LLCs Don't Save Taxes...Unless...

Welcome, ladies and gentlemen, to another live today with best selling author, America's small business tax lawyer, real estate investor and YouTube personality Mark J. Kohler.

Everybody, I am stoked today. We're here to make money. That's what LLCs do, they make you money. And as Nicki Minaj said, you ain't nobody till you have an llc. And so all of you out there that have an LLC think you may be done. You're like, oh, I checked that box, I went online, I bought my llc. Pen drop. I'm good. I'm saving money. I'm doing all other business owners do. Today's going to be an intervention of sorts. We're going to have a little, I'm bringing your whole family in people. I'm going to get them on the phone, they're going to read their letters, they're going to tell you that just having a sheet of paper for your llc, that's just the start, it's just the beginning. For example, you go buy a new little cute doggie, you got a new pet, maybe you're a cat owner. I know cats are easier. But you buy a new dog, you go to the vet, you get them all shotted up and spayed, neutered, whatever. Are you done? Or do you know that you got to go back to the vet, you got to take care of that dog, you got to feed it, you got to bathe it, you got to go to the vet on a regular basis. Some for some reason, people set up an LLC and think, oh, I just bought my llc. Everything is just going to automatically happen. I'm going to save money, I'm going to make money. People. If you want to be a successful business owner, the LLC is your structure. Your receptacle is going to help you build credit, it's going to protect you, it's going to make you look legitimate, it's going to help you with privacy, and it's going to save you taxes at the right time. A lot of people think an LLC save taxes right out of the gate. They do not. I hate to say this, you cannot rely on your accountant or your attorney to teach you every little thing. You are the captain of your ship. So today, for the next 30 to 45 minutes, I'm going to break it down. I want to answer questions. And if some of you think you've heard it all and you know that an LLC is just, that's it, I'm done. And I got that one sheet of paper, it's not going to cut it, but I want to help you so that you don't have to call the lawyer or an accountant all the time. You're going to need them once in a while. You're going to need the veterinarian once in a while. You're going to have to go to petsmart and buy some new food or new equipment from time to time. It's not just a one time fits all thing. So I'm here to help you. I love small business. I love making money. I love talking about ways to make money. But if you don't have the structure, it's just like the money's not going to come as much as you would hope, as much as you would like. I mean, money will come, but as Kevin Costner said in Filled the dreams, if you don't build it, they whoever, the Yankees, they will not come. You cannot put new wine in an old bottle. It'll break. So you guys got to have you ready to go. I want you to be making money. So we're going to break this down. I'm going to jump on the whiteboard here for a minute. For those of you that are on Twitter spaces, you might be listening only. I'm going to try to describe what I'm drawing. This will be posted immediately after as one of my live videos on my channel. You can watch this and take some notes with a pad of paper. People, people, you do not have to be a rocket sciences rocket scientist to do this. You're going to love it. Now in the chat on YouTube and Facebook, ignore any post from me or anyone that's talking about some sort of bitcoin cryptocurrency crap. There are bots out of who knows what third world country trying to rip you off. Just ignore them, make pertinent posts, and as James has asked before, my producer in the studio, try to keep your questions all in the same post. Don't do like four parts to a question because it'll get lost in the feed. Keep them simple. And also we can't talk about your grandma and her personal situation. Ask questions that make sense and James going to kind of summarize them for me here in a little bit and I want to bring you guys out. I'm here for you, all right? If you had a consultation with one of my tax lawyers, we're going to build a trifecta for you. We're going to bring your structure together and help set you up to go make money as a landscaper and influencer, an affiliate marketer, a web designer, a dentist, a doctor. A chiropractor, an accountant, engineer. If you own a small business, a restaurant, you're setting up your booth at the fair this coming summer, and you're already in the garage painting it and making it look good so you can sell those elephant ears or waffles. Whatever you do, the LLC provides multiple benefits and there's a structure. So let me throw this out. Your trifecta will look like this. Down at the bottom of your diagram, you're going to have your 1040 tax return whiteboards not showing flows. Well, we're not seeing the whiteboard can. We're going to make sure we can see that here in a moment. But at the bottom is your 1040 or your tax return, and that is where all the money is going to flow. And also for ownership, this is where we're going to put your rlt, your revocable living trust. Now, all of you followers of me know where we're going. We're going to put your operations on the left, and we're going to put your assets on the right. James, are we seeing the whiteboard? Is everybody seeing it?

Negative. No whiteboard yet. Nothing on YouTube. Also not sure why it's not showing up on your end.

