S-Corp Strategies for Payroll , Crypto and Lenders

Welcome everybody. My name is Mark Kohler. Glam rhinestones. Once I convert to S Corp, do I need to do taxes quarterly? Here's the technical answer. Abso freaking lutely. Okay. All right. Now for those of you that are going to have an S Corp, you've got to take a W2 and you're going to take draws. Now the technical procedure is you take a draw and then you do your W2 after the fact. So quarterly, four times during the year, you're going to issue a 941. And this little 941 report is going to claim how much you have to take in payroll. Now for those of you that don't know what the S Corp strategy is, go to YouTube, type Kohler S Corp. I've got multiple videos out there. Within an hour you're going to be an expert. I'm not kidding. You're going to know more than half the CPAs out there by watching three or four videos on mine, my channel about S Corps. I teach classes to other CPAs about S Corps and it doesn't make them bad CPAs. You just don't learn this in school. So you're going to do quarterly payroll. Once you turn your LLC into an S Corp, you got it. You can't get around it. It saves you taxes, it's a good thing. And once you make at least 40 grand a year net, you're going to start payroll and we're going to split this 5050 in this example. So you take 40 grand in draws, I, I take 20 grand in W2 and 20 grand in K1. And if I take 20 grand divided four ways, you're going to do a 941 for 5 grand every quarter. That's how it would work. Watch my videos on that. I've got a whole chapter in a book on that. Okay, Andrew says if I move my crypto and mining to an S Corp llc, how will that impact long term, short term capital gains, whether it be fees? Great question. First of all, I don't particularly like that you're doing mining outside of a retirement account because it's going to cost you more in taxes. Everybody listen. If I own a restaurant, do I pay self employment tax on my restaurant revenue? Yes. If I am a landscaper, do I pay self employment tax when I go out and mow someone's lawn? Yes. If I'm a dentist and I do teeth cleanings and replace some cavities or fill some cavities, do I pay self employment tax? Yes. Dentists doctors, engineers, plumbers, electricians, realtors, brokers, fix and flippers and crypto miners. It's a service. When you're mining, you're going to pay self employment tax. So Ryan's halfway there. Ryan is going to put in his S corp llc, he's going to do his crypto mining. And so crypto mining is revenue in his S corp. Now he can do other things. He could be a realtor, he could be a landscaper, he could be an electrician. You could run all that revenue through one S corp. He's going to take a draw whenever he wants money and then we're going to do his W2K one. That's how it works. Every dentist, doctor, engineer, realtor, broker, all those people. We use S Corps. That's what I am. Trust me. Stay away from a C corp in frickin Nevada. It's a scam, it's a ripoff. You're going to go with an S corp in the state where you live. And Ryan, gosh darn it, you cannot have your mining rig in Nevada and think you're going to get out of this. Wherever you live is where your S corp needs to be, period. And I stand behind it. I've got ex IRS agents that are partners of my accounting firm. I've been doing this for 20 plus years. Trust me, we will not lead you astray. And I'll sign your tax return. And if there's penalties, I'll pay them. If I'm wrong, if anybody's telling you different, you can set up your mining rig in Yugoslavia because you're off the grid and your wallet is over here and it's encrypted and all this. Oh, someone gave you that advice? Well, are they going to sign your tax return? No. Then who's in charge of your tax return? Ultimately you. And if you get audited by the irs, you guess who's going to fry you. So if someone on the web, on the dark web or wherever tells you can do it differently with your crypto mining and your crypto trading, ask them if they'll sign your freaking tax return. Bing. They'll be out of there. Be careful where you get your advice, people. So Ryan is mining Ryan. You're going to do that mining in your S corp. Now here's the trick. You are going to the day. This is what I do. The day you get paid in Bitcoin from Nicehash or wherever, you're using an ASICS rig or you're doing all sorts, I know there's 10 different ways to do mining. You might be doing staking, I get it. But if it's ordinary income, you run it through your S corp and at the end of the day you transfer the coin to a holding company, llc. That's where I hold my crypto, my crypto holding is over here and that's where I pay my short term and long term capital gain. I've got asset protection between my mining rig and my crypto. This LLC holds my crypto, this S corp mines for crypto, gets paid in bitcoin or whatever and transfers the coin over here. This has a wallet. This has a wallet. So Ryan, to answer your question, that's why I paused, there is no short term, long term capital gain problem over here because you're not going to keep the crypto here. The minute you earn it, you bounce it over here, you pay for the earning here and you're going to pay tax on that and we're going to do as much as we can to save the money. But then boom, you're going to hold it here for the long term, short term or long term capital gain. Now what everybody I did because I didn't want to pay taxes like Ryan. I did the whole thing in my Roth ira. Now this LLC is taxed as a C corp and it's going to pay C corp tax because it is subject to self employment tax. But every crypto dollar I earn here drops