New Year's Resolutions for Business Owners with Mark J. Kohler CPA, Attorney

Our broadcast today. This is the first live broadcast of 2020. Can you believe it? Now this will freak you out. My wife said this to me last night that she saw it on a post somewhere. We are the same in distance between 1990 and 2050. What is the same length of time between 1990 and today as it is between today and 2050 and. And 1990 doesn't seem that long ago. What? Crazy, right? Well, welcome everybody. Today is about New Year's resolutions. And if you haven't watched any of my live broadcasts, don't go anywhere yet. Let me at least introduce what we're going to be talking about. I'm a CPA attorney, small business advisor, author, podcaster and blogger, influencer, I would hope influencer on tax and legal strategies for Main Street America. Trying to help you build that side business, that main business of yours, that multimillion dollar IRA account, whatever you're working on. A small entrepreneur, medium sized entrepreneur. We want to help you out. So I have a law firm, accounting firm, and a trust company. And I've been doing this for years, 20 plus years. I know that sounds way super old. I'm trying to look young and vibrant here. So anyway, today I want to talk about New Year's resolutions for business owners. And I've got a list of eight things here, just kind of brainstorming that I normally talk to my clients about and I do myself. So I want to give you this list. And I'm also here for any of you that have some early first of the year type questions. Should I set up this entity? What should I be doing for my bookkeeping now that I'm in the new year? Should I change the way I'm doing my tax reporting or something? I'm here for you. So any questions you have, I've got Rosalie and Maria over here ready to field your questions on YouTube or Facebook. We're running Facebook Live on Marc J. Kohler, Entrepreneur, and then YouTube on Marc J. Kohler as well. So please type your questions below. I am here live on January 2, 2020. This is not pre recorded. I'm all yours. Okay, I'm going to run through what I think your New Year's resolution should be as a business owner. And I'm just going to list them and then we can talk about each one of them in detail. So that way they're out there. I'm going to put these first three as really part. Oh, did I bring a calendar? Do I have a calendar here? Oh my gosh, I can't believe it. I got my new mark J. Kohler 2020 calendar and I was just working on it in my desk, at my desk. And we are selling them at the office. $24. 90 free shipping, half the price of Dave Ramsey's calendar. And I love my calendar. It's got all the tax deadlines when we're doing our workshops and webinars and live podcasts. And it's a great calendar to carry around with you and sections for these first three items. Now, you're going to see an email go out later tonight with a promo to get the calendar if you would like, and my almost 10 hour business owner workshop that I recorded in December. If you buy the recording for 99 bucks, you get a free calendar sent to you with no cost for shipping. Boom. So look for that in your emails and that'll be available as of tomorrow. So this calendar of mine, which I can't believe I didn't bring it over here, the office is two blocks away and I walked over here on a conference call with clients, talking about New Year's resolutions, in fact. So I wish I could have it here. It's okay. You don't need to run anywhere. It's all good. I got my crew over here going. Do you want me to run to the office? No, I'm good. Where's your calendars? You should be carrying your calendar wear on with you, man. You guys drive me crazy. Okay, number one, I want all of you to think about a New Year's resolution and write down or update your 10 year plan. Now, I've got videos on this on YouTube as well as it's a big part of my business owners workshop. I want you to write down your 10 year plan or update it. We can talk more about that. Number two, I want you to do your strap plan. Now, I call that strap plan for short. Strategic plan. Strategic plan for 2020. I want to get that written down in my calendar. I have a whole page for that. What are you going to accomplish this year? And I try to work backwards from the ten year plan. What do you want to do in ten years? Means what I got accomplished in five, what I got to accomplish in three, what do I need to accomplish this year? So you kind of see where you're headed and you work backwards and we come up to your strap plan for 2020 and then your marketing plan. Because even if you're doing just real estate on the side, or maybe you're selling a product or a service, I want to know, how are you going to market this in 2020, what are you going to do new? What are some goals you want to set for yourself every month to accomplish in 2020? The next thing I want to talk about as your 2020 New Year's resolutions. And I just literally sent off two emails today for two clients. And Maria saw this Debt snowball. Some of you have some lingering credit card debt. It's time to get rid of it. And if you're not doing a debt snowball, I want you to implement a debt snowball or review it. Now if you email me and I'll put this down below and I'll write it right here. If you email me, Mark at markjpuller. Maria hates this. We're going to get swamped tomorrow. But if you email mark@markjkohler.com or the law firm, mark@kkoslawyers.com or the accounting firm, whatever. But they all go to my same inbox, markjkoler.com and in the subject line, put debt snowball, there's no cost. And we'll send you a spreadsheet that you can start immediately with your debt snowball and a video that explains how to do it. And I partner with my co author of the Financial Freedom book and what your CPA isn't telling you or what Wall Street's not telling you in those books, Randy Luebke has recorded a little debt snowball video. So all of you out there, a New Year's resolution. If you have any debt at all, get on a debt snowball. Number five, I want you to start talking about your reserve. How much do you have in a reserve? And start putting away a little cash. Dave Ramsey talks about everybody getting their first thousand down and getting used to that and having a little cushion and starting a debt snowball. I love Dave Ramsey for that. Done it myself, had all my kids work on that. But then we take it to the next level and I really want you to have about a three month reserve. What does it cost to live in a month? And can we get that in a cash account, money market account and start saving it somewhere separate from your checking account? Don't have it in your checking account. It's too easy to access. And then I think on my last two or three, Dylan, my, my videographer here had a great tip. He said, implement a new app for the year that you can track your receipts and your mileage. Make sure you've got some method of tracking receipts. All of us start out every year going, I'm going to be better at keeping receipts Whenever you go to that Starbucks or. Anyway, do you need the receipt? Yes, I do. And you take a picture of it. You might have an app. So I'm going to say adopt a new app. And I might do an article on this this coming week. Recommend some apps. I have my own app that I think is very helpful. There's some free and expensive apps. Somewhere in the middle is mine, but an app to track mileage and receipts. I know. We got some questions. Jen, I'm coming your way. One second. And then I'm going to put in here 7 and 8, maybe a new entity. For some of you that have put that off, it's time to set up a new company. Number eight is doing your company maintenance. And we have a company maintenance special. And coming up in the next 15 days, I'd like you to take advantage of that. I call it cmp. That means getting your minutes done, whether it's an LLC or a corporation. Have your annual board meeting. Let's get it done. And number nine, can they see this? Dylan, is it too low? Are we good? Okay, number nine, I'm going to put down here at the bottom. Bookkeeping. Ah, what everybody hates. But get on your QuickBooks. Let's get your QuickBooks up and going. This year you're going to do it online. Are you going to get QuickBooks Pro for your desktop? Are you Mac use? Whatever it is, let's get QuickBooks going and recommit ourselves for better bookkeeping this year. So there's nine. I probably should come up with 10, 10 possible New Year's resolutions. But I'm going to recommend this now. And I know there's some questions out there, so I'm all yours. Now. I'm going to beat this up for maybe 20, 30 minutes max and answer your questions on your new year tax and legal strategy. So I'm all yours. Okay, Maria, what do we got for Jen?