Okay, we'll continue to work on that. But I can just describe this verbally, everybody. So if you have an llc, the first thing on a phone call with me, I'll say, hey, is this to hold assets or is this to run a business? And if they go, oh, it's for my rental property, okay, that would go on the right side. That's where you're going to put your assets, your retirement accounts, your 401k, your home, and we're going to have it all funneled down to your 1040 or trust. So first and foremost, everybody, an LLC is for protection and privacy. I want it to hold your rental properties or investments, crypto stock, real estate notes. On the left side is, we're going to do your operations. So if you come to me and say, hey, Mark, I do online marketing, I'm an influencer, I'm a landscaper, I do Christmas lights, I do snow removal, I do whatever, we're on the left side, we're going to have our LLC for the operations, and that's where the dollars and cents are going to come in for the sale of my product or service. On the right side, that LLC is going to be for rental property. Now, on operations, that LLC is again, it's going to make give me legitimacy, give me protection. If someone were to get hurt Customer, vendor, employee, who knows what. Someone gets pissed off. They I'm manufacturing toys and someone eats one, whatever, you know, I'm going to carry insurance, I'm going to do my proper job as a business owner and then I'm going to take my income and report it to the irs. I want to do all the expenses I can here and that's. Those are, man, I've got video after video we're going to write off auto, cell phone, computers, Best Buy, Apple store, dining, marketing, accounting, legal, supplies, equipment, food, product. I mean I want to write off everything I can, but whatever you net. Guess what? An LLC does not save you tax. No matter what state in the freaking country you live, you're going to pay 15.3% in self employment tax. So if I make 50 grand, that's less than four, you know, maybe four grand a month in that range. Four grand a month, then I'm going to pay 7,500 in FICA. The F word. We hate that. An LLC does not save you on that. So I got to pay 7,500 in FICA, then I pay state tax. If you're in one of the 41 states with state tax, or I'm going to pay then federal tax. So not. Or you're going to pay your state tax, then your federal and your FICA. By the time you do state at 5 and federal at 15 or 20, I mean people, you could be at 30 to 40% in taxes. That's what shocks a lot of small business owners. And you're saying I set up my llc? Mark, that's just step one. So step one, you set up a proper LLC with all of the pieces and parts. We'll come back to that. But when you start to make money, we're going to convert this LLC to an S corporation. And this is where you cannot expect your accountant to do this at the end of the year and just pull a rabbit out of their hat. It's not going to happen. They can't just make it happen retroactively. When you show up in April for the last year, you're going to go, I owe this much to tax. Yeah, and you're going to be mad, but don't be offended. You're here listening. You're the good kids. You're the one in church right now listening to the preacher. But everyone else gets mad and they got to get mad at themselves. They can't get it mad at the government. They can't get mad at entrepreneurship or small business sucks. No, it's you Thinking you don't have to do tax and legal planning. You're a business owner. You have to freaking own it. You can do this. So when we convert to an S corporation, we've got to be engaged in the bookkeeping. We're going to talk to our accountant a couple times a year. We're going to set up a little payroll procedure, because when I net that 50 grand, I don't think anybody can see my screen yet. I'm going to write and tell you guys do, but I'll describe it. If in an LLC, I net 50 grand versus netting 50 grand in an S corp. And by the way, to convert that LLC to an S Corp, we charge 200 bucks. Super easy, simple, cheap. But now you have to do a corporate tax return, and you're going to kick out a W2. So in this situation, if I kick out a W2, I might do 25 grand in a payroll, and then the other 25 grand kicks out the bottom. So I only pay FICA on the payroll. So instead of paying 7,500 on everything with a typical LLC, I'm going to only pay 3,250. Now, I know some of you in California are like, Morgan, LLC cost me 800 bucks. And others around the country are like, well, an S corporation, I got to pay $1,000 a year for a tax return and I got to do payroll. Yeah, you're right. The S corp. I'm not going to BS you. The S corp is going to cost you two grand a year to maintain with your attorney and accountant. We help clients do it all over the country. I'll give you our phone number, it's down, and then we'll put it in the chat for sure. Well, two grand, that's approximately what you're going to pay. And you might have some bookkeeping on that if you're a train wreck with your QuickBooks. But let me get this straight. You spend two grand. In this basic example, you're saving 3,250. So I'm already ahead over $1,000. And the more money you make, the more you save. So I want to get my clients converted to the S corp when they're netting around 3,000amonth or more. So as soon as you start making profit, your first calls to your mom and you tell her you're a success and not a loser anymore. And then number two, you call the accounting firm or the law firm and go hook me up. Now, I have a network of certified accountants around the country that you can choose from and Interview and hire independently. I don't make any money on that. That accountant. And you're choosing to work with them. Or don't call my accounting firm. Call. Go to the network and find an accounting firm that fits your size and needs, wants, geography, price, whatever. But they're all trained on my strategies. The Marc J. Kohler Main Street Tax Pro Certified Network. You can find an accountant and interview them and price it, yada yada. The law firm KQS Lawyers will help you set up your entity and build your trifecta so you have your checklist for the year. And just like with the vet and your pet, you have to go back every year and make sure your dog or cat or animal or farm animal, whatever you got is okay. The LLC has to be maintained. You got to think about that. All right, so that's the basic structure. Now, are they able to see my screen yet? Tristan, are we good? Do you need my iPad? Do you need it? Do you need something here?

Could be something new in the system over there. If we can use a physical whiteboard, that would be awesome. Unfortunately, it's just not coming through since you're streaming from over there.