into my Roth and Ryan, I'll never pay tax again. So I do a C corp blocker and then it all drops to my llc Roth, no tax in your situation, you're mining over here, you're going to drop it over here and hold it there for the long term. Okay, I'm going to try this out. Laura. Laura St. Pierre. Hello. I am a freelancer, 1099 work who wants to get into rentals. If I have a lot of assets, home, a rental, 401k but inconsistent income because she's a freelancer, will the lender still loan to me based on my collateral? Laura, great question. When it comes to banks, first of all, banks not only look at your collateral, they look at your income. So it is true, you're going to have to make sure you look really good on the income side as well as the asset side. Now let's all talk about Laura here for a minute, is that okay? Laura? Laura. Let's look at her trifecta. And this is what any of my attorneys can do. They can set up your trifecta, give you a little diagram Give you a checklist for the year and meet with you each year to help you stay dialed in. And if our appointments are out at four weeks, don't stress, just get on the calendar, we'll take care of you. All right, so Laura is a freelancer, that's an entrepreneur. She's got a 1099. Now everybody look at this. What's Laura going to face in taxes? Let's say Laura brings in 60 grand. She's a sole proprietor, so I'll just do a little sole prop. She's going to report this on a schedule C on her tax return. And let's say she writes off 20 grand in all sorts of things. Dining, home office, auto, Home Depot, Best buy. She nets 40. Okay, everybody hang tight. Now if Laura goes to the bank with her 1040 and she shows them that I have 40 grand in income, that's going to help her qualify for a loan. So you want to go in with your best foot forward, Laura, and Show them your 1040 tax return with your schedule C and your tax return. Now, as your accountant, this isn't good. You're going to be paying out the rear end in taxes. Sorry for my French there. Because you're going to pay 15.3% in self employment tax on $40,000. What? 15.3%, that's $6,000. Then you're going to pay state tax. If you're in a state with state tax plus fed. Do you see that everybody? Laura's getting killed as a freelancer on taxes and it's self employment tax. So what are we going to do? Steve earlier on one of his questions said, well, what about the S corp? So what we're going to do is want to convert Laura over to an S corp. Now she could be an LLC taxed as an S corp or just come right out of the gate as an inch. But the most important thing is I want her to be an S corp. Now look what happens. Now I'm going to do this in blue. The same 1099 is going to come in for 60 grand. Then she's going to write off 20,000 in expenses. She's going to net 40. Same example, apples to apples. See, she got the same write offs. And S corp is not going to give her more write offs. She's got all of her write offs. And Laura, I want you to read my books on home, office, cell phone, dining, travel, I mean everything we can write off, we want to write it off. And you're going to net 40 grand. That's what you're going to take into the bank. But here's why. You're going to look sexier to the bank when you take that 40 grand. We're going to divide half of it into a W2 and banks love W2s and half of it is a K1. Now the bank is still going to see 40 grand of income. They're just going to see half of it as W2 and half it is a K1. You want to go to a well educated banker that understands this. If they don't understand that you made 40 grand go to a different banker. Just like Jack and Allison. They shopped around. Now why do we do this? And I'm going to put this in red. She only pays FICA on the W2. The F word. FICA. No. What? The FICA over here. She paid 15.3% on the entire 40. But we're going to split it. We're going to do 20 grand in W2 and 20 grand in K1. We just cut the six grand in half. $3,000. We saved $3,000 by doing an S corp. Now I know for some of you that are watching from California, they're like mark, an LLC is $800 and you charge $800 to set it up. Holy crap. That and blah blah, blah, blah, blah. Okay, California waives the $800 for the first year on an S corp. And yes, you're going to have to do a tax return. As I told Steve, you got to do quarterly payroll. An S corp is going to cost you $2,000 a year. That's why I say the break even point is around 40 grand. Because look it, the S corp is going to cost her too. So let's put it in black. I mean, I want to show the cost too. Cost 2,000. Saved 3,000. Now I know. Hey, this is hard math. Work with me. Save 3,000, spend 2,000. Now. Hold it. This is hard. Jack, help me out. Save 3,000, spend 2. What do you think? Would you do it? I mean that's kind of good. That's how the S Corp works. Guess what? Helps everyone. Helps the economy. Hurts no one. That was creepy. Do the S corp, Laura. That's the moral of the story. You're going to look better for the bank with the W2. You're going to save on self employment tax. And any of you out there that are getting a 1099 Uber side gig selling crap on ebay, affiliate on Amazon, dentist, landscaper, doctor, engineer, bleh, all of us. If you're getting multiple 1099s, funnel them through the S Corp. Saving money. That's the plan. Alright then. You're going to go out there, set up an llc, buy the rental in your own name like we talked about just a minute ago. You're going to buy the rental in your own name and then deed it up to the llc. Now look at Laura. She's got a side gig. She's saving taxes. She's buying rentals. She's got a 401k. Laura, I love you. You're cranking.