Open Forum for Tax and Legal Questions - Main Street Business Podcast

Foreign. Welcome, everyone, to the Main Street Business Podcast with Mark Kohler and Matt Sorenson. We are excited to be with you on the Open Forum episode. This is the episode of Dedicated to the people of the Main Street Business

podcast to the people for the people of the people of the people. Wait, yeah, I need to refresh my constitutional speeches or something. Yes. Welcome, everybody, and hopefully you've had a chance to listen to some of our podcasts. But if you are brand new and this is the first episode you've ever listened to of ours, Open Forum. Boy, you're in for a treat. Historically, our Open Forum shows are listened to the most, which is surprising for us because we love some of the deep dives on specific topics, but I think people just like to hear what other entrepreneurs are doing, you know, just. Yeah, what are the other questions?

Like, this is like people calling in for car talk, you know, and it's just tax legal questions and you get two dudes making up answers. I don't know.

Yeah, we're just funnier, too. I need. We need a Boston accent. You know something?

Yeah, those are. Those guys are great, by the way.

Mentors. There are heroes.

Yeah, they are. They are heroes. Now, of course, we are both attorneys, so when I'm joking, when I say that, you know, we're gonna try and give you some good tax and legal advice on these questions about how to live the American dream. Protect your assets, save on taxes, build a retirement. That's what, that's what we are dedicated here to doing on the Main Street Business podcast.

And I know many of you are thinking, well, this has got to be hyper focused on tax or hyper focused on legal. It's going to be boring. No. We are firm believers that your tax and legal is a part of your overall plan and it has to be integrated and brought together. We are so busy. We are so grateful for many of you that are willing to wait for an appointment. We have some. Most of our attorneys are out over a week, if not a little bit more, and we're trying to create more capacity on our end, but we're busy because people are just like, oh, my gosh, I don't have to go see my accountant. I don't have to go see my estate planning lawyer, then my business lawyer and play quarterback and bring them all together and run a play. You guys are my quarterback and there's different players on your team. We'll bring it together for you and we're affordable. Gosh, I had another experience today with someone that paid way too much for stuff. Just.

Yeah, yeah. I mean, this, this industry, it's interesting. You know, a lot of people end up going to the lawyer. They know that'll do your divorce, your dui, your personal injury case, and they're going to help you with your business and tax planning. Careful, careful. All right. Or that's like having your dentist do plastic surgery on your nose. I mean, I don't know.

Yeah. Or it's the big firm. The. The more I pay, the better it should be or must be. Or the big firm has all these things. I met people in the last three days, probably three days in a row that just have fallen onto my calendar or plate or text or a phone call that have said I spent five to $10,000 on legal work and I'm for what? We do that same or better quality with this holistic approach for a third of that or less. And they're really, really frustrated, in tears. So shop around. Don't think just because they're a big firm and they're charging five or ten grand for your estate plan. I literally had a text on the way over to the podcast studio today of a woman that went through divorce. It was brutal. She had. Did it, set up a revocable and an irrevocable trust. Don't know why yet. And try to get her on a calendar. She's a friend of a friend. Swamped. But. And then. And. But the reason why I wanted to really talk to her the most is because apparently she spent close to 20 grand with estate planning attorneys. I've never, never in the, in the history of our firm in 20 years charge someone for estate planning. Even if it was 10 trusts, 20 grand. It's just in our quality. It's. I put it up against anybody, so I just feel so bad. So I want to try to reign that in.

Okay, so today, today's podcast is brought to you by KQS Lawyers, where you can get quality legal advice for affordable fee. Well, all right. Well, we've got questions here. Do you want. You got some tips though, Mark, or some stuff in the news? I know we got some deadlines. The IRS is gonna want some stuff here in the next few days from you, and there's some nasty penalties if you don't give it to them.

Yeah, let's do that. Matt and I talked about that. I've got my handy dandy calendar. It's now been shipped out to all those that pre bought one. Matt, yours is in the mail too.

Excellent. Love it. Looks so good, by the way.

Oh, thanks. Dude, it is sweet. Matt finished 2021 MJK Monthly Planner for entrepreneurs, Business owners Tax legal professionals as a deadline of every possible deadline, state and federal, state for entities you might have set up and then federal tax deadlines for the whole year. Little messages, notes, videos. It's really helpful. Okay, the next big date that we're facing, we're going to try to do this on the podcast in the future is the the 1099 deadline. Now rules have changed. I shot a little selfie video for social media the other day and some of you may have already seen it. So this would be a good reminder. 1099s are getting to be a bigger and bigger deal. Think about it. Everybody, right? States are cracking down on who's a subcontractor and who's not. They're sick and tired of business owners saying, well, I'm going to just 1099 rather than do the W2 thing. And all the states are really hammering down on this. California had even another law passed in the last 18 months to really shove this down people's throats. And they're one of 12 states that are very aggressive. So 1099s is the form that you have to issue for people you paid more than $600 for services in your business that you want to deduct in 2020. Now that's the one sentence definition. 1099 is something you issue to vendors for which you want a deduction for who you paid more than $600. Now I've got a lengthy article that takes it off from there. It's on our blog. You can just type Kohler 1099 rules, blah, blah blah. Get that article because you want to get a W9. Do I really? 1099 Home Depot. All these little questions that come up. You'll want to read the article. So I'll leave it at that. But here's the biggest change. They now have the form. We're all used to the 1099 Ms. Misc. But we're what we're interested in. 1099 missed. Now we have what's called the 1099 NEC, which is the 1099 non employee compensation form. You have to mail those out to all your vendors by February 1st this year because January 31st is on a Sunday. And you have to compile them, put the COVID 1096 on it, and either electronically or mail them to the IRS the same day. It used to be. You had until the end of February to give them to the irs. IRS is like too many people are Trying to file their tax return. And we want those 1099s out. And we're going to start auditing people that don't claim that income. And people are trying to live under the table. You want to write off. They don't want to claim the income. Too bad. Freaking 1099. Anyway, big topic, but your deadline is this coming Monday. And you can't do this on your own Sunday night online. You have to have a company involved because it's done a duplicate. The electronic procedure to the IRS is tricky. I don't even do my own 1099s. I enlist my staff and my partners and I have ways of sharing costs. I mean, it's a cost of doing business. So there you go. Anything you want to add to that 1099?

No, just do what the IRS says.

They don't.

They're starting to get a little more nastier on this one. So they've been sending out kind of the warning shots. So this is one. Don't, don't mess up. You don't want to lose the deduction. So just be prepared, be on it. Last, last shot here in the last few days.

What's your update? What do you like in the news? You had something out landlords, didn't you?