Okay. All right. So everyone, thank you for listening today. I'm all yours. Let's talk about this. Let's start fielding some of the questions. Maybe that's the easiest way to go. And, James, as you start looking for a first question or two and people start typing them up, I know we got business owners from all over the country. This is your chance to get a real answer from a real tax lawyer with a real firm. Where we stand behind our advice and get my book at Amazon. I've got multiple books on Amazon or podcast. You can study more, learn more. You've got to own this. While you're looking that up, James, let me tell everybody this. An LLC is not one sheet of paper. And I know some of you are like, well, I can go to the state and do it for $50. Yes, you can. But that's only about a fifth of an LLC. You've got to have a corporate book. You have to have an operating agreement. You have to do regular minutes. You got to get a tax ID number, and heaven forbid, you did it. Member managed. That's the last thing you want. You have no privacy. We set up our LLCs. Manager managed. We want to make sure it's set up in the right state, that you've got all the pieces and parts in your minutes to write off home, office, your car, equipment, and make an S election. When the time's right. These are provisions that have to be in your LLC. And I know LegalZoom and other companies make it sound so freaking simple. And it is simple on the face of it. But successful business owners and you guys that are doing masterminds and using mentors, you know, they can pull up their books and look at their profit right there. They know what their expenses are. They have a phone number to an accountant that they meet with regularly. They meet with their lawyer once a year. They have an estate plan. They're buying rental properties. They're investing in their Roth. People will get you there. I want you there. This is what I teach, this is what I do. I love this and I'm so grateful you're watching today. Please continue to watch. Do not give up on this. I know it's. You've got your podcast of how to feel better and how to make money and how to do health and a podcast over here on how to do your social media. Well, you got to have one other podcast in the mix and that is running your business for tax and legal and scaling, and that's Main Street Business podcast. Get over to our podcast, Main Street Business and listen to it. Over 5,500podcasts, 2 million plus downloads and you can be starting to listen and learn what you need to do to be a successful business owner. All right, I'm all yours, James. What do you got?

The keyword was listen and learn. So we got Jason. He's actually a local, I'm assuming maybe Rexburg. I have an Idaho LLC formed by KKOS for an operational business.

I.

All right, I brought up an. I brought up the S election with my CPA for 2023 since the income should be substantial enough this year. And he suggested making my LLC a multi member LLC with my wife as a member could achieve the same thing as an S election with less paperwork and because she is not active with me in the business, therefore no se tax on her portion, he suggested 25 to 75% split. I've just never heard of doing it this way instead of the S election until now. What am I missing? What's your opinion, Mark?

Okay, what this gentleman Jason in Idaho is suggesting.

Jason Wangs guard.

Oh, thank you Jason, for listening. And everybody, this is a very common question, so let's unpack this. He's got a business, he's married, and he's making more than 50 grand a year. So he talked to his accountant and an accountant said, yeah, let's convert you to an S corp. But then the Accountant took it to another level, one that I don't think has a real benefit. And here's what his accountant said. Let's put your spouse on here and we'll keep your payroll down compared to your, the income. And then we're going to push out more profit to your wife and then that way you don't pay FICA on that profit. And Jason, you'll take a salary and your share of profit, but it'll be less. So the accountant think everybody, what's the accountant trying to do? Push more to profit and less to payroll. And by adding the spouse as an owner, they think that this equation will work. The problem is it won't because on the 1120s tax return it asks what is the payroll or the salary of officers and owners. That's, I think it's line six. I want to pull it up here. That line is compared to, to the overall net profit of the business. So you may think, oh, I'll push more profit to my spouse and not pay fica. Well, the IRS is saying whoever the owner or owners are, there needs to be enough payroll taken in comparison to the overall profit, especially when there's not other employees involved. Now I know there's a counter argument. Well, Mark, that other shareholder is non participating. They're just an investor. Oh, they are, they're an investor or are they your spouse? Now see, under audit, which an audit would probably occur if you take too little salary compared to that much profit, you want to be able to show up and go, yeah, these other owners that aren't taking salary, they put money in, they put an invention in, they put a patent in, they put a trademark in, they did something to get their ownership and they are a passive owner. But when the IRS goes hold it, this is your spouse, you're just trying to hide more self employment income through your spouse. You're still filing a joint 1040, they'll go, Bam, not enough payroll. Then you're going to have back FICA with penalties and interest. So Jason, the takeaway here is your spouse to hide net income is not a good idea. It ultimately will fail. Number two, do I want your spouse to get a payroll? Yes, when we want to fund his or her 401k. So. And does third, does a spouse ever have to be an owner? They don't. It's a marital asset even in a non community property state. So if you bring in your do or do not bring in your spouse as an owner, it's not going to help you from a tax perspective. But putting Your spouse on payroll can help from a 401k wealth building perspective. So Jason, my answer is I think it's a little aggressive. I think in the long run it doesn't work. Now if you. This CPA is so excited about it and everybody, I love this question. What you do, Jason, is you email your CPA and go, I've been doing some research on this. Thank you so much for the suggestion of making my spouse a bigger owner and saving on FICA with a more aggressive strategy. I will do it. But I want you to put in writing here in the email that if the IRS does not accept that strategy, you'll cover the penalties and interest. Because if you're recommending this, I suspect you're going to stand behind it. So can you please tell me you'll stand behind that strategy and that will work? I think your CPA will go, well, I mean, it's aggressive, but I can't stand behind it. So let me get this straight. You're my frickin CPA and I ask you in writing to stand behind your advice and you say you can't, then shut the hell up. What kind of advice are you giving me if you can't stand behind it? Now at our firm, when we figure out your payroll with your S Corporation and the proper amount of payroll, we'll even in our accounting we'll prepare the tax return and or we will stand behind the advice on the payroll allocation. But when we're pushing non payroll income to your spouse just to save on fica, I'm not signing that. And I doubt your accountant that's recommended is going to sign it too. So ask for it. See what they say if they sign it. And they said, yeah, I'll pay the penalties and interest. Jason, Part of me is like, go for it. Just there, have your get out of jail free card. It was in Patriot Games. It was sweet when Jack Ryan, Harrison Ford and his, his little buddy National Security Advisor came across the hall and said, do you have one of these pieces of paper, Jack? I don't think you do, but I do. And he had his little paper. You need to have that paper.

