tax. Florida, Nevada, Washington state. But a lot of times there's exemptions for that when you're transferring it to your own llc. But if you're going to buy cryptocurrency, one option that most people were stuck with for the last few years was they would have to set up an llc. Well, let's even go further back. They'd set up a self directed ira, like a Roth, our favorite, and then the Roth would open an llc and then they go out to some sort of exchange and get a wallet and get going and then they start to trade. But that's the old way of doing things in a lot of. I mean, what's the simpler way? You want to diagram it or. Yeah, I'm gonna trade places with you.

Okay, so what was the guy's name?

Charles Gordon. What was Corey.

Started with a G. It was our gardener. It's, it's just our gardener.

Okay, all right. Okay, so let's, let's say that you want to trade crypto personally. Okay. First of all, there's no reason to use an LLC. Why would you use an LLC? We use LLCs for asset protection. Do they save taxes? No. So why do I need an LLC for crypto, like a rental property, if I'm going to personally own it, I don't want my name on it because the tenant slips and falls. They can sue me. But crypto, I don't see a need for using an LLC for personally owned crypto. But like Mark said, many people were using retirement accounts to buy crypto because when you buy crypto in your personal name, right, Then you go exchange it for another crypto, or maybe you use it to go buy a Tesla or whatever. You pay tax on the gains. Even if I trade Bitcoin for Ethereum, and I don't even use any money, I just trade the type of crypto. Will you pay tax on the built in gain and the appreciation when you went from bitcoin to Ethereum? So it's very complicated and it can be very confusing come tax time. And I've got a whole article on Entrepreneur, by the way, on crypto taxation. You can go just check that out. So the retirement account became really popular, particularly the Roth Roth IRAs. Right. You pay no tax on money you make in a Roth ira. It's the only vehicle you can use to make money, not pay tax and not go to jail.

I love it.

That last one's kind of an important part.

That's kind of a winner.

Winner's coming. So. So the like what Mark said, the old way. Oh, this is.

You're doing okay.

Okay, the old way. We got a Roth. It's going to own an llc. I always remember the Nicki Minaj song about called llc. Oh, yeah. Nicki Minaj has a. You know, you're kind of nobody until you have an llc. Yeah, even Nicki Minaj knows that.

All right, now you've got your wallet here.

Okay, let's say this is your crypto wallet and you're, you know, buying and change and you're buying and selling Bitcoin.

And especially if you want to do cold storage, that's where the LLC is going to be helpful too, because you want to be creative. You might want to do all sorts of things. But this was the old school way.

Yeah, this is the old school way is I have an llc. It has a bank checking account. I link that checking account to a wallet on Coinbase or Gemini or Kraken or Finance, wherever you're doing it. And I'm buying and selling crypto. Now at the end, it's owned by my Roth IRA. It's not going on my personal 1040. Just like the stock you buy and sell with your Roth IRA doesn't go on your tax return. Well, what we've done now at Directed ira, where we're at now is you can have a Roth IRA or any retirement account, hsa, traditional ira, whatever you want to self direct. You know, that's what we do at Direct ira, it can own a wall wallet directly at Gemini. Gemini is one of the largest exchanges and providers in the crypto space. They're a licensed trust company. There's not many people licensed out there in this space, so we only like working with them. We're an actual licensed financial institution ourselves, so we think that's important.

So, okay, does that hurt?

Yeah, it's a good thing, right? So here your Roth just owns a wallet directly, and now this. You, you need no LLC in the middle. We set up the wallet for you on an exchange and you can go, we're going to put the cash in there from your Roth ira. You get added as a trader. Now you can go trade the account, you can go buy Bitcoin and just sit on it. You can trade all day Bitcoin and go in and out of it if you want. Or Ethereum or you know, they have 40 plus crypto currencies. You can buy and sell, but you're not paying tax on it. It's growing for the long haul in your Roth ira.

And what I like too is the thing that takes the longest to start doing this is just getting your money here. You can have this account set up to buy tomorrow. It's just, how do I fund my Roth and get the money there? And then you're off to the trading.

Like, we can get your account set

up here in a day in your

Roth and we can get your wallet going at Gemini. We set up your account at Gemini. It's owned by your ira. It's not owned by you, it's owned by your IRA here at Directed Trust Company. So we actually established this and we have an institutional relationship, so we can establish it. You just get added as a trader. So really the only delay is sending the money over from Fidelity or Schwab or wherever your current IRA funds are at.

