Smart Strategies to Pay Yourself and Save Thousands

You've got some income now and now you're talking about paying yourself. Well, keep in mind the first thing we're going to look at is have you been doing your bookkeeping? Do you know what expenses you have versus this income that's coming in?

Get your bookkeeping done, make some money. And when you start taking home more than five grand a month after your expenses, call your mom. Tell her, she'll be so proud of you. And then call us and we'll tell you how to go. Next step, next level.

Welcome everyone to the Main Street Business Podcast. This is Matt Sorenson, joined by the incredible Mark J. Cole. We are excited to be with you. Today is open forum for the podcast. We have your questions here. We're going to give you some answers on tax, legal, wealth, building, everything, small business. Pretty stoked for it.

Yeah, no, this is a fun. This is the people show. This is a fun show. Excited about it and we're just going to jump right in and I'll say it now. If you want to present post present, give us a question, Please go to Main Street Business Podcast.com we're anxious to see your questions. We'd love to see them here. And I. Can I lead off?

Absolutely.

Okay. This is a topic you and I have been really talking about a lot lately. And that is a business purchase question. Yeah, I just did a training on that last night. You did one yesterday. So this is from AB Houston32 that says my S Corp. Purchased a business. On which forms do I report the purchase? The first business will pay rent to the new business. What do I claim as expenses? I remember that strategy from one of your older videos. Please help. Oh, A.B. houston 32. Not Houston, A.B. husto. These questions that you're asking and don't be offended with this response. If you're buying a business and having these questions, I can see that you were probably not assisted in the purchase with some tax and legal counsel because all of these questions and about 50 more exist and these are the basic questions. There's so, so much more you've got to deal with here. I'm going to just say I'm going to riff for one minute, but I'm going to just tell you, you have got to make an appointment with one of our attorneys. It'll save you 20 times what you pay them for just an hour because you're. These questions are off the chart with things that you should already. These are water under the bridge type questions and should have been addressed before you even bought the business. And, and I don't mean that rudely. It will serve you. I would talk with either Ashley, Scarlett,

Max, Ryan, Darren, a lot of the attrition officer handling.

Yeah, they're handling these transactions every day. Okay so first thing, your S corp purchase to business. Which forms do I report the purchase on? You're talking about maybe the asset allocation. That's form 8594 is with the IRS. You're going to sign it and it has to match the seller's tax return. This is a form you would have signed at closing. So this is a little after the fact. So you got to get a hold of the seller, go we need to get on the same page on this 8594 and it would normally be agreed to as an exhibit in your asset purchase agreement. Then you said the first business will pay rent to the new business. Well apparently you're the new business because you just bought it. So the first business I'm presuming is a seller and so they're paying rent to you but you're the one that owns it now. So now that means you're the first business. And then there's a new business. I don't know who's paying rent to who. And, and by the way that means there's real estate involved or is there a sublease involved that's going to be a factor. And if someone's paying rent, it's a rent. Rent is an expense for the person paying it. It is income for the person receiving it. And I don't know who's first, second or third business in this. And so again a huge topic of and then the fact that you're asking if that's a write off or what is there's about 20 other write offs you need to be worrying about. And with your S corp, your payroll strategy, your do you have employees in this mix? What are the merchant account situations? Your ongoing office expenses and marketing and sales and legal and, and and then you remember that strategy from your older videos. Maybe you're referring to a self rental where you own the building, you're renting it to your S corp but that another business in the mix. So I am just begging of you please make an appointment with one of our tax lawyers and they will set you straight, they will answer questions you don't even know to ask and you will love it. So thank you, appreciate that.

Yeah, just one thing on the tax forms there Mark said 8594, right? That's the allocation of purchase price. If you just Purchase the assets of the business. And that's what it probably sounds like you did because your escort bought a business. We presume you just bought the assets that business. But let's say you bought someone's LLC or someone's corporation. You acquired it. Well, the seller is going to report that on schedule D as a capital gain, assuming they made money on that cell. But then you're going to need to track the basis of what you paid for that business. All right, so it depends on what you did in that scenario. You want to make sure you get that right. There's a lot more like Mark said to get into that. All right, let's. I'm going over to asset protection here. This is in the asset protection category. This was by C. White. J says. Hi guys, Big fan. First time asking a question. My wife and I recently moved to a new primary residence. We want to keep our former primary residence as an investment property.