But is that the paper you want to have? That's the, that's the one piece of paper you want to have.

I want you to have that paper from the CPA that's making a recommendation that's a little aggressive. Because if that CPA is willing to pay the penalties, interest, interest and put it in writing, take that paper and go. I'm just saying I wouldn't do it. All right, what do you got, James? Next question.

Got a question from Tiago Casa. Welcome back, Tiago. Hi, Mark, I'm. This is a great one. I'm literally moving today. Is there a way to write off my moving company expense since I work from home? Thanks for everything.

No, you can't write off moving expense anymore unless you're active service, military, active duty, military service or how they'd say it. You know what I'm saying? I love my veterans and active service members. Thank you for all you do. But no. The only persons in America now that can write off moving expenses are active duty service members. So I'm sorry, it doesn't matter if you have a home office or not. Now I'm assuming a home office in your business. When you go set up your new home office, you get to write off the normal stuff, but no moving expenses. Now someone may say, and this is a counter argument, someone may say, well, if I have a business in town, let's say I'm a dentist and I'm going to move my dental office over across town to a new office. I can take the moving expense to move my office. And that's true, that's not a personal moving expense. And so I will add this caveat. What's her name? James?

No, that's he as Tiago. Tiago Tiago Costa. He's asked quite a few questions over the year.

Okay, so Tiago, if you hire a moving company to move your home office, not the rest of your house, but a moving company shows up to unplug your computer, get your furniture, maybe you've got, maybe you have a little woodworking shop and you do framing for people in your garage. I have a client that does that. And, and when they moved, I know he had a moving company help move all of the woodworking equipment to his new shop in his new house, that would be a write off because it's very specific to the office furniture and office supplies and equipment. But if you're going to be throwing your personal crap in the in the U haul or in the moving truck, ain't going to happen under audit you'd get shot down. And most of the time our home office is just a small percentage again of the moving expense. Now I know someone that's going to say, well, Mark, if the home office is 10% of my home and I have a moving company come, can I write off 10% of the moving company? Because I'm going to move 10% of the home, which is 10% my office and I'm going to move it over there. I don't. You might. I mean, you're starting to talk my language. But I mean, Tiago, you got to. It's got to be legit, you know, And I'm looking for where I'm going to put that on your tax return and yada yada, I don't know the size of your business and how much and how large your home office is, but hopefully everybody that gives you a sense of maybe some things you could think about.

I got a question from Sean. Can an LLC own residential property in a partnership with an individual?

Sean says can an in can they want to own a residential rental property property in an llc. And who does? The partners of the LLC just says

partnership with an individual. So maybe just partnership with some. Someone else.

Well, hell yeah. I mean, okay, Sean, if you want to. This is great. I'm glad you're asking. If you. If you want to go buy a rental property, storage unit, duplex, single family home, commercial mobile home, whatever, and you're going to partner with someone. Sean, you're going to love this answer. You can partner with a ton of people. Let's look, of all the partners you could have, I could partner with Tristan, I could partner with James, I could partner with Michelle out here, her corporation. I could partner with Tina's IRA. I could partner with someone's 401k. I could partner with a foreign individual from another country that wants to throw in some cash. All of those people could be partners of that llc. And so any of you out there that want to go do the rental property strategy, the LLC is a perfect fit. Now, the LLC does not save you taxes. What the LLC is doing is creating a structure for your partners so that you can all play together and go do this investment. You're going to have a set of books, you're going to do a tax return. You're going to track everybody's money they put in. You're going to track any debt from the bank on buying the property. The lease agreement is going to be in the name of the llc. And the list goes on and on and on. But that's the purpose of that LLC and freaking A. You can have a 2 year old or a 92 year old as a partner and anything in between, company or person. IRA, 401k, anything. So Sean, get out there. Go for it, man.

Here's a. I mean this is simple but still very important when it comes to the LLCs. Tim Matheson. But aren't you exposed with your assets without an llc.

Yeah. I'm glad everybody's asking. Do we. Did we get the whiteboard working or is it still. We're going to give this a shot right here. And we go click. You see whiteboard.