Or an old 401k.

401k. That's the only delay. We're just waiting for the money to hit. We put it in there, give you an invite to be a trader on it. You got to get verified there, but that happens within 24 hours. Now you're off. And you could do crypto without having to worry about taxes and tracking things. Or you, you know, if whatever crypto you buy goes to the moon, you don't got to worry about cutting a check to the IRS for half of it.

There you go. B. Awesome.

Actually, I have another one on this, this crypto side. Again, if I have a crypto, and if I have crypto in a self directed Roth ira, is staking considered a UBIT or UBTI from Todd?

Only if you're mining, staking wood.

He said staking, which is another version of mining. Oh, okay.

Because staking creates ordinary income.

It's not interest. Yeah.

Okay. So if you're staking with crypto in your llc, you would have ubit. So in that scenario, and this is what I'm kind of a pro at, is you've got a third option here. So if you have your Roth IRA here, what you would do is you set up your LLC to hold your crypto that you go out and earn during staking or mining, but then you set up an entity to just mine or stake and this we turn into actually a C corp and it's a blocker. And what we mean by blocking is it blocks you bit, you don't pay UBIT. You only pay a 21% corporate rate, which is half of what UBIT is. So you pay your 21%. And for my mine, I just transfer it down to this LLC at the end of every day. So it's kind of fun. I get home, I'm watching Netflix and I'm like, I'm going to transfer my crypto for the day. So if you're snaking or mining, you just pop it down here. Now this is a more complex structure. You're going to need two entities. But the beauty is you're out there maybe getting a bigger return on your money for the average investor. Again, 90% of our clients, they're like, freak, I just want to buy some Ethereum. Mark Cuban said it's going to be the next, you know, currency. Let's get it going. So you can do this within minutes and you're off to the races. But for those that are staking and mining, talk to one of our tax lawyers and they'll set up the structure for you and you're off to the races. I do it too. I got my little mine hash right here and I can look at my mining. I'm mining at this very moment right here on. There we go. So those that know mine hash, I've earned in the last hour $11 in Bitcoin. Just mining. I only have three cards going, but whatever. Okay. We didn't know if we got any people to give books out to as well. Okay. I had another question. If you make dollars online, do you pay state taxes in all 50 states, like California? Dr. John. Okay, Dr. John, regular follower. We love your questions. Okay. State tax is a tricky one. Before I actually came to starting our law firm 20 years ago, I worked at KPMG Pete Marwick, which is one of the big four accounting firms here in Phoenix. I came down and did an audit for Swift Trucking. Oh, Swift Trucking. Yeah. Yeah. I don't know if you knew that. And so we had. They have to pay taxes in all the states they drive their trucks through, believe it or not. So trucking is a very state tax intensive thing because you're driving on the roads of all these states, but when you sell online. Congress has been trying to tax more and more online transactions as well as the states because they don't have people walking into a store anymore getting sales tax. People are buying crap online. Let me say this in general. Currently the general rule is you have to have significant sales. I don't want to say a million in sales, but I'll Just use that as an example. It's going to vary from state to state. And there's some states that have started to collaborate and pass some laws to work as a pac. But Amazon's Harry and David Cabela's, you know, all the big online sellers have to pay state tax wherever their buyers are coming from. But for the average Joe Schmo, like if we sell one of these books online off of our website, we don't sell the quantity or the amount of sales. Where if a buyer from Virginia buys our book, we have to collect sales tax in that state. We only have to collect sales tax from those buyers in the state where we are operating. So it's a very complex topic. I would get in some forums, state taxation for Internet sales. And you're going to want to know the rules in your state and where you're selling. And big time.

And I think he asked out income tax to state income tax, let alone sales tax. So state income tax is actually probably easier than the sales tax issue for online. Like, let's take the same example. If you sell this book into Virginia, do you need to pay state income tax in Virginia?

No.

Unless you have a physical presence there. From an income tax standpoint, which is a little different than sales tax, let me just say. But from an income tax standpoint, you're not a resident there, you have an established business there, you don't have employees there, you don't have a physical presence. So you would not be paying income tax there.

Yeah, great comment. Okay, Corey, looks like we've got about 10 more minutes or so. We're here for you. Thanks everybody, for participating in this crazy copy of taxes, LLCs and S Corps.

Awesome. So, John Miller, is. Is it True the more LLCs you have, the more red flags pop up for the irs?