Yeah, I was just gonna. We were gonna talk briefly about landlords because we do get a lot of questions and. And you know, with all the COVID relief that's happened from, you know, last round and cares act before it, landlords didn't really get a lot. You know, you couldn't get ppp. You can't use ertc. Those are more payroll, employee based. The idle stuff was something we thought would be a shot for rental property owners. Airbnb owners was gutted. You know, you were getting a thousand bucks at most on that stuff. And then they were only doing it if you had employees. 1,000 per employee. Well, you don't have it for rental property. The only things that were really out there, and I was just giving an update to let people know where it stands, is the rental relief. So there is still rental assistance, of course. And that's one I've even used for some of my tenants have had to use it that went on unemployment, that if you have a tenant that automatically goes on unemployment, they automatically qualify for rental assistance. There's others that even if. Now hold it.

Can I start? Stop there. Matt, I love your example. Can you give your person. Maybe you were going to, but I want to ask you, now you're a landlord, how did you Take advantage of that. Can you give an example?

Okay, so now he applied through his city. The city, actually, the. My tenant. Yeah, Applied through a city. And the city actually uses a nonprofit agency, a housing nonprofit agency that's not a government entity, but actually will process this stuff for them. Now the landlord has to certify and approve. I got to see. You have to send a copy of the lease, you have to certify what the rent is, and then it's not paid. And all this. And it was, I'm not going to lie, it was a, it was a pain. But I got a check that's not going to bounce. Okay. First for a few months of rent. And so it was worth it. Now, so it's usually going to be city based. If your tenants or your properties are in a small city, it might be at a county or state level, but mine are in a large city. The city basically runs and gets that money, manage it, doles it, pays it

out

under the COVID relief. The last bill passed about a month ago. Landlords can apply on behalf of their tenants now. So you don't have to wait for your tenant to apply. You can apply on their behalf as long as they in writing allowed you to do that. So because some tenants are just, you know, they stick their head in the sand, they're like, I don't, you can't evict me, so I don't, I don't care. But as a landlord, you're like, no, I need to get paid, man. Like I, I'm going to do jump through the hoops and the paperwork to make sure I get paid. So that, that is what's out there. It's something. But just be aware of that. For those tenants you have that are stopped not paying, inquire if they've been unemployed. There are some income restrictions too, if they're still working, and maybe they just got reduced pay or something. But they're pretty generous. I think for most tenants where a lot of people are going to qualify, they made the income limits pretty high.

Now can you get back rent?

Yes, absolutely. You get back months rent. So I got a couple, I got about 2 months rent and 1 check.

Sweet.

By the time they finally processed it.

Now, one thing that we've talked about, I'm a landlord too. I've got a rental property that I'm trying to get rented by next Monday. It's a long story, but anyway, what I think a lot of real estate investors fall prey to or fall into the trap of thinking turnkey property I got this property and now I'm going to let my property manager run it for me. And I get it. I do have property managers myself. But I want to encourage all of you that are me. I've learned the hard way that my successful real estate investors, they're involved, they've, you've got to keep an eye on this. So if you have a property manager, your property manager may be helping facilitate this. You may say, hey, property manager, get over there, have them fill out the damn form, sign it and then I'll process it here. Or get them involved if they're helping you do it. You're the captain of your ship and you may have a property manager goes, yeah, well they didn't do this. Get involved. Say frickin, I'll drive over there. And I know some of your rentals. My rentals are in other states. Get friends or family or contacts that you have to go, help you track down the tenant and say, we need your help, we want you to pay rent. And I think with the tent, I think a lot of tenants are thinking their landlord is mad at them or is going to do something bad to them. But I think if you go to the tenant and say, hey, let's work together, let's solve this together. Oh my gosh. You don't think they're stressed out? They are just, if not more than you.

Yeah, absolutely. So, I mean, you know, we'll see what's going to happen. You know, Biden has some, you know, there's some news on eviction moratoriums being extended and things like that, but.

And more money for rental assistance and some more money.

Right. I think right now it's slated to go out through March, so hopefully we can see some more funds coming out that way too.

Yeah, good tip, Matt.

Thanks.

All right. Yeah. And I think a lot of you, if you just go, Matt and I haven't written an article on this rental assistance thing and maybe we should, but it's so city, county, state specific and it depends on the type of tenant you have and all that. So maybe we can just do a summary article to kind of point you in the right direction like this last four minutes was. But just get on Google, you can find the solution in your area quite quickly. All right, Matt. Well, it's open forum for those of you that have not taken advantage of this. You can go to mainstreetbusiness.com and right on the front home first above the cut page right there, it says have a question, submit a question, do it Right there. We are looking at those right now and we're going to reply and say, hey, we answered it on this and such and such show. And sometimes we can't get to all of them and sometimes we choose one that we know is going to knock out several birds with one stone. So be patient with that. But Matt, do you want to choose the first question? Let's see what we got going out there. And we love where you're from, your first name and where you're from. That's. It's so helpful. It really makes us a family, I think.

Yeah, these people are starting to give us that. I appreciate they're listening. This is Lee. I'm going to start with Lee because you know, he gets to go to the front of the line.

Lee. I love Lee. Yeah. Okay.

Always got some great questions. This is of course an IRA 401K one surprise, surprise. Yeah. So. So he asks. So he has a 401k that we helped set up. He has an S corporation which is generally the entity of choice for small business owners with an operational business. He says when making the company contribution. When a company makes a contribution, not the employee, he says, does it report on a W2 on line 12? A follow up question when transferring the money from Traditional to Roth, where is that reported? Okay, two great questions.

Yeah.

When you contribute on the company side and you're an S corporation, that is not on the W2. Only the employee contribution, which, whether it's Roth or Traditional, is on the W2. The company contribution is on the 1120s tax return. There's a line for employee benefits. I think it's line 18. I don't know if they change it for this upcoming year. I was just looking at the prior return line 18. That's where you're going to put the company contribution because it's an expense to the company on the 1120s.

And again, back to my principle of that you're the captain of your ship. A lot of accountants, they may not ask for this. They may not know. Did you actually make this contribution? Let's back up even further. What's cool about subchapter S like Lee's, he's the only owner employee, which is a large majority. I don't know if I'm going to say majority, but a large cross section of our clients, they're the only employer, maybe their spouse, maybe their kids. And so here's the cool part. You don't have to make the contribution to the 401k for last year, the company contribution, because it's not on the W2. You don't have to make that contribution until the day you're ready to file the tax return, if you choose to do so. And you can do an extension that push this till September. So the problem is you got all this time to make. Yeah. And you can choose how much you want to do based on an equation, based on how much you Deferred or your W2. So there's a little bit of math. It's not bad. And you maybe call us and we do consults with clients on, hey, what do you want to do? And how much and how much is this, that and another. But anyway, the point is, your account may not know that you followed through with that because that's not an accounting function. That's an investment function. So if you decide to contribute to the 401k, which, if it's a solo 401k self directed, you're the trustee. There's no Merrill lynch in the middle there. So if you put money in that bank account, which we love, you got to tell your accountant, they say, hey, I made a contribution to the 401k for last year. Don't forget to put that on my return. You don't know how many people were doing their tax return for 2020 now. And they go, well, I made a contribution last year for the, for what the hell you got to tell us that, that it was for 20, 19. We don't know. So, yeah, stay involved. So, Lee, this is good.