Jen from Facebook says, is this the best time to choose? Change your business, for example, move from a solo proper to an LLC to an LLC into Inc.

Okay, so Jen asked if this is a good time of year to change your company structure. She says, I'm a sole proprietorship. Should I convert that to an LLC or an S corp? Let me give you a few reasons why you might want to change. And Jen, it depends on the facts in your situation. I'd recommend anybody out there that you don't know set up a half hour with one of my attorneys. Half hour might cost you 150 bucks. We'll apply it towards a new entity if you need one, or at least you get some advice on where to go and a straight answer. Don't just click around the web and hope you get the answer you want. That may not be the answer you need. So first thing I would do Jen, is I'm going to ask you if I was on a phone call with any of you out there. I say is this your short term business or your long term business? Because if you own a rental property, you may be just a sole proprietorship. You own that rental property in your own name, you're going to report it on a schedule E on your tax return. And that my friends is a sole proprietorship. You're a landlord as a sole prop. Jen, if you own rental property in your own name, this is a good time of year to get your frickin LLC done. Let's set up an LLC which you own, transfer the property over there, you're not going to have a problem with the bank. No due on sale clause to transfer to your own llc. Boom. The property is now over here and you have asset protection. You got your new entity off and going. You're no longer a sole proprietor, you're an LLC Now I have a feeling Jen has an operational business because she's saying, well I might want to be an S corporation. So some of you out here that are just a plain old sole proprietorship, I would. If you're going to make, I'll cut right to the chase. If you think in 2020 you're going to net have net income of 36 grand or more. So let's say 3,000amonth. If you think Jen, you're going to make more than 3,000amonth, I'd at least do an LLC because I can always backdate it into an S corp, but I can't backdate you into an S corp unless you at least set up an LLC now. So I would set up an LLC as a 1120 and then see how the year goes, see what your income is, see what the expenses are. If you end up netting more than 36 grand I can backdate it into an S Corp back to 1 120. If you don't set up the LLC, I have to set up your S corp sometime in July, August, September, October and now you're screwed. And so if any of you out there have an operational business and you're expecting to make more than 36 grand, let's get the LLC done now. We can turn it into an S corp later. All Right, Next question.