Oh, this is right up your alley. You love this. This is Matt's M.O.

that's why I picked this question. Says I want to transfer the investment property from our personal names to an LLC for asset protection purpose purposes. But I've heard this could possibly trigger the due on sale clause for our mortgage. We have very low interest rates. So understand banks are exercising this clause more often so they can afford offload their low interest rate mortgages.

Have you heard that? Now I have not heard.

How can we transfer this property to an LLC without triggering the due on sale clause from our mortgage company? Thanks and keep up the great work, Chad. All right, Chad, great question. First of all, love what you're doing here. My point about building wealth, probably one of the number one points is accumulate assets. So many people think, oh, I'm buying a new house, I'll sell my current house. And I love how you're looking at this Chad and saying, hey, we've got a low interest rate on this. I assume that the rent you're going to get is going to cash flow the property. You're going to have the value of the property go up over time. And if you don't need to sell the house to get into the next house, totally great strategy, great way to build wealth. You need to accumulate assets. That's how you get wealthy. Now as to the due on sale class question, because this is coming into a rental property here. So when it's your primary residence, we probably just want it in your trust for estate planning purposes. No asset protection risk necessarily here. You live in it. But once you put a tenant in it we've got some asset protection risks. What happens if the tenant slips and falls? I don't want them suing you and coming after all your assets. So we're going to have that rental in an llc. Tenant slips and falls. Whatever happens, they can sue the llc. They can't get into any of your other assets. They get stuck in that llc. Now you have a mortgage in your personal name as you said. And most mortgages have a clause in there that says when you change ownership of this property you must pay off the mortgage and the, and the mortgage company has the right to call the loan due. This is the due on sale clause. Now what happens? 99.9999% of the time is you transferred ownership out of your personal name to the LLC and you have the asset protection. You continue to pay the mortgage. The bank doesn't care.

The underlying ownership did not change. You are still the owner, you're still the guarantor. The bank has a hard time arguing you sold or transferred the property to someone else because you didn't. It's not a pass through entity called an llc.

I mean I think they could make the argument because ownership did change out of your name to the llc but they don't care. I'm just saying Mark and I have probably had 10,000 plus properties of our clients over the years. Tens of thousands.

Yes.

Transfer out of their personal name to an llc. And we've maybe had a few over our entire Careers of 20 years as lawyers where the bank has actually done and you know when it happened clause.

Yeah. It's when they called the freaking bank and asked them or they stopped, they missed their payments. Yeah.

The bank's like oh we better look into this and what's going on with this property and if their property taxes due to that they're not paying in and oh, this isn't even in their name anymore. Okay, so now here's a one piece of like maybe safety for you Chad, if that's the right word. I don't know. Let's say the bank does send you a notice of default because you have transferred the property to your LLC and says hey, we're calling that. We're the one bank out here that's actually going to do something about this because you've got this low interest rate. We want to get it off our books and we're going to call the loan do what do you do? Deed it back in your personal name. It's kind of like what the bank does when you don't Make a payment, they have to send you notice, give you an opportunity to cure and pay. They can't just foreclose. So if that happened, you still have the ability to just beat it back in your personal.

And banks are not people. Let me just repeat this. Banks are not across the country trying to exercise due on sale clauses for people that transfer to LLC who are still paying their mortgages. It is not worth two points of interest. Three, four. It's not. The cost to foreclose and just exercise to do on sale is astronomical compared to the increased interest they would get. Maybe it's stupid. It is not happening. Whoever is out there saying this on the airwaves, back it up because I am not seeing it at all. And we are helping thousands of clown, thousands of clients every day with this situation. All right, okay. This is, it's ride in solo. It's riding so low. Where do people come up with these? These. I don't have the coolest handle at all. I do not. Okay,

what is your handle, Mark?