Yeah. So, yeah, you're right. So that, that should be an expense. So in fact, it should be on your, you know, your P and L or, you know, however you're tracking your income and expense, it should be a line item on your expense. So your account would know to pick it up out of your bookkeeping to throw it on as on your company return here. Now, the question about, we say transferring money from traditional to Roth, where is that reported? Now, let me say on this, I'm going to use some different words. That would be a conversion. So you would this technical term here. Okay. All right. So the convert from traditional Roth, let's say you had 20,000 that you contributed. Maybe it was the employer contribution here. That's in a traditional account in the solo K. And you want it to be Roth now. Okay, well, that's gonna have to get taxed. Right. You just got an expense and deduction for it, effectively from the company. So to make it Roth, you have to do a conversion. And the plan will need to 1099 you, you will get a 1099 R for $20,000 that you will pick up in taxes in the year you convert. So that's how that works. You're going to get a 1099R. If you have a solo K at Directed IRA where we custody your solo K, we do the 1099R for you. If you do non custodial, where you control everything and you have the bank account and everything, there's a fee for it. But we can help with 1,099 Rs for people doing solo KS when you do a Roth conversion. But you do need to report that, and you want to kind of report the sum of what you do over the years. So if you do a conversion now, and you might convert some later, just do it all at once. We do 11099 at the end of the year, totaling it up.

Now what if you do? Matt, I've got to ask you. You know what's funny, people? I tell our attorneys in our office, I'm like, you have got to listen to the podcast. I learned something new every week. I love listening to Matt because he's such an expert in this area. It's kind of. If you think of the car talk guys, you know, Matt might be the muffler guy, and I'm kind of the engine guy or whatever it is, you know, AC versus heater, whatever. And it's kind of like we. We take the car apart and we're. Yeah, the mufflers are important part.

Okay.

Because guys in these small towns, they thought they want loud mufflers. I don't know what it is. There's a lot of broken mufflers in these small towns in America. Apparently the. The noise of your muffler is a reflection of how tough you are.

Yeah, I just. I just. It's just good that that's how you see me sometimes. You don't know how the people in your life, you love you. But.

I don't know why I said muffler.

If you were a car guy or a mechanic. What guy are you? You're the muffler guy,

dude. Is that your spirit animal? I don't know why I said muffler. Come on. All right.

And then you self identify as an engine guy.

I'm the engine guy.

Y guy, engine guy, muffler guy.

Come on. I did that. There was nothing meant by that. I just. Maybe I should have said, I'm the windshield wiper guy. Yeah, I'm the windshield wiper guy. You know, of course I can't even change my own windshield wipers. Whenever I go to AutoZone, I'm like, can you come out and put these on, guys? Like, you're that stupid? Yes, please. I always cut myself when I do it. Okay, where were we? What were we talking about?

Solo case.

Oh, what's something I'm going to learn? Okay, can I convert inside my 401k to a Roth? And what's the form for that?

Yes. So you will want to do what's called an in plan conversion. This is just an internal form for your own record keeping. Like, let's say, you know, you're IRA or 401k was at, you know, Merrill lynch, you're gonna have an in plan conversion form. You have to elect it. So we have one in our solo K binder that you get your own one you can fill out when you're doing that. We also have one at directed when you have an account like here, that we custody and hold your money. And we'll actually process that internally and then do the 1099.

Yeah, is that cool, people, that you can, you can convert to a roth in the IRA world and, and then inside your 401k, Lee, you could say, oh, I'm going to chunk at this. I'm going to do a little conversion inside the 401k. This is where people call it the mega Roth is, because you'll do your contribution in Roth, then you'll do the company contribution or match and then immediately convert that to Roth. And so now you're doubling down on this huge Roth contribution for the year. That is that sometimes what you hear?

Oh, yeah, yeah, I love that. And that's the flexibility of the solo K. One of the cool things about it is you can go traditional, you can move over to Roth, you can do a little bit of both. You want tax deductions this year. So you go traditional. You know, that's the, you got some extra cash, you can pay some tax, you go to Roth, it's flexible.

Okay, well, next question. This is from Jed in Utah. He says, I've heard you mention several times that an operational business that also owns its own building, for example, a dental practice, should keep the operations and the real estate in two separate entities. So everybody think restaurant building, dentist building, lawyers building. One of the best rentals we recommend to clients to buy is the one you're already renting from someone else. So if it works in your demographic, your age, your finances, your part of the country, that's one of the first rentals that we want to consider is because you're going to be your best tenant. So again, if you're paying rent to someone else in a commercial scenario, see if you can make a play to buy the commercial building. Okay. Now he says, I understand the liability benefits of two separate entities. What the S Corp for the restaurant, the LLC for the building. Just adding to his question here a little bit. But he says, I'm curious, is there any tax advantages in the case where the ownership structure is identical for both? That is, the partners own equal percentages of the operations and they own equal operations, equal percentages of the real estate. So equal percentages of operations, equal percentage of the LLC owning the real estate. And he says, is there any tax benefit? Yes. Now I want to say in, in some ways that it's nominal, but it could add up. So I don't want you to think it's a huge tax windfall. I would say the primary reason you're doing it is for asset protection. Because if something goes wrong in the dental practice, the building's owned by someone else. Seriously, if you go to an Applebee's and you slip and fall, you're suing Applebee's. But I'll guarantee that building is in a separate holding company with a lease to Applebee's to run it. So you're not going to be able to touch the equity in the building. You can just touch the operational restaurant or dental practice. The second benefit of it, really, even before taxes, is you got an exit strategy. We have a lot of clients that sell the operations of their business but keep the building and rent it to the buyer of their business, or they keep the building and do something else with it. Sometimes people sell their business and the buyer doesn't want their building. So I like that separation as an exit strategy because really you're building two assets, one for operations and one for holding. So keep that mentality. But tax wise, why is it a benefit? The first one is, and this is primarily the biggest, is that you are now paying rent to an LLC that owns your building. That turns your operational income into passive income, just by definition. So when you pay rent to the llc, you're like, boom, I just took it out of self employment tax world. It's now a rental property llc and the same money can go over there and then fall right out the bottom. You're just funneling money, some may say laundering money from the operations through your rental property that you rent from yourself and pushing it out. Now there are limits. Some people go, well, cool, I'll just pay huge rent and wipe out my income on the operations side. No, no, no. The IRS is privy to that. Their computer systems are going to pick out, pick up weird percentages of rent compared to gross revenue and the type of business you are. Their computer system knows what typical rent is for a type of business of yours based on the data, the massive amount of data that goes through their system. But in summary, you're going to convert operational income to passive income. You're going to want to choose fair market value rent and maybe a little bit more. You can be a little aggressive, just don't get greedy. But you're going to do fair Mac fair market value rent or in a little bit more probably do a triple net lease as well. Really give give your landlord a kick a agreement which is you and as long as it's common and it's not out of the box, it's going to be okay. So you pay that rent over there and you convert it to passive and that's going to reduce the amount of salary you have to take on the operations side side and the amount of self employment tax and that's probably the biggest tax benefit. I have one other one but Matt, what do you, what would you say about that structure?