I have far assault. Okay, yes, sorry, from YouTube. How can I withdraw profit from my S corp?

Ars Assad from our YouTube channel says, how can I withdraw money from my S corp? Well, you're going to love this answer. You just go down to the bank and say, give me money. Boom. It's that easy, Arsad. So any of you out there that may be operating as an S corp. I am. I'm an S corp. On my walk over here to the studio, I was setting up a new S corp for a client in Arkansas and we are setting up this new S corp. My S corp owns several different businesses. So I've got an LLC here, real LLC here. I do stuff on online with a URL here, a DBA here. So you can have one S corp. And that's what I prefer for a lot of my clients. And it's going to make money. And Arsad, you're paying bills. That's cool. Anytime you want money, you take a draw. It's called a draw. I can literally today I took a draw. I moved money from my S corp. Just go online, transfer it into your personal account, and it's called a draw. And you're like, well, Mark, I need to take a payroll. And isn't there some tax reporting? Sure. On a quarterly basis, we're going to designate, designate part of that draw as payroll and we're going to do a payroll report. And that payroll report is going to be done four times during the year. April, July, October, and then right now, this time of year, we're kicking out the last payroll for the fourth quarter of 2019. So, Assad, you take money anytime you want. It's called draw. We're going to do a payroll report quarterly. We charge 150 bucks a quarter, easy schmeasy. And then the rest falls out the bottom as profit. K1, you get a 20% deduction. You will freaking love it. I've got a chapter in my book on this. S corporations. It lays it out really well. This book I'm going to give away to one of you today. So if any of you would like a copy of this book, all you have to do is share this broadcast. And when you share it, Rosalie makes a note of all the people that share it and then she chooses the name she likes the most and they win a book. Or are you more. Are you more random than that? Okay, she's more random than that. I thought. So she just randomly throws a dart at that piece of paper across the office and that person gets A free book. And I will sign it now. Should I sign it now? Is that good? Who do I say it's for? Just whoever. I just sign it. Okay, the lucky one. The lucky one. You are. Here, I'll put a little smiley face there and I'll date it one to 20. There you go. This book is yours. So if you share this broadcast today, she will give this to you. Now, the reason why I bring this up is here in chapter 4 5. Oh, sorry, chapter 4. Chapter 4s corporations. Arshad, just pick up the book. If you don't win it tomorrow, go to Amazon. You can have it on Prime, Kindle or audiobook and look at chapter five. It'll answer all your questions. You'll freaking love it. Get over to YouTube. I got more questions videos on s corpse there. Okay, who's next?

I have Moet131 from YouTube. How do I know if I qualify for an HR? I work full time during the day and own a small business.