Oh, no, not by any in. No way. Now let's think of who has LLCs. A lot of them. There's two instances where you might have a lot of LLCs. And, and let's just think through it. Let's just think practically through it for a minute. I have only 1s corp in my life. I don't want more than 1s corp. I think you only have 1s corp. Yeah, you may say. Well, Mark, you have a law firm. You can have as many S Corps as you want. I don't. I only want one. And I take the most reasonable salary I can, as low as possible, do my 401k and get the heck out. That's. That's my plan. And I. That's what we teach to everybody. So. But my S corp, my own. Part of a law firm, part of an accounting firm, part of a real estate project. I may sell books, do hair and nails, drywall. That's a joke. I don't do hair and nails on the weekend.

But anyway.

But your S corp can have all this income, so you might have multiple LLCs. These LLCs might file a partnership tax return. Maybe. I own it 100%. That means there's no tax return. Over here, you might have an LLC, and it owns a bunch of LLCs. With rentals. You might have multiple LLCs, holding. Nah, I've just never seen an audit. Because you have too many LLCs. The people that are getting audited are the ones that. In the tax return itself, it doesn't make sense. You're taking a way too big dining expense or a way too large travel expense or too little of this expense. You're outside the norm, and that's when usually you get flagged. But the number of returns, I want to.

Yeah, And I think the more income you have, or the more business activity, maybe more audit risk. But what are you gonna do? Stop, you know, like, obviously, like, you know, a Fortune 500 company that has thousands of LLCs, or Donald Trump, you know, and he had his. His audit, and he. They put out his elaborate corporate structure with. With hundreds of LLCs. It's like. Yeah, but it's not because of the LLCs themselves. It's because there's so much business activity and tax reporting and 1099 flying and everywhere and K1s and, like, you know, there's just more stuff going on. It's not just because you had LLCs.

Yeah, they smelled blood in the water. That's what happened. Okay, no more Instagram questions. Corey, go ahead.

This is from Chaz. Would you prefer to do an LLC or a layered land grant for rental properties?

O.

Go ahead.

Llc. Yeah, that was easy. Yeah, that was easy.

Where's my easy button?

Yeah. I don't even know what a layered land grant is, but it sounds wrong.

Yeah. And.

And like, land trusts, I'll say we're familiar with that. That comes up in the real estate investing space, and people go out and promote them. So never lawyers. It's never lawyers. It's always some guy that's like the guru of land trusts. It's like, okay, where did you go to law school? Nowhere.

You know, I just know it better than lawyers.

Yeah.

Here's what I would throw out, too. If someone's trying to pitch you on something that's not mainstream. Like I would say land trusts are outside the mainstream usage of a investor, but a land grant or a Delaware statutory trust or just, just some sort of weird structure that you just don't hear about every day. Get a second opinion. Like pay for a second opinion. Yeah, if we're trying to be on the cutting edge, I mean if it worked, we'd be doing it. And it doesn't mean we don't have things to learn.

But. And don't think too that like LLCs and S Corps because if you use a lawyer that they're expensive. Like our law firm charges 800 bucks for an S Corp or an LLC for an attorney to be involved and do a consult with you on it.

Okay.

And you know you can do it a legal zoom, what for like 500, 600 bucks? If you actually got all the stuff you're supposed to get. So don't think that it's too expensive and that, that it's outside of what you, you know, like, oh, it's going to be way too expensive. It's not. I mean there's, there's affordable lawyers out there, professionals that can help.

Yeah, yeah, totally. Go ahead, Corey.

Awesome. This is from Bobby Siskes Junior. Mark, please explain the 6,000 pound vehicle benefit.

Well, thank you. When you started talking about weight, I thought he was going to say please explain how you've lost so much weight. I appreciate that. Thank you. That was really nice of you to ask. Just good living.

Yeah.

Okay.

Do you have a weight deduction?

Yeah, I don't even know if I. I always try to find a reason to whiteboard, but I don't know if I even need a whiteboard for this. Yeah, I do. Okay. So, all right. So everybody, this is a great question and I think this impacts every one of you. Every business owner should be taking the auto deduction, period, Period. You're going to drive down to Costco or the Apple store at some point to buy something for your business, period. So everybody's going to take the auto deduction to some degree. Now you have two main options. It starts up at the top auto. I can take either mileage or I can take actual now mileage.

Matt, you said it was 50, 56, 56 cents.

56 cents. So if you did a thousand by miles.