Yeah, I mean that just that alone is pretty nice in that you're expensing out of your business and you're picking it up as income but now it's rental income as opposed to ordinary income over in your operations side. And then of course, you know, you're paying down the debt that you owe on that building. You're getting an interest deduction for the mortgage interest you're paying over there against that rental income that you're paying. So it kind of, it's kind of like a perfect domino effect on what happens when you do that. And at the end of the day, you know, you pay down that mortgage and that property that you would have been paying some other tenant for. It's the same thing of why people are like own your own home, own your own business location. Like the office I'm in here right now, Mark and I own this, this is an office condo in a bigger building that we own. And I'm on it. Yeah. At least the more space I may

be technical, you know. And, and on that note, the building I'm in right now that you're, if you're watching this on YouTube because this is simulcasted to YouTube as well. I'm paying month to month rent here and right now I'm waiting for the Building permit. And I'm building a shop building across town. And my mortgage payment on that shop, that's going to be 3,000 to 4,000 square feet compared to a thousand in here is the payment on that is going to be less than my rent here. And I'm going to be paying down the mortgage, building equity on another property. So I've been in that process for about a year trying to get that deal put together, but it's. So that's the. Another benefit. It's an economical decision. It's just smart economically.

Yeah.

So, Jed, go for it. All right, Matt, your choice.

Okay. This is from Roth in Hawaii. He says he's awesome. We've had the pleasure of meeting Raf and working with them, but he says from Hawaii, never miss show. Love you guys. Easy question. When is the best time to add the board of advisors, directors for your llc? When does it make the most sense? I have advisors in Florida, Georgia, North Carolina. I want to add them before I start traveling this year. I like where you're going with this. He says, thanks, guys. P.S. mark. Waves and monsters await. Not sure exactly what that is. He says, matt, let's get Cobra Kai season four here already. Yes. I think I just watched season three, by the way, which is. Just came out recently. Have you watched Cobra Kai at all yet? No.

No. And I am a karate dude. I'm, you know, I love boxing, karate,

but you can get sucked into it. There's some good. There's some good drama there.

You know,

season three. I don't want to. Spoilers to pick up.

Spoiler.

Ali comes back. What was her name? Elizabeth Shue. I forget her name.

Yeah. In the original Karate Kid.

Yeah. That was the girl that Johnny and Daniel, you know, LaRusso, they fought over. She comes back in season three. Pretty sweet. I just got to that episode, so. All right, now your question, though, Rob, what's the best time now? It's like, when's the best time to plant a tree? Yesterday. You know what I mean? So I just get it done now. Now, if you do have some travel and maybe you're doing your annual minutes are coming up, your company's renewing, which, by the way, we do have our company maintenance special right now. I'll come back to that. Where we do your minutes for you. But it's a great time to just add into your minutes. Maybe if you haven't added it in yet to your entity, your board of advisors in your llc, or establish a board of directors in your corporation, it's a great time to do it when you're doing your annual minutes, throw it in there, add them in, identify who they are. And remember, for your board of advisors in particular, they're just advisory. They're an advisory capacity. They don't have authority or anything. Don't think of like the board of directors you hear about in these, these fights in corporate America and the board of directors is fighting with the shareholders and stuff. No, these are people that are just advisory. And that's what we're going to put in in their terms of their role. But they're involved in your business. And then when you're meeting with them, of course, it can become a valid, legitimate business expense when you're meeting with them for business purposes.

I love it. Now, I want to add a couple thoughts. First, Raf says, Rafael says waves and monsters away. I think he means waves and rock stars because I'm a rock star guy, not a monster. But we've got to get over to Hawaii and do some surfing, that's for sure. I'm actually going to say this to everybody on the show right now. Pay attention. If you're multitasking, listening to something, stop your conversation and listen to this point. This is a saver for every one of you on the show. Everybody should have a board of advisors. I don't care if you don't even have your LLC yet or your corporation yet. You're in startup mode, you're thinking of an idea, or you've been in business 30 years. You can establish a board of advisors tonight. It's that easy. You don't have to go file anything at the state, you don't have to file anything with the irs, but you do have to document it. So you pull out a pad of paper and you go hear here. I call a meeting to order, do it on zoom. Do it when you travel, do it in your home with your friends and family, Whoever it is, here I call our first meeting. I hear, you know, blah, blah, blah. And here's who my board of advisors are. I plan to set up an llc. I plan to set up a corporation. They'll be more formal down the road, but you're my board of advisors, by the way. Eat all the food you want. It's a tax write off while you're here. And we're going to talk about my business, my plans, and I need your help. Being an entrepreneur is lonely. So you're going to say, I need your help. You board of advisors are here for a reason. It's not just a great way to write off my board meeting at 4:00 clock on February 7th. Super bowl in two weeks. You don't want to hold your board meeting at halftime. You want to have your board meeting as a legit opportunity to get the help of others, to help hold you accountable, to get share your ideas. So I love what Matt said. When's the time to start it? Yesterday. Period. And it's a tax writer.

All right. Okay. I got a. I got one here. You ready?

Yeah.

Can I go? I got two.

Yeah, you go. I talked. You go.

All right. Okay. This was, this was Jamal from North Carolina. He said. Quick question. The first iteration. What's up, Mark and Matt? Jamal from North Carolina, quick question. The first iteration of the CARES act had a provision where SBA loan payments would be made for six months on behalf of the loan holder. Which is pretty sweet, right? The SBA was paying your SBA loan for you if you already had one in place before. The CARES Act. Does this new legislation include that as well or some variation of it? Thank you and truly appreciate the show. Yes. Jamal, I've got good news for you. And this is going to go into effect in February. The COVID relief bill, kind of this follow on one that got signed into law about a month ago does include an additional three months, I believe, payment relief for those with SBA loans. So if you got the first relief where they covered six months worth of payments for you on an SBA loan is automatically going to apply again starting in February. So you'll get, I think February, what's that? March, April of loans covered. So yes, you're going to get that. I don't think it's another six months. I believe the extension was for another three months. But it's going to go into effect like last time. You don't apply for it, you don't ask for it, they just automatically do it.