Okay, Moet131 says, how do I know if I qualify for a health savings account? He or she has a day job and then a small business on the side. So this is easy for everybody out there. If you have a day job or your spouse, significant other, you want to go into work tomorrow and go, hey, do I have health insurance here? Yes, you do. So first you want to see if you're getting health care provided for you and or your spouse. And there might be a little extra withheld from your paycheck to come cover your spouse or kids. I don't know. But the easiest thing to do first is if any of you have a day job in your family circle, your close family circle, find out how much it costs. What kind of plan is it? Is it an hmo, a ppo, hpt, whatever? What kind of plan is it? And you want to ask and just mow it. 131, go into work tomorrow and go, is mine an HSA qualifying plan? And they'll go, nope. Yep. And you can find out right off the bat if it's an HSA qualifying plan. If it's not, you can say, I'd really like an HSA qualifying plan. When is the next enrollment period at work? It could be anytime during the year. So you want to ask them, can I get an hsa? There's no real requirement to get the hsa except asking for has to be a high deductible plan and it'll be crafted as an HSA qualifying plan. Now you can put money in your HSA. So 131, that's the first place. Go to work and ask if some of you out there have a small business full time or a small business on the side and you're not getting health care at work. I go to your healthcare.gov exchange in your state, which may be sponsored by the state under a different URL or the federal1 under hra.gov and I'm sorry, hra gov, healthcare.gov you're just going to go to the exchange and if your incomes of a certain level, you may be able to get an HSA plan right there on the phone or online or you're going to go to an independent health care insurance agent and just say, I want an HSA qualifying plan. You got to sign up for one so that you can participate in the hsa. Now let me just give a quick example of this. My daughter, who is 23, Dylan, she 23 2. 22 3. I don't know. Who knows? Once you're over 20, I forget about all this stuff. So she's in her young early 20s and she was home over Christmas and she goes, dad, my health care plan sucks and I want to change it. And she's low income because she's a college student and she's working to be a realtor. So excited for her. And I said, great, you're not on my plan because I ain't paying for it. Let's call the health care exchange in your state. And we literally got on the phone. I had to get transferred a couple times. It was cool. It was totally anxiety ridden for her or my wife to try to make this call. And I kind of deal with red tape. I call the IRS every day so you can deal with the IRS. Healthcare.gov is not too bad. So we called him up and I said, hey, my daughter needs a plan. And they're like, make sure she's on the phone. Yep. Is this you? Really, Sydney? And we did all that stuff and then we put her on speakerphone and we got her a new plan within an hour. And it was a plan that she wanted. The premium worked and we were debating HSA versus regular plan, so it's really that easy. Now I have a chapter in my tax and legal playbook on Kohler care. It's better than Obamacare. You would love it. So ways to save on health care and how to have an HSA or an hra. So I've got videos on that on my small business workshop, which I mentioned earlier. You can get for 99 bucks and get a free calendar. I spend. In fact, I'm shooting some more video right after this live broadcast to kind of put more video content in that workshop so that you have some healthcare options you're going to love. All right, Brandi, what do we got?

Brandy from Facebook says LLC or S Corp. I have one accountant saying one and a business advisor saying other. Currently a partnership. Llc.

Okay. Brandy said, should I have an LLC or an S corp? Currently a partnership. He has an accountant say one accountant say an llc. The other accountant say an S Corp. Brandi, before I can answer, and this is why we do consultations, and you might want to pay us for a half hour and we would set up the entity for you and apply it. I got to ask a couple more things. You're going to have to reply to Maria, and I want to know this. Is your partner, your spouse, or a third party Number two, What's the business about? What do you do and how much money do you think you're going to make this year? Net, not gross. So is your partner, your spouse? What does the business do, and how much do you think you're going to make this year? You give those three ounces to Maria, I'll come back to you. Okay, Maria, who do we got? Vanessa.

Vanessa from YouTube. I have an LLC. I want to set up an FMC so that this year I can pay my kids and spouse. How do I set it up in California and do I have to pay the yearly fee of $800?

