Mark Kohler explains his trifecta framework for business structure: operations on the left, assets on the right, and tax returns at the bottom. S Corps handle operations and can save money through self-employment tax reduction, while separate LLCs hold rental properties or crypto on the asset side.
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What is an S Corporation? Let's look at the trifecta. This is a way I've used to explain a business owner's overall operations to build wealth and bring it all together. On the left we want to put operations. On the right we want to put assets. And down at the bottom is your trust or your 1040 tax return. So when you're doing business or operations, you could be just a plain old sole proprietorship. You could be an LLC or you could be an S Corporation. And again, the S Corp could be an LLC taxed as an S corp or it could be an inc. Now if I'm going to be over here on the asset side and buy rental properties or invest in crypt or investments, I might have an LLC over here. And this is the trifecta. Assets on the right, operations on the left, all flowing downhill. However, we're not worried about the asset side. The S Corporation lives over here. This is where we want to talk about the S Corporation. It's a way of doing business.