Now there's actually a eight month provision for those in certain businesses and those loans are covered for a certain type of industry. I'm going to keep searching for it while we're here on the show and just hold that thought because there is actually a greater than three month provision for certain types of businesses. So we'll get to that. Well, we'll come to it a moment. Let me bring up the next question as we investigate that story. I like this question here. Okay. Hey guys, I'm in. I'm Evan, a hair colorist from Philadelphia. I recently moved from New York City and still travel there one day a week to see clients at what I expect to Be a temporary job location potentially ending this year. I've been riding off bus fare, car rides, travel, because as I understand it, this is not considered commuting since this is a temporary office location. Am I correct in this? Also? Am I able to expense any meals for myself on these days? The answer is yes, yes, and yes. But there's some other concerns I want to bring up. Evan. So Evan.

Love it.

Look at what Evan did, too. Let's step back for a minute. And this is what I love talking about with clients on our consultations. And we really encourage our tax lawyers to all take this perspective, is let's look at the big picture. New York City was probably the worst city to be in for Covid in a lot of ways, right? It was just shut down. It's been the epicenter for so much legislation. It's been really difficult to survive there as a business, especially as a small business. And forget it. Hair salons, right? Oh, my gosh. It's been devastating, right? So Evans said, I'm moving to Philadelphia. That was probably a good economic move. Maybe he's saving money where he's living. He. He's got a new opportunity. He's out from under the umbrella of New York regulations. And it doesn't mean New York's bad. It was just a good move for Evan, you know, to try to adjust to the pandemic and the climate. So when he travels back, that's absolutely a tax strata for a temporary location. If you keep going back to a location for more than a year, new, different sets of rules start to play into it. So I won't go there. It's challenging because then the IRS starts to say, well, hold it. That's a second home. It's not temporary. So you kind of have this year to get your crap together and decide, am I going there for on a regular basis? Is it? And how frequently? And there's some other rules to consider. But right now, the way you phrased it, Evan, I love it. Your meals, your travel, your hotel, whatever you're doing along the way to get there, make Benny a comeback. All right? Off. Those meals are now 100%, by the way, which is a wonderful bonus, which would have never been the case for the last 40 years. So that's a benefit to help the restaurant owners see what the IRIS is doing is saying, hey, well, Evan's here. Benefit a restaurant in the local area of New York. Give you 100% write off. So it's, again, tax legislation trying to stimulate the economy. Here's my Concern, Evan, you've got to realize you're going to have a target on your back from the New York State Tax Commission. Plus, if you're going back to the five boroughs, you've got the New York City tax. And for those that don't know, this is a whole other level of city tax that applies to those in the Bronx, Brooklyn, Queens, New York City and Staten Island. Those are considered the five boroughs. So they're going to say, hold it, you're earning money in New York. You got to pay your fair share of taxes on the money you earn in New York. So you would have to file a non resident tax return in New York in the city, track your expenses for that and blah, blah, blah. So talk to your accountant. Some people where it's de minimis are able to not claim that income and just get in, get out, because it's a once a year thing and it's just not enough. Nexus is the technical term. Sorry to throw out some of those, but just be cautious of it. New York's going to want to tax you if you're going to play in their park.

So, yeah, I don't think anybody's surprised by those words. New York. New York is going to try and text you. They're like, that's not the greatest revelation, but it is true. All right, let me get to Jeffrey's question. This is from Washington State, by the way. He says, go Hawks, baby.

Go Hawks.

Yeah. They're out of it, right?

Yeah, but I'm from Washington. I'm wearing my Seahawk blue today. The ladies say these. This blue brings out the color of my eyes.

Do they?

Okay, this. This sweater is famous. This is this sweater for a while, my brother. Yeah. This is so funny, dude. I know some of you ladies are gonna be disgusted, but my brother in college, I'm not kidding. Matt, I think I told you about the kissing sweater. Did I ever tell you that story? Oh, my gosh.

It's classic.

The Kohler family reunions. This is a good one. My brother in college, he literally had a sweater that whenever he wore it, he got a make out session somewhere. I mean, it's just once he kissed three girls in the same day wearing that sweater. I mean, his roommates started to say, dude, can I borrow the sweater? I mean, it was legit.

Magical powers.

It does. It did. It had magical powers. This blue. Magical powers. So a lot of my fans, they're gonna watch this on YouTube because they're like, mark's wearing the sweater.

Yeah. Okay. All right. This one's gonna be.

Stand that up. Okay. All right, go ahead.

All right. Okay. All right, back to Jeffrey's question.

More important thing here,

he says, I've looked everywhere but can't find anyone talking about this. My question is mostly asset protection. Single member LLC for a home office business. I'm very strict about keeping personal and business expenses separate. For asset protection, however, I use vehicle 80% business and 20% personal when paying for auto expenses and vehicle loan payments. Which account, business or personal, should I pay for these expenses or do I pay auto expenses with my personal account and then reimburse 80% of those expenses from the business account to my personal account? All right. Okay, Jeffrey, let's hit a. There's kind of two little things going on in here. First of all, the single member LLC for a home based business, and I don't know what business you do here, but for a home based business, the single member LLC can make sense, but I presume it's just flowing through to you personally on schedule C on your tax return as a sole proprietor. Now you, I don't know the income, but generally for those of you with a single member LLC, if you're making 40,000 or more of net income after all your expenses, we will generally make an S election to that single member llc. So you're taxed like an S corp. Go to our prior podcast, the Power of an S Corp or Benefits of an S Corp for a whole hour long discussion on why the S corp is the way to go for small business. Basically, you save tax. As to your question, though, on tracking your expenses. Now, this isn't in Jeffrey's question, but the first thing is you can take actual expenses or you can take mileage. Most clients are just going to take mileage, which is around, what is it, 55 cents a mile? I don't know where it's at right now. And so Jeffrey, you're just going to track how many business miles do you have versus personal miles. And then of course, and you may know this, I'm just framing this for everyone, you're going to take a deduction for the miles you use. If you drove 10,000 miles on the car and you 55 cents, you're going to have a $5,500 tax deduction for your auto. And that takes into account the auto expense, the vehicle loan payments, you know, the insurance and all that type of stuff. Now his question is, well, what account do I pay it from, the business account or the personal account for tax purposes? It doesn't matter. Okay. It doesn't matter for asset protection purposes. I don't think it matters either. Because you use that car for personal use and business use. The IRS doesn't care. I don't see how that becomes an issue because that is not a business asset necessarily. It's a personal asset that you're using for business that you take an expense for. So I don't really have too much of a preference. I would say if you're. If you're in a high risk business and you have 80% use business, I would probably have it paid for from the business account, but I don't know. It's a necessity and I don't think everybody needs to do that in every situation. Is paid from the business account. What do you think, Mark? Do you disagree? Nope.