Oh, Vanessa, you're going to love this answer. So Vanessa's in California and she wants to set up an fmc, which stands for anybody. You're killing me. Family management company. Okay, Family management company. So Vanessa's diagram is going to look like this. Okay, so here's Vanessa's trust. Vanessa has an S Corp. She said she does, and she is in California and she wants to set up a family management company. Now, Vanessa, if you don't have an S corp, you may not even need the family management company. Call me. She what? Okay, she has an llc, probably taxed like an S corp. Vanessa, again, if you don't have an S corp, you may not need the family management company. Read my chapter on paying kids. Call my office and set up a half hour. Consult with one of my tax lawyers. Again, for 150 bucks, we're going to save you 20 times that getting this dialed in. But for now, everybody, Vanessa lives in California. She has an LLC taxed as an S corp. She wants to set up A family management company. And this is a little company to hire the kids. So let's say she has three kids over here. Now, Vanessa, just like we were talking about with some of these other folks, she's going to take a draw and then she's going to kick out her own W2 for herself and a K1, which is the net income from the S Corp. So this is Vanessa's world. She's got her S corp, but she wants to pay the kids. And if they're under age 18, which that's again why Vanessa's texting or calling here, we're not going to pay the kids out of the, out of the S Corp or LLC taxes in S Corp. That's a bad thing. So we're going to pay the family management company and the family management company is going to pay the kids. Now the heart of Vanessa's question is, how do I set that up? Vanessa, you're going to love this. It's not an llc, it's not a corporation. It's not going to cost you 800 bucks in California. You're going to go down to the freaking bank and just set up a sole proprietorship. And you're going to walk into Wells Fargo. I've done this myself in California. And you're going to go, I need to set up a sole proprietorship. Do not walk in and say you're setting up a family management company. The 19 year old behind the desk, their brain will explode, there'll be guts and blood everywhere. And that banker, you know, they'll pass. You know an alarm will go off because bankers drive me crazy. Don't tell them what you're doing. Just say, I need a sole proprietorship. You're going to set it up under your Social Security number. And they're going to say, what do you do? And you're going to say, it's a small business in my family and we do janitorial. That's it. Because they're going to. Kids are going to clean the office of the business. This is janitorial business, office support company, I don't care. But you're going to set up a sole proprietorship. It's going to have its own little bank account. And whenever you want to pay the kids, you're going to transfer money here and then transfer the money back into your kids account. Let me give an example of this. Four days ago on December 30, I needed to pay Molly, one of my kids that helps out in the business. I transferred money in the S Corp. Down to the family management company. And I paid Molly for all the work she's done this year. In fact, she helped paint the studio this year. That was one of her jobs. She painted the studio white. Her and her friends. Right here, this white wall behind me. She needs to come do a second coat. So I'm going to get her to work on that maybe this weekend. So I needed to pay her. And I get a tax write off for that. No W2, no 1099, no Sudafood of FICA workers comp, nothing. I just got a write off for five grand and I dropped it into her account. It was funny. She was out with her friends at the movie. Within minutes, I get this text, dad, there's five grand on my bank account. I was hoping she wouldn't notice. I text her back, don't you dare touch it or you're freaking grounded for life. And she goes, what are you doing? I said, I'm just running money through your account for tax purposes. She's like, okay. The next morning, I take the five grand and where do I put it? Back into my account to reimburse me for all the crap I paid for during the year. Prom, car fuel, gas, everything, right? That's what parents do. So I reimburse myself. I just laundered. Sorry. I just transferred five grand through Molly's account legitimately for the services of a child in our business, Vanessa, that's what you're going to do. More info on YouTube, buy my book. Get my $99 business owner workshop where I go into this in more detail for 8, 9 hours on all these topics and more. And get a free calendar. You'll love it. Who are we on to? Brandi? We get an answer from Brady or Brandy?

Randy.

Brandi. Okay, Brandi's got some answers for us.

Boyfriend, triple tank, partner, Direct sales net about 40k.

Okay, Brandi. Oh, my gosh. Now I've got to get into marriage advice. Brandi says she has a boyfriend and he owns 5%. What? Are you crazy? Get rid of him. Unless he's a doctor or going to medical school. Brandi, he's not good enough for you. Move on. I'm sorry. I hope he's not watching. Brandi. Okay, sorry. This is the lecture I give my twin daughters. Okay, so no one's good enough for my daughters. Now one of them is married. And I love Jack. He's a stud if he's watching. Now here's the deal. Brandy has a 5% boyfriend. Partner. It's a mess, Brand. You don't want that either. You're going to marry this guy and we're going to go 5050 and set up a real business or you're freaking going to take him off. Why is he 5% anyway? You shouldn't even be doing that. Frankly, that's what I'd spend my time on, the phone call with you. If you want to pay him for his help, give him a freaking 1099. But he doesn't need to be a 5% owner. And if you're going to net over $40,000, you need to be an S corporation. I'll save you money right out of the gate and I'll stand behind it all day long. Now your other accountant is right too. Because if you really are going to have a partnership, I'm going to set up an LLC. And if your boyfriend is really going to own 50% of the company, not a measly 5, get rid of him as 5%. Just give him a 1099. But if he's going to own 50%, that's cool. He's over here. Your corporation is going to own the other 50%. So in a partnership, Brandi, I think the problem is you've got a unique situation. And both of your accountants are giving you good advice, but they don't have the wisdom to make you make some hard decisions. Because as a partnership, I want you an LLC. If you're making 40 grand or more, I want you an s Corp. This 5% thing is the thing causing the problem. Get rid of them. Not entirely. You might keep him around because he's good looking, but give him a 1099, make yourself 100% owner. You don't need the LLC. Now, you're an S corp. And here's your little buddy over here boyfriend, the pool guy getting a 1099 for his services. You own the S Corp 100%. That's the way I'd go. Brandy, give us a call if you want some tough love. But it's going to save you money and make you more in the long run. Boom. I don't pull any punches, people. That's what you pay me the big bucks for. Okay, a couple more questions. What do we got?