It's pretty creative. Yeah, I put an exclamation point behind it once in a while. Okay. I'm Mark, you know. All right. This is in the tax strategy category. Does having mineral rights on your property count as a small business in the trifecta before royalties start, I'm two weeks out from signing a contract that has a one time payout of 200k. But Beverly Hillbilly, someone out with a shovel and hit some oil in their backyard with the possibility of 12 to 20k a month in royalties if they drill on or under my property. I love this. So if you've watched the movie Landman, this is in the last episode and this is the guy standing by the trunk. And Billy Bob Thornton's son is out there schmoozing people saying, sign here, I will hook you up. And so this is very, very common for those of you in certain states, I. E. Oklahoma, Texas, maybe South or North Dakota that have mineral right opportunities. You're in that lane or that fairway. All right, I'll get to the answer. No, it is not a business. It is passive income. And I know what you're trying to do. Try to find a way to write off something against this royalty payment. And it's a advanced royalty payment is what you're receiving and it's passive income. Count yourself lucky and blessed. It's not subject to self employment tax, but you cannot take a write off against it. It's similar to dividend or interest income because you're making income off your property. You're not going out and working or creating labor to sell services or products. But man, exciting is it's already taxed

at a preferential rate and that you're not having to pay self employment tax on it, but it is still your regular rate. Yeah. Of income. So. But it's like, it's like rental income, you know, in that sense. Although you can't take expense there. Okay, great question there. This one's from C.W. clark says. Hi guys. I recently found your videos on YouTube and can't get enough of them. Entertaining and informative. I'm in the process of starting my own business. Originally planning on just going with an llc. After watching some of your videos, you suggest switching to an S Corp from the LLC at the 50k mark. I understand the benefits of the S Corp and I'm considering that right out of the gate. But what is the significance of using 50k at the time to change? I've not seen a good explanation of that reasoning yet. Well, stay tuned CW Clark, because we're going to give you that good explanation right now. All right, now first off, I like where you're going. Starting a new business, going to go with an llc. Now you can just do an S election to that. Keep in mind you don't have to change the LLC to a corporation. You can just elect for S Corporation tax treatment with the irs. Our office does this all the time. It's a filing you simply make to the irs. But with the state you're still just Vandelay Industries llc. You're still just an llc. You just made the tax election. Now the reason the 50k mark is important is the strategy of the S Corporation is we are going to take some of the income coming out of the LLC taxes and S Corp or the S Corp and we're going to pay salary which you pay self employment tax on. The other portion we're going to pay out is dividend or net income profit and that is not subject to self employment tax which is where the tax savings is. Now if you only have 30,000 of income there, the tax savings on that isn't going to cover the cost of having to do an S corporation tax return. Now quarterly payroll, the additional work of the S corporation which is a separate corporate return. If you're just an LLC just you, it's just falling onto schedule C on your personal return. It's not an additional corporate return. You do not necessarily have to do quarterly payroll, but once you elect S Corporation treatment, oh, you got to do payroll now oh, you got to issue a W2 at the end of the year. Oh, we want an 1120s tax return. So you're going to need an engagement accountant. Do not do this on your own. You would be a fool to do that. Focus on making more money in your business. Unless you are an accountant. But I don't know why I had to throw that in there.

I love it.

There's always an exception here, so I got to be the lawyer. So that's the reasoning here is is the juice worth the squeeze? It's not worth the squeeze until you hit 50k of net income.

Yep, I'm with you again. Well said, my friend. All right, our next question here is from AJ And I want this out on social media as well because it's so important. He says, I do a fair AM of trading. I'm familiar with trader tax status, so that's day trader status and certain that I don't want that. Good move. And I probably also don't want to make the market to market election. Good move, AJ. So he says, I'd like to write off expenses for home office data services, trading tools, etc. Here's what I'd like to do. Tell me if I'm nuts. Okay, A.J. you asked for it, so you're going to get it. Option A. I'm going to set up an LLC and take make an S selection, then open a brokerage account in the name of the LLC and trade in that account. That deduct all my ordinary necessary expenses. Not allowed. You are still trying to write off trading expenses for a trading practice that is not a business. Trading is not a business. And you do not want to make these elections and to have day trader status. You already know that setting up an entity and making an S election does not somehow morph you into the ability to write off these expenses. It's not a business whether it's in an LLC or an S corp before or after you set up an entity. And I know someone is trying to sell you this strategy. They are crooks, they are scammers. They're not the ones signing your tax return. And they're wrong. And I'll stand by it every, every day of the week and on Sunday. You got me? You're with me on that.