I echo everything you're doing. And I've got an article on autos that really goes through a lot of these issues. Leasing versus buying, mileage versus actual depreciating a non SUV versus an SUV or truck, bonus depreciation. There's a lot of issues to consider, but I like how Matt, based on the facts given, Matt nailed it. I totally concur with him.

That's good. Coming from an engine guy to a muffler guy, that's high praise.

Yeah, you might get promoted, you know, if you pay your dues back doing mufflers.

Transmission guy. I can get up to transmission guy.

Yeah, we'll work you up. That way you could be a back seat guy, then you could be a front seat. You know, fix the little lumbar level, you know, work your way forward.

All right.

All right. Okay. You choose another question. I'm almost on this SBA answer. And it's really good.

Yeah, I mean, the SBA is. You get three months. I know that.

Well, there's more than that.

SBA loans. If you got a new SBA loan since the CARES act, you get six months. If you're in high. Certain businesses that are have certain codes because they were more.

I'm going to answer it all. Yeah.

Okay. I knew my answer though, right? For that situation of three months.

Well, you didn't bring up the. Yeah, you didn't bring up the new loans before too. So I'm going to hit that as well. This is good.

So, okay.

Yeah.

Ben's got a question. This is Ben. He says I own an S corp that I run my main gig out of. I also own eight rentals, three townhomes, a fourplex and a six bed home.

Cool.

Single family, all with my name on title all right, I need to transfer them to an LLC or multiple LLC or maybe even put them in the name of my wife who runs. Excuse me. The name of my wife who runs a much less risky biz. All right. Tom Cruise, risky business. Little shout out there says I have another S corp with another business I run and several other LLCs that I'm in partner with. I was recommended to have my main gig, S corp, be the partner owner in any other LLC I own. We like. That makes sense. And let all my taxes flow through and up to my S corp. Okay, Got it. As told, the S corp can own part of an llc, but not the other way around. That is correct. Okay. An S corp can own an llc, but an LLC cannot own an S corp. What's the best way to simplify my tax filing and decrease my liability across the board? Okay, there's a couple questions going on here for Ben. Let's work backwards. The first is the principle of having one S corp. We like that. I have one S corp. Mark has one S corp. My S corp owns certain things that it gets income from. It gets income directly. It gets income from the law firm that it owns and other businesses that we have that go into the S corporation. Now I've got a tax return on the S Corporation. I got to keep books on that S corporation, just like you, Ben. I know.

Sucks.

Now, all these other partnerships I've got, which you have too, Ben, you're having separate tax returns and separate things going on, but that's to keep those things nice and clean and tidy for the partnership. But the taxability of that income from those partnerships is flowing all into your S corp. And you take one salary, one net profit or dividend, and you do your own tax planning in your S corp. That is by far the way to go. Trust me, it's better than getting all those K1s out of those LLCs and trying to figure it out.

I love it. I'm all right.

Any comments on that before we get to the rentals, Mark?

Okay, go hit the rentals. I'm with you. I totally agree. All right.

All right. Now as to the rentals, you. You got eight rentals. I do not want those in an S corp. Let's first get that off the table. We don't want them in your personal name either. Okay. That's some liability there. We'd want your personal assets separate from your rentals. Now, since you're in Utah, Ben, I would actually recommend a series LLC in your situation. If these are Utah properties in Particular, we would definitely do a series LLC that had that your trust would own you and your spouse should have a trust. If you don't vocal Living Trust owns that series llc. You've got enough assets and things going on here, Ben. If you don't have a revocable living trust, give us a call. We can help get the trust set up. But do a series llc. That one series llc. We have a show on that specifically, too. Go listen to that for the more in depth. But basically it's one LLC with the state that has individual sub series that would own each townhome, it would own the four plex, it would own the single family six bedroom. And that way, if something happens on one of the townhomes in the series llc, the plaintiff can only sue and get after that series. They can't get after the other townhomes in the other series. They can't get after the 4 Plex. They can't go after any equity in the single family home. But if you just did one llc, regular llc, and you put all these properties, these eight rentals, into that same property, something goes wrong on property number one. Those are all at risk, okay? All the equity and all the properties are at risk because they're all. You're kind of holding all your eggs in one basket with one llc. So in your instance, because of the number of properties, I would DO A Series LLC. Utah does allow for that, as does about 20 other states. So that's my final answer, Ben.

Okay, now we're going to come back to sba, but I'm going to jump in on a question here so that I'm participating. I don't want to just be doing research the whole time. The SBA basically kicked out a procedural guidance notice, all these SBA loan payments. And this guidance is. This procedural notice 5279 is 17 pages long, and it goes through all the different type of SBA loans and how they're treated with this payment procedure. Did you get the first round? Did you get the second round? How much is the loan payment? How many loans per business? Da, da, da, da, da. So it's, it's quite evolved, so I'm going to just say this. It became effective January 19th. So, I mean, this is just in the last week. I would recommend any of you listening that have a pen or paper handy, please search for this at the SBA website. It's control number 5279. And if you have an SBA loan, it's not written in foreign language. It's a little wordy, but if you're a business owner getting an SBA loan, this, you can handle it. Open this up and find out where your loan falls in all this. I'm just going to summarize it right now then, Matt, because I don't want to get too far down this rabbit hole, but basically, if you'd got the first round of SBA loan payments of six months, that means your loan was effective before March 27, 2020. You're now allowed to get three more months. So as Matt said, that starts February 1. That's pretty much across the board. But you could look at the details here. You're only allowed to get.

Okay, how much can you get? Is it like up to like nine grand?

Up to nine grand.

Nine grand.

And it's only one loan per entity. So Matt and I have an LLC that owns a building with one SBA loan and we have another LLC with an SBA loan that owns another building. As we talked about owning your commercial buildings, you're in, we can get deferred that deferment or that payment made for both of those llc. But if we had two SBA loans in one entity, and the second round, it's only allowed for one loan per entity. Next, if you got a new loan Approved, both after March 27th but before September 27th, so you ran out there and got an SBA loan. We're not talking about an EIDL loan or PPP loan.

PPP loan.

We're talking about just a 504.7A type loan. You can get up to six months. So you can get the six months. You're like, well, I missed the six month one because my loan wasn't in place yet. Well, now it's in place, you can get the full six months. Only those that got the first six months get three months. Then the final kicker is for those of a certain code, an NAICS code that's a national industry code. If any of you have that national industry code, you can get an additional five months, and that is a big deal. So you can get these payments up to $9,000 per month. Now, these codes, there's six codes, 61 code, 71 code, 72, 213. That's that little code you put on your tax return as to what type of business you are. Now you can. I just googled that list and I went to the nacensus.gov NAICS list and. But you've got to kind of go code by code. I'm going to tell you what I saw from this was things like restaurants, entertainment venues, hotels, accommodations. So anything in that realm, if you're close to that and you're in one of those industries picked on, it might be salons, you know, things like that. So go look up those coats and you can get up to eight months. Anything you want to add to that? I mean, it is a big.