Yeah, a thousand miles. 560 deduction. Not too shabby.

Not too shabby.

Take the long road home now.

Take the long road. So Corey, what was his first name again? I'm embarrassed. Sorry.

It was Bobby.

Okay.

So Bobby says, all right, 56 cents a mile. That's cool, Mark. But I bought a F150 or I bought an SUV that weighs 6,000 pounds or more. Is there some rule out there that would help me out? The answer is yes. So when you go to actual. We have to split this down into a couple more tiers. The first one is you might do leasing, which we're not going to talk about here. That has nothing to do with the 6,000 rule. Or you might be purchasing. I'm going to put buy. So you're either going to buy new or used. And you can do that new or used.

Doesn't matter which is an update. It used to only be new. Yeah, this is a new rule about used.

Good point. So this is where

£6,000.

What's his name?

Oh, Bobby.

Oh, Bobby.

Bobby. Gosh, Bobby. You're going to hate me after this. I've got a lot going on in my head. I'm trying to work through this freaking diagram. All right, be patient with me, Bobby. All right. Okay. So Bobby is not doing mileage. Bobby is not leasing. He's buying. Now, when it comes to buying, you can buy either a vehicle that weighs under 6,000 pounds, which obviously would be your typical car. Could be a motorcycle. There's, you know, anything under £6,000, a vehicle under £6,000, or a vehicle that's £6,000 or more. When you buy a vehicle under £6,000,. There's depreciation limits. Now, they used to be pretty crappy, but under the Tax Cuts and jobs act, they got the best they've been in 40 years. And so you can write off almost close to 75% of a car in the first three years now with depreciation. So this is pretty darn good. And it's better than it's ever been. Most people always did mileage. I mean, for years, Matt and I were just mileage mileage. But now. Now this debate is a big question mark. Corey in the chat. Corey's used to this. My producer, he might put my article on auto in the chat here at YouTube and on Facebook, I've got an article on trying to figure out which way to go here. It's a really good article. And a lot of people debate this, but Bobby remembered your name. Bobby is. Bobby's here. He's like, I'm not here. I'm not here. I'm not here. I'm over here. I'm gonna buy a vehicle that weighs 6,000 pounds or more. What's in it for Me, this is where the GOP and Donald Trump freaking threw gas on the fire. If this is 90% business use, you can write off 90% of the truck or SUV the day you buy it.

Even if I finance it?

Even if you finance it. You could put a dollar down on a $50,000 truck, and 90% business use would be $45,000 worth of business use. 100% write off right there. Huge. Now, if you don't have $45,000 of income, there's some issues. You know, there's the balance between bonus depreciation and 179. Your accountant will walk you through it. But if any of you, like back to her, the guy that was saying, hey, I'm making four or five hundred grand or I'm making too much vehicle deductions is a big one. Lots of options there. So the bottom line is, Bobby, if you own a vehicle that's £6,000 or more, new or used, you have a legitimate business with decent income. Sweet write off.

That's it.

You're gonna. Now, when you do actual, you're gonna do fuel repairs, maintenance. You're never going to do mileage. You can't go back. Once you go this way, you can't go back. So there you go.

That's a great answer.

All right, next question is for Matt Sorenson. No matter what the question is, Corey.

Oh, geez.

Matt Sorensen is going to answer. Okay, I'm excited to hear this.

This is a pretty good one. This is from Guadalupe. Already have an LLC with a business partner. When we reach the point to convert to an S Corp, do we both get an S Corp or just one? Thanks, guys.

Great question.

A great question.

I'll diagram.

I'm glad this is mine. Okay. Okay.

Pictionary.

Okay. All right, well, how. It's like, it's like a game or like a board game or like a game where, like, one person talks to other persons to draw.

Yeah, I don't know. I can't remember the name of it. Anyway, keep going.

Okay.

All right.

Okay. So here's what you're gonna do. Guadalupe. Well, you're gonna keep that llc, okay? That's the business. You're going to receive the income in there. You're going to pay all the joint business expenses. If you get any employees besides you and your partner, those employees are going to get paid out of that llc. But you're not going to own the LLC anymore. Neither is your partner. You're each going to create your own S Corporation here. Okay? And. And that S Corporation is going to own. Let's say if you're 50, 50, your 50%, your partner's going to have his or her own S corp owning the other 50%. Now when the revenue comes down, you're gonna receive it in your S corp. You're gonna take your own W2 like we talked about, and you'll get your own K1 and you do your own tax planning yourself over here. Your partner's gonna get their share of the profits and they get to do their own individual tax planning. You might have your own outside separate income that can flow into your S corp for stuff you may do separately. So this is a great strategy here. This is actually like. Like this structure is what Mark and I do. Like, this is basically the law firm. We're 50, 50 partners in our law firm. I have my S corp here and Mark has his S corp over here. You know, so it's kind of.