Negative, negative.

Yeah, we're down. Okay. So I'm going to try to. And this is maybe good. It could be a blessing in disguise because our Twitter space people would be going, I hate the whiteboard. I can't.

What's the whiteboard?

What Mark's doing. Yeah. All right, so everybody, let's go back to Sean's example. If you're going to buy a rental property, if I'm going to buy a rental and I put it in my own name or even buy it with a partner, Tristan and I, we say we're going to buy a rental. He's our studio producer here in Phoenix, and we're going to go buy a rental, we put it in our own names on title, and we buy that rental. Here's some exposure on this. First, if the tenant is pissed that the railing on the stairs going up the hallway isn't fixed, and they complain and complain, or maybe they don't even say anything at all, and they put their arm hand on the railing and it breaks. And they fall down the stairs and break their femur, which I understand is very painful. Brian Regan. And they're gonna sue. Tristan and me. We are partners with our individual names on that rental property title. So we are both liable. Let's say I'm in the Caribbean. I'm doing a cruise. I'm a thousand, two thousand miles away from the rental property. Tristan goes over to pick up rent and they get in an altercation. They're jerks to Tristan. Tristan's trying to pick up rent and they turn to fisticuffs.

He calls security. James shows up.

Yeah, yeah. Tristan calls in his wingman, James, and they get over there and they start, you know, turns into an all and out brawl and someone gets punched in the face. They file a lawsuit, they can sue me. I wasn't even there because my name's on title as a part owner. It's called joint and vicarious liability. But if I do an llc, Tristan go get in a fight with the tenant all he wants. He's on the hook, not me. They can sue the llc. I wouldn't be thrilled with that. But they can't sue me personally. Also, if the tenant does fall down the stairs, they can sue the llc, but they cannot sue me or Tristan personally. We're good. To go. Now, if we are a slum landlord, let's say you have a great old LLC and you thought you were protected personally. And that tenant calls and goes, oh, the railing on the stairs is broken. And I'm like, get over it. And they call again, the railing on the stairs is broken. I'm like, freaking go fix it yourself, you jerk. And then they email me and document it. Our stairway is broken. I'm like, go pound sand. And then it breaks. Kick. Now I am a slum landlord because I didn't take care of the property the way I should have. And now I'm personally liable. Watch. Law and Order Season 8 Episode 4 It's a Good one. All right, James.

Next, I've got a question from Efron. This one's really interesting. Okay, if I didn't do my payroll last year as an S corp, can I just do a schedule C and have zero expenses, Just a one time thing.

Oh, yeah. Now what's the first name of there again?

That's Efron Ortiz. He's in here every now and then.

I love it. Efron. Big fan. Now I would say this, Efron, Yes. But it better be. Your first year, 2022 as an S corp and your accountant screwed up and never did a payroll. And now you're trying to fix it with a management fee over to a schedule C for your officer comp. And then you're going to zero out the schedule C. Well, I'm sorry, you're not going to zero out the schedule C. You'll pay your FICA on the schedule C and take an expense on the S corp. So what he's doing, everybody is. You think, oh, well, that's easy. I don't have to do a payroll report throughout the year. I'll just wait till the end of the year and just push it over to a schedule C and pay my fica and then everything else. No fica. Oh my gosh, I love it. I'm going to do that every year. New the IRS does not want that you under audit. You would fail. And they're going to hit you with FICA on everything. But Efron's saying, well, Mark, it's only my first year. It's my first year. I didn't know I screwed up. I should have done payroll this year. 2023. I'm on it. I'm being Johnny on the spot. I'm Efron on the spot. I'm gonna do it. Then we as an accounting firm will tell the client it's in writing. We'll tell them it's precarious, it's aggressive, it may fail under audit, but usually it's fine, let's do it. And we would sign off on that. On the tax return moving forward, you've got to switch over to payroll. So hopefully Efron, it's just the first year. I like this strategy. It's a good one. It's kind of the band aid. Before you get everything really going well,

we got a lot of people out there saying don't be a chad in the comment section. Don't be a chad, number one, to be specific.

Yeah.

And by the way, Chad is in the comment section also. Got, got a, got a question for, for you from the Dave Show. If you, if, I'm sorry, if you know you'll have significant business income, any different between any difference between starting your entity as an, as a corp versus an LLC before electing to be taxed on an S corp.