Claudia from Atlanta, Georgia. I own a taxi company in Atlanta. I own 20 vehicles. The rent is on a weekly basis. Is this rent income considered passive? And or how should it be recorded? Or should I have a separate LLC for the vehicles?

Okay, first name again. Claudia in Atlanta. Oh, good food in Atlanta. Every time I go there, I gain five pounds. So Claudia's in Atlanta. She has a taxi company. She has 20 vehicles. Now, I don't know how you're battling Uber and Lyft, but God bless you. I mean, that's a tough business. She rents the cars. She doesn't own them.

She owns 20 vehicles and then the rent is on a weekly basis.

What's the rent for? Claudia says she owns 20 vehicles and the rent is X. So I don't know if she owns the vehicles and she's renting them to her business because I think later in the question she says, should I have an LLC for those vehicles? Frankly, Claudia, I don't like either one. Here's why. I'll give you two options. The first option, which is probably where I'd go and where most of our transportation businesses go, is you're going to have one corporation, it's going to be an S corp and it's going to own all 20 vehicles. There's no rent going on. Um, and this is where you're going to make your sales. You're going to take write offs for all 20 vehicles. You're going to do your draw, you're going to do all the tax planning. I teach. Love it. That's the simple way to go. Now if someone talked you into owning these vehicles over here, so you got these 20 little taxis over here. That's an ugly taxi, whatever. Okay, you got 20 of these taxis over here. You own them individually and you're renting them. When you lease. That's what it is. It's an auto lease. You call it rent, whatever the hell you want. But in the state of Georgia, and this is most states, when you lease personal property, you got to collect sales tax. And I've had clients go down. Here's a story. I had a client, now this is important, Claudia, and everybody out there. I had a client down in Nevada went into an asset protection guru and they told her, told this husband and wife, let's take all of your forklifts and trucks and equipment in your construction company and go over here and set up an LLC and let's put all that equipment in this llc, then you can lease it back to your construction company. Now you have protection. If anybody sues you, they can't get to your valuable equipment like it from an asset protection point. Claudia. Makes sense, right? And so someone might be telling you to put all these cars in an llc, but I would double check with the tax board of Georgia and ask them if you are going to pay sales tax on the leasing of personal property. Even to your own corporation. Again, in most states, you are. What's going on?

No, she said her driver's pay her on a weekly basis for the use. That's the rent.

Okay, all right. She says that the drivers pay her rent for the use of the cars. And now she wants to maybe put the vehicles in another entity. And then you'd have to lease them back to yourself. So my example still is maintaining itself. Thank you. If you lease these vehicles back to yourself and then rent them to your drivers, you're going to have to collect sales tax. So this client of mine down in Nevada, when they had all these construction pieces of equipment, they got audited by the tax board in Nevada. They owed $30,000 in back sales tax because they owned the vehicles. Claudia, in your example, in a separate entity, $30,000 they couldn't get out of it. It was a nightmare. All because some asset protection protection guru didn't understand taxation. So you want to be careful when you're renting vehicles to yourself or to someone else. And if you're renting these cars to your drivers, I get a consultation with the tax professional in Georgia. It's not about asset protection. Believe it or not. I would put this sales tax issue to rest, because when you rent these cars to someone else, you should be collecting sales tax on the rent of personal property, maybe. So now some accountants watching this in Georgia going, mark, you're completely wrong. Okay, that's cool. But I'm just telling you, in a lot of states, sales tax on personal property exists. So you might want to restructure your relationship with the taxi drivers. But I'm not a fan of you putting these in a separate entity. Claudia, this is a big deal. You own a big company with 20 cars and a bunch of drivers. I get a second opinion from your accountant, maybe even one of our accountants to make sure you're on track. Okay, we're going to do two more questions from Desmond and Henrique.

Desmond, how can one clear and manage his debt in business?

How can one manage their debts?

How can one clear and manage his debts in business?