Let me make sure this is really what it. Yeah, this is totally inappropriate. I do not agree. This is. Okay, does this matter? Same. Here's our llc. Here's my S corp, here's Matt's escort. That's what it really looks like.

But yours is like Jupiter over here. It's just full of gas,

like plutonium.

Yeah, this is like, you know, very valuable.

Yeah.

Plan over here.

Oh my gosh. Okay. I love that.

That's a. I just keep that LLC you already have, but just create your own S corp for you. Tell your partner and your partner could maybe be know they may not do it.

I don't know.

They don't have to. They could do their own thing and keep their own ownership personally if they want. Now if you're a good business partner, you would tell them you'd be a. To do that. Get your own escorp.

Okay, Peter, dude, can you help me out? Peter, can you go check with Aaron and I want to know the names of the people that have opened an account since we started our podcast. Just first names. Go see what Aaron's got for me and, and we'll. We'll give away some books here. Here's the phone number if you want to get your Roth ira trading crypto or just freaking investing better than crappy mutual fund for 5%. Thank you, Peter. Team member here. Okay. All right, now, Corey, couple last questions.

Ready for another one? All right, this is from Steve. For staking crypto, should we go with an S corp or an IRA structure?

Oh, well, is it the same as mining?

Yeah, I mean, staking is a. Is a, you know, A new process of mining. The IRS has came out and said that's ordinary income, similar to mining. So because it's ordinary income, if you're going to use a retirement account, you're going to want to do what Mark's doing, which is that blocker structure he showed. And we have some priority podcast episodes and you have some prior Facebook lives and videos on mining crypto with the Roth ira. Now, if you're going to do it personally, if you're like, guys, I don't want to build this in my retirement account for the long haul. I just want to do it personally. I want to do mining or staking personally. Yes. Then you. That is ordinary income. So we want to use an S corp. If you're doing. On the personal.

Let's do both examples. I think that that's a great question, Corey, was he asking about in a retirement account or out of a retirement account?

I believe in a retirement account.

Okay, let's do both just for everybody out there. So you have two options here.

He did ask about an S corp and let me say, never an S

corp in a, in a Roth IRA or IRA of any sort. No escort.

It's not allowed, basically. IR. Roth IRAs cannot own escort.

Yeah. Now if you're an individual and you're going to go stake or mine S corp all the way, you're going to do the escort. And then as you generate income, I'm sorry, as you're going to generate currency, cryptocurrency, you'll spit it out into a personal wallet over here. So this is your wallet.

What is this right here?

That's a person.

Oh, I thought that was like a Chinese character or something.

You know, that's very offensive to Chinese people.

Yeah.

Oh, you meant Chinese character. Like, like the letters, like the Alphabet. Why does a Chinese person look different?

No, you meant a Chinese letter. Language.

Jeez, Whatever.

Okay.

Character can mean person. I'm like, no, this is a human. This is regular person.

Okay.

Now the Roth ira, you would not use an S corp again. You're going to have a holding LLC and a blocker LLC that's taxed as a C corp. I can't say enough. That's the only way to do it. We've, we've tried to, you know, crack the code. This is what's working. All of our clients that are staking and mining are doing it up here. And then they spit the cryptocurrency down into a holding company. And it is the most tax efficient way to do it's Amazing. It's saving tons of money. But if you're doing it as a person, you'll do the escort. So. And you can have one. You don't set up a new escort for this. If you already have an escort, just start mining in it. If I was going to do it personally, I'd do it in the same S Corp that I'm doing my regular stuff. So here's what my mind looks like. I'm so excited. I'll show you here on. Okay, here's the camera. Okay. Look at that. Isn't that cool?

All right.

That's my mind. Three graphic cards. It's my little friend that just keeps working 24. 7.

They're called rigs.

They're called rigs. That's my rig.

Yeah. And now we're doing a webinar on crypto taxation rules for trading mining. We're going to go over strategies in and outside retirement account. That's a big week for a whole hour.

That's because that's the April 21st week.

Yes.