I like it. Everybody, here's a good question, a good comment. And I talk about my kids and their businesses sometimes and they've allowed me to do so and I appreciate them. So let's do two examples. Let's say I'm a Realtor and I'm going to bring Sydney, my daughter, that's at Sotheby's in Southern California. Any of you that need real estate and SoCal, I'll hook you up. Anyway, let's say you're just a regular realtor and you haven't set up your entity yet and you're not broker level. You haven't been out there for a long time, but you've had a couple successful years and now you're making 50 to 100 grand a year. And I speak at realtor. Com. I'm speaking at a conference this afternoon online for a bunch of real estate professionals. And what happens is there's always a realtor in the room that's making 100 grand a year that just maybe it snuck up on them and they should have freaking been an S corp, but they missed it. And they're not even an llc. So coming out of the gate, I'm going straight to a corp. I might do what's called a PC, a professional corporation. So I'd name it John Doe or Mary Jane PC. And I just come out of the gate as an S corp. There's no need to be an llc. I'm just going to go straight to the S corp. Now let's talk about my daughter Sydney, who in this last year and A half has had a lot of success, but her first two years, she was just a brand new Realtor, you know, hitting the payment, working hard, and she wasn't making any money yet, really, because she was new. Very common, right? Many of you in all sorts of small businesses. So what we did is we did an LLC that was ready to convert to an S corp. Because in my example, I just gave this realtor that shows up. There will be one today, I promise you. At this event I'm doing today, there'll be a realtor in the room that made 100 grand last year. No LLC, no Corp. And they are paying up to 40% in taxes between FICA, state and fed. And they. They will many times be in tears. It's very. I'm not kidding. It's very, very hard for them to know this. There's nothing I can do. I cannot go back in time now. If they were an LLC last year, I could go back in time and make it an S corp to the beginning of 11 22. Do the little schedule C kick out like we just talked about it a minute ago. First year, screwed up, should have done payroll. But I do my S election, kick out some money for fica. I could cut that realtor's FICA in half. I could probably save them six or seven grand. That's huge. But if only they're an llc. So my daughter Sydney, we set her up as an llc. I said, go knock your socks off. Go for it, babe. Work hard. And she did. She's freaking killed it. She had a good 20, 22. And I remember when she called me up, says, dad, dad, it's time to become an S corp. I'm like, whoo. And we celebrate it. And we made her S election, and then we started talking about how to maintain her S corp. So I was able to backdate the llc. So the LLC is almost like S Corporation insurance, which I love. So for those of you that plan on making 50 to 100 grand or 2 or 3 or 5 million, whatever it is, we want to start as an LLC and then convert to an S corp when the time's right. For those of you that are already making 50 grand or more and this has been a blind spot and you haven't done it. We're coming out of the gate, baby. We're going straight to the ink, the PC. And it just saves a lot of headache. We're just going there.

So first I want to say Jason said, CPA is my uncle. Thank you. That helps so much. You Rock Mark.

Thanks, Jason. Good luck with that uncle conversation. Ouch. Hey, send your uncle everybody. I'm just going to give a shameless plug here. I am now training more accountants around the country than real estate investors and business owners. I am trying to help the accounting industry that is really struggling and broken. A lot of accountants have lost their energy, their interest, their excitement for accounting and tax planning. They're looking for strategies. They don't know where to get them. You don't learn this in school, you don't learn it on the CPA exam. And if you join a boring, stodgy old firm, you're not going to get fresh cutting edge strategies. They just work you to death. So I set up this last year. It's kind of my life's work. I built a program, the Main Street Tax Pro certification. Over 69, 70 videos, 12 modules, 700 quiz questions that aren't that hard, don't stress. And white paper and a weekly training call and an open forum to collaborate with other accountants. And we're freaking changing the world. Main Street Tax Pros. I am certifying tax advisors around the country. I mentioned it earlier. You can go to my website, markjkohler.com and find an advisor if you need one. But Jason, tell your uncle. Go check it out. Markjkohler.com any of you that are accountants or want to be accountants or EAs, you don't have to go become a CPA to give people tax advice. I love the enrolled agent strategy. It's an exam at the IRS that's not that challenging. You go through my program, you learn some business skills, people, you're out making money tomorrow with your own tax practice. You can do that and there's people starving for it. Check it out. All right.

I kind of went into this question where Caesar C. Says hi Mark, when will you be releasing the Tax Advisory Advisory Network?

Tomorrow is the day it should go live. Now we have almost 30 tax advisors that are graduating in in the next seven days. We already just have a few. We've got over 150 in the program right now. So be patient people. What I would recommend, if you're looking for an accountant for last year, go to my website. Excuse me? Go to my website. Sign up for the network to be alerted whenever there's a new advisor released. File an extension. In the next two weeks you've got to file your S Corp or LLC extensions. Then on April 15, file an extension. Send in some money. If you think you owe people, you reduce your chances of an Audit by extending. Let me repeat that. When you extend your tax return, there's less chance of an audit with the irs. They're already picking off people like a sharpshooter as they walk through the door. You're like, I'm not walking through that door. I'm going to go through it in August or September or October. That's what I do. You reduce your chances. So don't stress. File a freaking extension interview for some advisors tomorrow. The network goes live. I would hope within the next three weeks, you're going to see 50 or more advisors from around the country on there that you can reach out to and interview.

Awesome. We got a question from Get Happy Shots. I have a new LLC for my cleaning business formed last month. And I want to pay my two adult children, the 6900, and my granddaughter, who's also. Who also works for me, the 12 5. 12,500. How do I do this? Document this to 1099. Them or subcontractor. What's our best answer?

The 6900. Get. What's it get? Get Shot. Get shorty. What's their name handle?

That's Get Happy Shots.

Take Happy Shots.

Get Happy.