Yeah, I mean, it's automatic for what we saw last round, so it's gonna been told it's gonna be automatic, too, so it's not something you apply for. And also, I'll say this is not ppp, okay. This is not the PPP loan you may have got that is SBA related. This is the regular, you know, standard SBA loans we had before PPP came around to buy a business or buy some property or expand your business. Those regular SBA loans that are out there.

Yeah. Okay, let's. So jumping to a question. You answered Ben and Jeffries, is that right? Yeah, I was looking that up. Okay. All right. I wanted to jump on one. I'm sorry, you're going to have to hear from me, people. But when you need your engine worked

on, I mean, who are you going to call?

Yeah, the engine guy or the muffler guy. It's just. Just hate to tell you. Okay. All right. Now, this is Tina in Maryland. Ooh. Matt from the Stomping Grounds. Go. What is it? Tarpons?

Terrapins? Yeah, Terrapins.

What's it. What's a terrapin?

It's a. It's a very fierce turtle.

I didn't know you. I didn't know turtles could be fierce, but it is true. I stuck my hand in my little friend's aquarium because my friend, when I was growing up had a turtle, and I stuck my hand in there, and it was pretty fierce. They bite hard.

Yeah. Yeah.

So Maryland, Terrapins. That's where Matt went to law school. He's famous.

They won the NCAA national championship while I was there. I wasn't on the team much throwing that out there.

Yeah, but you were in the crowd. You were the sixth man. Yeah, the six man.

I didn't go to games. I didn't even go to one game. That was not. My college experience was a little different. But, you know, that school they were. Used to be like, right now they're terrible. Like football, and even their basketball's gone downhill. It's tough being a Terps fan, but okay.

Now, Tina asked a question about something I have been buried in every night for, like, six days. It's a massive part of the new Covid relief bill. And many people don't know that they qualify for it. And so we almost dedicated the show to that topic. And that's the ertc, the Employee Retention Tax Credit. Now, why it's important is because under the new legislation, you can do the ERTC and the PPP. You can even go back to 2020 and get the ERTC when it wasn't allowed that you could do both. The test to get the ERTC is easier than the ppp. It's pretty cool. But you have to have employees and you can't get it for yourself. I know some of you are like, oh, Mark, that sounds so good. So if you have an S corp and you're your only employee, or you hire your spouse or kids, blah, blah, blah, you can't do the ertc. But if you have any other employee on the books that's not family, this is a sweet credit and you can do it on top of ppp. Some people aren't even doing PPP and they're just going to the ertc. So Tina asks for the new ERTC that was passed in December. It let you retroactively go back into 2020 and claim the ERTC, which is up to $5,000 per employee, otherwise stated, 50%, up to $10,000 of annual wages for all last year. So every employee last year outside of your family that you paid at least $10,000 to, you're getting a check for five grand. Big deal. It's wonderful. I had a client with like 60 employees times five grand. Do the math. Okay, my question is, I got PPP in 2020, but that last two months I used all in second quarter. Can I file 941x for third and fourth quarter and claim ERTC? Or I can only use ERTC for 2021 only. We really appreciate both of you. Thank you so much. Well, Matt, look, that was nice. She mentioned you.

Oh, thank you. She said both of you, thank you.

We appreciate the muffler guy as well. That's really what she meant. All right, sorry. We're gonna beat that up.

That's why What I said, that's what I heard. I heard that.

That's what I heard. Yeah, yeah. Okay, now everybody listen. This is a really good question and it's tricky, Matt. In fact, this is what I was up until my brain turned to mush at about 2:30 last night. I'm literally, I was working on Tina's question from about 1 to 2:30am on this very question. Some of you are like, you have no life. You are certifiably a geek. So, yes, Queen's gambit. Me. Yeah. Okay, so here's your question and let's rephrase it so everybody can get their head around this. One of the rules with ERTC, even if you go back into 2020, is you can't, you can do both of them, but you can't use the same payroll dollars for the ERTC and pay and ppp. So I was creating this massive little table to give examples of what this means and how you have to trick it. Be tricky in taking advantage of both. Now, I'll do my best here. Let's just let me answer it this way. First in concept, then I'll maybe do a number, a numerical example. Tina said I used the PPP all up in second quarter of 2020. All right, cool. She says, can I then do the ERTC for third and fourth quarter? Yes, because you're not using any PPP money in third or fourth quarter. So you could do both strategies. You just can't use the same payroll dollars to claim both benefits. And so in Tina's question, she makes it really easy on me. She says I use PPP in second quarter. I didn't in third and fourth quarter. So I can go back and get ERTC for third and fourth quarter. That's right. But Tina, you're using a third and fourth quarter analysis when last year is an annual analysis, while in 2021 it's a first and second quarter analysis. So for example, everybody, let's say Tina's payroll was $50,000 and she used PPP money to pay 30,000 of it in second quarter last year. Well, look at the rest of her annual payroll for the year. It was $20,000. 50 minus 30. She had $20,000 left of payroll and that's what she spent in third and fourth quarter. Well, if those were two employees, because she can't count her own payroll for ERTC, but she can count her own payroll for PPP. See the trick? So she'd say, well, I had $20,000 worth of payroll and I can get up to 50%, up to 10,000 per employee. I don't care if it was third or fourth quarter. I care how much payroll you use for that employee for the year and how much of it was used for PPP versus ertc. And so you're going to do some math there. Now I was creating spreadsheets like I said, at one in the morning because there's so many variables. But I'll leave it at that. I'm getting too technical and I'm a nerd. But then, Tina's final question. Or I can only use ERTC for 2021. No, you can use ERTC for 2021 and ERTC for 2020. You're going to look at it a quarterly basis, which is 70% of 10,000 per quarter in 2021, where it's 50% of annual wages in 2020. So it gets better. It gets better. And if you use us, I throw in a shamwow town. So it's.

That's a little infomercial, huh?

Yeah, infomercial to throwback there. It gets better. It gets better. Okay, so anyway, Tina, you're on it now, believe it or not. I'm not kidding. After this podcast. Today, we're doing a training with our attorneys on this very issue, and they all are up to speed on this. And we're just making sure that everybody's on the same page because this is a moving target. New legislation or new notices come out from the SBA almost every week. You saw that with the last notice we talked about. So if you need a consult, talk to your accountant or lawyer if they know what they're doing. Or be patient and set up an appointment with us. Even if it's two weeks out, you can claim this well into second, first, and second quarter. You don't have to have an appointment now or you're going to miss it. You can still do the math and make this work. PPP applications are until the end of March, so you have all of February and all of March to apply for ppp. But Matt, you're gonna love my analysis later. It's pretty cool.