Clear and manage their debts in business? I'm not sure if I understand that. Desmond, if you have debt personally or debt in your business, if that debt is making you money, think of a rental property with. Maybe Claudia even has some loans against some of these taxis. I'm okay with that because the taxis making her money. But if you've got credit cards just sitting there in your personal life or in your business, you need to get on a debt snowball get rid of that debt. Productive debt is making you money, owning equipment or property that cash flows. I'm okay with that. And let's just make sure we're not paying a high interest rate. I hope that helps. Desmond, maybe give us a call if we could do a consultation, particularly for you.

Enrique Henriquet. Mark, I'm a student in the US and my parents gave me some money as Christmas gifts. Should I pay taxes on the money?

No. Henrique says he's living in the US as a student and his parents from another country gave him a gift. Should he pay taxes on that? Frankly, Henrique, and any of you out there, you do not pay taxes on gifts received. I don't care if you're a US citizen or not or just a resident living in the U.S. the IRS does not require you to pay taxes on any gifts you receive. Now, if you're a US citizen and gifting someone money more than $15,000 in 2019, now you have gift tax. They assess it to the payor, not the recipient. Now let me give you another example, everybody. I had a client last two weeks of the year called me up and said, my dad is paying off my student loans to the tune of 60 grand. And I said, is it a gift? She goes, I don't know. He might give me a 1099. I said, why don't you call up and find out? Come to find out, dad was going to write that off. He was going to give his daughter a 1099. Now, I'm not opposed to that. Daughter was serving on the board of directors for her dad's business. And I'm cool with that. I 1099 my kids. But a $60,000 1099, she's going to pay some taxes. So she said, should I set up an S Corp? And then I said, has he paid you already or has he not paid you yet? And she goes, well, he paid me back in June. Well, it's too late. I don't have an S Corp back in June. So you've got to be careful making sure that you have the S Corp at the time you receive the money. So I was not able to help this young lady getting a 1099 from her dad. Now, are they still going to save income tax? Sure, because dad could be in a higher tax bracket. So I'm not saying it's a bad deal, but they could have saved more talking to their accountant before they did it. Oh, and Brandi, is she mad?

She replied back, oh, no.

If it's mad, don't say it.

We can't get married lol or I lose my health insurance as a widow which is only $77 a month. Money is money. I can't do a 800 month insurance. Had to add him as a business partner for him to go on the company's trips.

Okay, now Brandi gives us a little more info. The saga continues. And Brandi, thanks for letting me joke around with you. She said I can't marry him lol because I'm a widow and getting some health insurance or Medicaid or something like that. Medicare. And so there's a financial reason why she can't marry him. That's cool. But then whoa, Brandi, you're gonna love this. Here's what she said people. She goes I put him on as an owner of my business so I can ride off trips with him. He doesn't have to be an owner for you to write off trips with him. Where can he serve ladies? You know, Come on. What? That's right board of directors. My team here knows the answer. Brandi, get rid of him as an owner it only complex is your makes your tax return so much more complex. I could use some explanatives but I won't just get rid of them as an owner and I would backdate it to 123119 just do a membership transfer agreement get them off the LLC, make an S election is 100% you and put them on your board of directors board of advisors. You can pay him as a subcontractor and he can still take you can still take a write off for all the trips freaking together. You're good Brandy. Don't make him an owner just to make expenses there and many of you in summary as you head into 2020 make sure you've got the right entity, the right checkbook set up and the right procedure. And if you need to clean house a little, get some minutes done, take someone off ownership, set up a new sole proprietorship to pay kids. This is the time to get organized. Get your health savings account going. And I'm going to say this. When you lay out your strategic plan for 2020 going to be there with you with my YouTube videos, some very affordable books, my business owner workshop recording of close to 10 hours of content for 99 bucks. You can watch it over and over again and I'm going to help you fill out this information. So if any of you share this, Rosalie will put you in a drawing for the book. Please give me a like give it a thumbs up, give me a great review on Amazon if you pick up the book. A little five star review goes a long way, so I really, really appreciate it. I've got a weekly newsletter. The first newsletter of the year goes out next Tuesday morning, so we're going to do a little emailing this weekend, but the newsletter goes out on Tuesday. And the new 2020 business calendar? It's out. So get to my website and check it out. You're going to love it. Thanks everybody and have a Happy New Year. Drive safe this weekend and keep living the dream.