Get Happy. All right, Get Happy. Let me say this, everybody Get Happy first, as an aside, let me tell you. Get Happy. She gave me a little emotional buzz there. I, all through college, owned a janitorial business for eight years. We cleaned buildings and restaurants and hair salons and Radio Shacks. Yes. When Radio Shacks existed. And we worked our butts off for eight years working through college with a janitorial business, carpet cleaning and everything. It is a great service business and you can make good money. You throw in that construction, cleanup and home cleaning people. I have clients making 250 grand a year running cleaning businesses. I don't mind getting dirty. I just love making money. Freaking, who's got my money? Bring it on. I want dirty money. What can I do? You know? So I love this cleaning business. Get Happy. You freaking go now. Get Happy says, I've got adult children and minor children. How do I pay them? And they set up an llc. Now let's everybody review what we're hoping is Get Happy set up their LLC properly. Get Happy has all the pieces and parts, articles, minutes, operating agreement, corporate books, stock certificates, ein. Everything's set up properly in the state where Get Happy should is operating. If you haven't, we have a cleanup special right now. It's once a year. You can get some money off to have the team clean it up. You May say, well yeah, I only paid 100 bucks on some service. Well, you need to pay the other five to six and get it done right now. James, please make sure there's a link down in our chat for that special. And everyone, that's where the don't be Chad commercial came from. Yeah, it's a lot of fun. We shot that in the office with a lot of the employees as actors and actresses. It was a lot of fun. So check that out everybody and share it if you could.

It's in the description. Yeah, on the YouTube you can find that video. If you haven't seen it yet.

I've got a quick.

We'll post it in the chat too. Oh, you're not done.

Oh yeah, no, I haven't even answered the question yet. This is good. So everybody but think about it. This is really good. This is a great little example. Get Happy started a cleaning business. We're going to make sure their LLC is set up properly. Get Happy should have a merchant account, a Venmo account, an Apple Pay account. They should have their bank account set up. And when they're out doing services, that's who their vendor, that's who their customers are paying is the new llc. Now Get Happy wants to pay his or her adult children and their minor child. Now where you came up with 6900 is an old number. That's about a four year old. Four years ago was the number. It's now this year now. And everybody keep this in mind. You can pay your kids whatever. If your kids earned 30 grand and they made you more than that, pay them 30 grand. Why I tell you that you can pay your kids up to and this year it's $13,850 for federal purposes. That's the standard deduction. So if I was to pay my kid under age 18 $13,850, one of my children that's under age 18 would then I don't have any more under age 18. It was a great tax write off while it lasted. They would file a tax return and pay zero tax. I got a Write off for $13,850. Paid them for legitimate services. They filed a return or not and paid zero tax. I got a sweet kick ass write off. So Get Happy. That's what you're going to do with your kid under age 18 is just pay them for their services legitimate. Maybe they only earn four grand, maybe they earn five grand, maybe they earn 20 grand. Doesn't matter. All that matters is they don't pay tax on the federal tax on the first 13,850. Now you have to make sure you get my calendar. For those that haven't got it yet, we're still shipping them out right now. This is the 2023 calendar, and it's got little maps of the whole country and a table that tells you what the rules are for your state when it comes to paying your kids. So if get happy lives in California, the standard deduction there is only 4,800. Nebraska, 7,350. Montana, 5,090. Oregon, 2,450. So they might be paying state tax even though they're not paying federal. So make sure you understand this when you're talking to your accountant. Now, your kids over age 18, you're just going to 1099 them like a subcontractor. Again, they don't pay income tax on the 13,850, but they may pay FICA because now they have a Schedule C. When you 1099 them, they just created their own cleaning business. They are working for your cleaning business as a subcontractor for you. You're going to want to make sure you document it like that. Because if they look like an employee, act like an employee, you use their. Use all of your equipment and show up when you tell them to under audit, you're going to get in trouble. They need to be a W2. If they look like a W2, you got to pay them like a W2. Right now in my family, I've got two children that are on W2s and three kids that are 1099. And that's cool. I have to pay them the way I treat them. Very good questions. Get happy. Have fun with it. Please get with one of our certified accountants.

Great answer, Mark. I've got a question from Stefan. First, I want to apologize. You never got your book that we were supposed to send to you. We'll make sure. We'll make that happen. But I wanted to, and here's the question, but I wanted to throw something else out there for you, Mark. If I had an S corp when they did PPP instead of sole prop, I would have lost out in 12 to 15k because payroll is a lot less than profit. Now that I'm S corp, I guess I'm hoping they don't do another program like that. I'm wondering if any of your clients were disappointed in that way.