So everybody keep in mind April 21st is a one hour webinar at 3 o' clock Eastern on Entrepreneur website. It's free. You can go register right now@entrepreneur.com. that same weekend, right? Yeah, same weekend. We're doing a two day IRA summit. Directed IRA sponsored summit on everything. Retirement accounts and self directing. There's a pre session bonus. There's a day and a half of complex stuff and easy stuff. Anything you'd want to know, it's recorded. So get to directed ira.com and you can just link over to. You'll see the advertisement. Okay, last question, Cory.

This one comes from Fix. Could you have an LLC taxed as an S corp for a holding company in Wyoming with an operation business in California set up as an llc?

You could. And I know what he's trying to do. He's trying to get away from California tax and the minimum $800 tax and fin. Give it up. And I know the feeling. I lived in California for eight years and using Wyoming is great for asset protection. But if you live in California, you're gonna get taxed on your net income. And if you're running the business at all, making one phone call, the Department of Revenue for California, the FTB Franchise Tax Board has said we're gonna grab it, we're gonna tax it. Yeah, that's what I think you're doing. Finn. I'm not trying to be rude, but.

Yeah.

That's the only reason you try.

I guess.

Yeah.

I don't I don't. There's no reason you would do that, right? Some people use LLCs for holding companies, for asset protection, but you never add an S election to it in Wyoming.

So.

And here's another important tip just in general, for people on the LLC versus S Corp. Debate. And Mark said this before, you always want to set up the entity in the state you're doing business. Now, Californians are classic for. And I was gonna do an SNL California joke, you know, oh, the California. Anyways. But Californians are also known for setting up entities in Nevada, Okay? And they do business in California. And so the California Franchise Tax Board, if you do anything in California, even if you have, let's say, a rental property in Nevada and you have a Nevada llc, as far as the Franchise Tax Board is concerned, if you make a phone call while you're in California, because you're a California resident and it's to your property manager in Nevada for that Nevada rental property, they think you owe them 800 bucks, okay? And people go to and fight them on this. But that's franchise position, literally.

Yeah.

If you're like sitting on the toilet in California thinking about your Nevada llc, you just did business in California, okay?

And you.

Twice California wants you to pay 800 bucks for that, okay?

You did business in several ways, including your Nevada business in California. I. I would say this too.

It. The.

Matt made a good point there. I have a lot of California. We have a lot of California clients that do set up a Wyoming holding company for privacy, for better asset protection. And their Wyoming holding company may pay the franchise tax in California, but then it owns other LLCs around the country, and we get two steps away from the Franchise Tax board. It's for asset protection. It's for privacy. I love it. The s. Election operations. I. I don't see a benefit there. So it's. Be careful. Okay? Corey, hold up before Matt says some closing words. Corey, I want three names. I want three winners. And we have Peter, you got any names for me too? First names, okay? Dale is a winner. So Dale's gonna choose a book. And then Corey, I want three winners of our books. And you get to choose. Now you choose those names while Matt's talking here. What were you gonna say? Closing words.

Closing remarks. If you're in the debate here on LLC vs S Corp. I would just. Just remember operational business, selling goods or services. Once you're at about 40 to 50,000 of net income, this is after everything you can expense, you're down to 40, 50,000 net income. You need to make the jump to the S corp. If you're already an llc, remember you can make an S election and that you are converted over to an S corp for tax purposes. Now let's say you just are making ten grand a year, all right, and you're not seeing it. It's going to grow and maybe it's a side hustle and that's great. That's all you need to do. Don't worry about the S corp. There's not gonna be many tax savings there. It's gonna be more cost than savings, even at 20,000. So look at your situation. Sometimes it takes place planning because you need to look ahead for the year and determine how much am I going to make. But that's why I love the LLC as the Swiss army knife. When you're not sure. When you're not sure. Just do the LLC now and you can see where you get at the end of the year to say, all right, I had 50,000 in net income. Cool. We'll add the S election on for the whole year.

Here's my couple final words of wisdom. If you're in the middle of the S corp LLC debate, you get an hour it.

Hey guys, seems that we are having some technical issues, so. But thank you guys for watching. We have three winners that we wanted to call up for everybody. I have a Nicole Micah, a Alex Arnold and a Tara Hughes. So if you guys want to just email me at Corey C o R E Yarkj Kohler.com Just give me an email and then I will. I'll get your guys information and get you guys your book sent off. All right, thanks guys.