All right. Cool.

I can't wait to tell you. It's pretty cool. All right.

Yeah, this ERTC is. Let's turn into a little more popular, I think this go around than last. So it's when you really want to. If you're like, didn't track too much on what Mark was saying there, look into ERTC more. If you have other employees in particular this. This could be a really powerful tax credit. All right, this is my last question. This was from Stevie, and Stevie was cool. She shared our podcast, I know on her social and gave us a pretty good shout out there, which was cool. So she's a fellow podcaster and virtual cfo, so we always love some other pros out there give us praise. But she said she had a good question that came up on our webinar recently. We did a webinar on Covid Relief, by the way with Entrepreneur. You can go find it on entrepreneur.com if you want to get kind of a full deep dive and all the different things. On Covid Relief from last month's bill, she said, I have several clients that start a business in 2020 and we're trying to determine whether or not they qualify for a new PPP. Several of them formed in early 2020 January and incurred expenses in the first few months, but didn't start selling products or services until March. I watched the webinar and I know Mark mentioned he was planning to write a blog for businesses start in 2020. Is this available? Then she talks about how she's a fellow podcaster and is going to spread the love of our show to others. Okay, good news, Stevie, Quick update on that and Mark, you can elaborate if

you yeah, I pulled up the SBA application for the second draw for this very issue.

For those that are new businesses that started in 2020, you can get PPP, the first variety of it. Okay, this is nice because you don't have to show the loss of income from 2020 to 2019. You get to just qualify under the, you know, the lower threshold of business uncertainty. Economic uncertainty makes loan necessary. So for those that started in 2020, you had to have been set up though by February 15th and you use your 2020 average payroll numbers. Okay. Now the first round, you couldn't do this. They clarified this though in the legislation. You can businesses start up in 2020 as long as they were set up by February 15th or established can get this first round of PPP and they're using 2020 average payroll numbers. So for that, your specific question, Stevie, is someone that formed in January but wasn't doing business until March. They're actually the perfect one that's going to fit into this. Let's say someone didn't start anything. They didn't even set up their entity or anything until April. They're not okay. They would have had to have had the business had to have been started by February 15th.

Now I want to throw this out too and I'm right now and this is good for many of you to read. You can go straight to it on the web. Google SBA form 2483 SD SAM David now this is the Paycheck Protection Program second draw application form. It's I read this kind of stuff all the time and sometimes I just can't get my head around it. This application is not bad in the directions or the. Yeah, the instructions. I should say after a two Page form. I mean, there's a very, very simple form in concept, I should say three pages. The second two pages are just check boxes. But the instructions that start on the fourth page, they talk about when you were in operation. And one thing that. In that question that you asked of that Matt just read, you said they formed the entity, but they didn't have sales until later. Just forming an entity is not being an operation. You got to have sales. So operations mean that you. You. Now, you could have been a sole prop. Cool. But you had have been making sales by February 15th. Would you concur with that, man?

Yes. Yes.

Yeah.

That is what has. What the statute says. It does say operational not established. So good. Yeah, Good clarification.

And right there in the first page of the instructions, and it's not bad. Again, it says right in the middle, there's four bullet points for all loans. The appropriate reference quarter depends on how long the application applicant has been in operation. So for entities not in business during the first and second quarter of 2019, but in the third and fourth quarter of 2019, here's the test for those in da, da, da, da, da, da. So you got to look at when you were in operations. Now, let's step back for a minute. Every. Take a breath. And I'll finish on this note, too. Some of you are a little pissed. I know you're. You're mad because you're going, hey, I started my business in the middle of 19. Or when Covid hit, I went out and started a business. Why can't I get more help? Now? Joe Biden and the new administration might throw you a bone. I don't know. They're already talking about another package of relief. But the main concept of their first and second round of the COVID relief was we want to help businesses that were affected by Covid. Which means you were in business before COVID hit. That's what they're saying. If you had employees, if you were in business, we've got unemployment. For those out there that have jobs. But for those of you who are in business and see what they're trying to say, you were in business plugging along in 19 or before. And then Covid hit, Boom. What can we do for you? Their goal was not. Oh, for all of you that were on unemployment and now you want to start a business, we're gonna throw money at you, too. No, that's not the goal.

Yeah, no, you're totally right. I mean, that's the. That's how the. That's how the Cookie crumbles, as they say. But. But also this is gonna help some people because there's a lot of people that set up in let's say 19 and it was their first year and they're like, why was the sole prop. But I didn't have any profit, I didn't make any money. I had all these startup expenses or whatever or they're. And. Or I was an S corp and I took a really small W2 so our. So I. There was nothing to really get on a ppp. Well, now you can get a second shot at this. If 2020 you did have some income. Now that. Which is odd. But that's just the way it was going to work where you can use your 2020 numbers. Now, if you were in operation by February 15, 2020 to now get PPP again under the original test, not having to show a loss of revenue from 2020 versus 2019, which you have to do for the second trial loans, but just under the original test of economic uncertainty makes the loan necessary.

And yeah, I love it. And. And gosh dang it, I was going to say something on that note. I liked what you had. The way you phrased that. That. Oh, when Matt said what was odd, he said, how did you start 19 and not make money but in 2020 you did what was funny? Oh, I don't want to use that word. What was interesting is that when Covid hit, it created this whole new winners and losers of types of industries. Like people that were doing home delivery web sales already when Covid hit, boom. Yeah, there's just like freaking, oh my gosh, Covid's the best thing that could have happened to my business. And I hate to say it that way, but some experience that. Look at, look at Zoom. Zoom was behind GoToWebinar and Skype. And I mean they were just a small player really relatively when it comes to market share. And when Covid hit, they were ready. Freaking. The Zoom platform was freaking awesome. Zoom is off the chart now. And so it's common. Some people did have a good 2020 and a crappy 19. And if you didn't get the first PPP, you might be able to get the second PPP because you never got the first round. And that's the weirdness of this. But Matt and I are continuing to write articles on this and try to help. It's not. The topic's not over. I know some of you are sick of it, but especially you landlords. Hang in there because we're going to see more landlord relief. Come to, too. So. All right, man, take this out.

Yeah. If you want to get updates on some of these topics, make sure you're signed up for the newsletter, which you can get at main street business.com mainstreetbusiness.com Also, if you want to submit a question, if you just think of one, you're like, this would be a great question for the show. Go to mainstreetbusiness.com hit submit a question and it'll track them all in there. You can see other questions other listeners around are asking, which we just went through today. And thanks so much for hanging in there and listening to this. We really hope that you learned something that can, you know, help you save taxes better live the American dream, make life a little easier. That's really what we're going for here.

I love it. And we're having a special on new mufflers this month. And if you need one, stop in at your local auto parts for a muffler exchange.

Yeah.

See you next week.

Thanks, everyone.

Sa.