Well, here's the thing, everybody. I was an S Corp when the COVID relief came out. And there was the PPP. There was also the ERTC and also we've got the 199A pass through deduction. Some of you may have heard about that. And what happens is everybody pay attention. This is important. Some of the benefits that may come down with a government program or a tax write off are based on the payroll amount, not the net. And so when PPP came out and I got a little less amount for the PPP on my income now I got, I got pretty kick ass PPP because of all my other employees. But on my portion I only could go with the payroll which I got a little less for my piece. But keep in mind how many freaking years I saved on FICA before that and since then. And even in that year I saved on FICA almost $12,000, but my PPP would have been $14,000. So I only lost out on maybe two grand in regards to my payroll. So everybody do not get hyper focused on Social Security. PPP199A FICA is so damn expensive, anytime we run the model, even for just a two year look, the S Corp wins every time. So even though you got a little, maybe got sad at the PPP program, you're still a winner, you're still saving. And will the government ever do another program like that again? I hope not. It was freaking a nightmare. We're still digging out of the hole. You watch the news lately? Oh my hell, I'm hoping our economy still they injected, what was it, 2 trillion into our economy and wondered why. There's inflation. Are you kidding me? We're still digging out of that slowly but surely. And interest rates were a byproduct of this. Now you wonder why. Oh, interest rates are so high. Guess what? It's because of the fricking the government programs during COVID Holy hell. There's a, there's a domino effect with that benefit. And so we've got interest rates and inflation we're dealing with because we freaking threw money on the fire. And so now we're working through the money, the government, you know, our gross national gnp. People are making money paying taxes again and we're going to get lean and mean again. The country is coming, it's going to work things out. But don't worry about government programs, people. Control your own freaking destiny. Control your own level of income. Take ownership of your business and your future and you're going to love it every day and even on, you know, every day of the week and on Sunday twice, you know, whatever they say. All right, one last question and then I'm going To give away a bunch of stuff. Go ahead, Jake.

Oh, we're giving away a bunch of stuff this time. Awesome. Check it out. This is from Sergeant Sam. You've heard that name a million times.

Yes.

Thanks for returning. Sergeant Kkos set up my entity last year. I paid for my cleanup at the same time. How do I go about getting my clean up paid for it last year?

Sergeant, what I would do is if we set up an entity and a cleanup, that would not make sense because the cleanup is for an already existing entity and our cleanup special is either or. Sometimes you can't polish a turd. Have you ever heard that, people? So if your entity is such a train wreck, we're just going to set up a new one and bypass the cleanup cost and service and just do charge you for a new one with a discount during the special. So you get to choose either new entity or clean up my old one. You get a discount for either one. So Sergeant, I have a feeling that you still got a discount. You just didn't do the cleanup. You did the new one. But call the office, talk to the team. And I would probably talk to Christie Rice. She is my manager of that department. Email her and say, Christy, could we schedule a call for 10 minutes? Can you tell me what I paid for last year and what did I receive? And Christy will make it right with you. So, okay, now what I want to give away today, people are a bunch of calendars. I want to give maybe four or five calendars away. These are so helpful. Let me tell you can buy them on the website for like 25 bucks. But there's, there's QR codes with motivational messages each month, all of the tax brackets and strategies for chunking your ira. All of the deadlines, sorry, all of the numbers for HRAs and HSAs and writing off auto paying your kids Roth IRAs, business accounts. Then we get into the states. Which states have the best asset protection? What are the standard deductions in each state? Which states have COPE? Serious DAPs, community property and privacy strategies, state and local tax. I mean it just goes on and on. Build your scrap plan is more almost like a journal and a calendar. And I've got all the tech stack tax deadlines throughout the year, places to make notes every month. It's just fun. It's just a wonderful little calendar. I'm going to give away four or five of these. James, why don't you just start rattling off some names, people, if you're a winner, you need to email diane d. I a n n e markj kohler dot com. That's Diane. D I a n n e two n's diane@markjkohler.com she'll confirm you're a winner and get your address and send you off a calendar. So who are our five winners?

James, first, don't be a chad and try to sneak in there because we got the names written down. So I want to start off with go ahead and give Brenda Smith the new calendar. She's gonna be stoked. We'll give Stefan. Actually, we're gonna give Stefan the tax and legal playbook. Sorry. If we can do that. Okay, let's do Caesar C.

Okay.

Jason Wangs, guard our local the Dave show. And let's give Efren also a calendar. Want to add any more there?

Cool. So read those names off one more time, and if you are a winner, please email Diane. D I A N N earkj Kohler. We've got Efron C, Caesar.

Caesar C. Jason Wangsgaard, the Dave show, Brenda Smith, and Stefan, you'll receive the tax and legal playbook.

All right.

And Stefan, you're going to want to email Diane again also. I apologize for that.

Okay. And, folks, I want to recognize James and his team, Courtney and Patrick in the Idaho studio. Tristan here in the Phoenix studio. They do so much work, work to make sure this goes off well. We've got Kirby in Nashville running Twitter and the social media and making so many comments there to help everybody. Appreciate you, Kirby, and thank you, all of you, you Main street business owners. I love you. We're gonna. We're all in this together. It's Main Street.

Can't do it without Wall Street.

Yeah, it's. It's just awesome. It's a great time in this country to start a business, build wealth. Over 40% of American have a side hustle. That means you're an entrepreneur. Let's hook you up. Let's get things figured out. Please check out the podcast. Come to the YouTube channel. There's so many videos there. And if you like a video that I've shot or a podcast, please share it. Share the good news, and I'll be there with you every week trying to make it happen. Don't keep. Don't give up. Keep working hard. James, thanks again.