4 7.

But you want to hear he's got an option B. Oh, and B, I

think this will be worse.

Okay, okay, I'll let you riff on this. 2 LLC. A management company and a holding company. One owns a brokerage account, the other is likely a Wyoming llc. Oh, that's gonna solve it. I didn't know I needed a Wyoming llc. All you freaking scammers out there selling Wyoming LLC is right and left. I'm so glad you're saving this guy's life tax wise. You're amazing. Thank you so much. I didn't know you could set up a Wyoming LLC and all of a sudden manufacture write offs for something that's not even a business anyway. But that's his idea. And AJ, you asked for it. Okay? He said 80 owned by me, 20 by the management. Company is also going to be an llc, but I'm going to use C Corp status. Oh. If you go from an S Corp to a C Corp, it unlocks all of this. It somehow morphs trading into business. No, I'm sorry, I don't. And I don't want to steal your thunder. He goes on and on and bless your heart, separate accounting, a separate management fee and C Corp. And I got to take a salary and the LA LA. And here's the sad part, AJ goes. I no longer have a W2. I pay for my own health insurance, my own medical costs. I've got all these expenses. I want to write them off. I want the hsa. I want all of this. But I'm a trader. And you're a successful trader. That's great, aj Start a business on the side, Become a consultant. Do something that's a freaking business. Trading will not get you there. But Matt, this option B, you think it works?

Well, he started with tell me if I'm nuts. And I don't know that you're nuts, but whoever's giving you this advice, and maybe this is chat GPT May, this is some ridiculous seminar you went to at a Holiday Inn last night. I don't know what it is, but see, you have to keep in mind. What are you doing? What is the income you're creating? It's the same for real estate investors and everybody else. We don't just put it in an entity and now it changes the nature of it. And I can get different write offs. The S Corporation has a. A specific strategy here for self employment tax saving. That doesn't change the nature of the income that you're making. So you have to start at the very beginning, which is how you phrased it. Am I a traitor or not? Are you taking that status or not? It doesn't matter what entity you set it up and doesn't matter what state you set it up and doesn't matter. The gymnastics you try to go through it will not work.

One last example because we just had a caller with this question. They found mineral rights were under their land in Oklahoma and they're going to pay them royalties and they would love to take a tax write off for receiving royalties for for oil and gas. Is that a business? No. Oh well, I'll open an LLC to receive the oil and gas royalties now I can write them up. No, it's still royalties for oil and gas. See the point? You have to go look at the heart of what you're really doing. And trading stock is not a business. It's a passive activity. Enjoy your short term and cap long term capital gain and go start a consulting business on the side. Where's my pen?

I'll just drop. I love that by the way. That's the creative strategy at the end of the day is start a consulting business on the side. You're good at someone in trading and you're good at it. Start writing about it, start talking about it, start consulting other people about it. Maybe do a training or education program. Now all this stuff you're doing to learn about trading, be better at trading now can become an expense because you have a business and ordinary income coming up. Same thing with someone with the royalty income. Maybe you're going to teach other people how to discover mineral rights under their property and optimize it it. Maybe you're going to create a website that creates income about it. I don't know what you're going to do. Maybe you're going to sell cool T shirts that said I hit oil. You know, I don't know. Let's do something ordinary income that's going to give us a write off.

Now you're here's a warning because I know where you're going to go next. Well, I'll start managing other people's money and they'll just give me access to their bank account or their wallet or their this or their that and their trading account and I'll start managing their money because I'm so good at it. Now you're going to jail unless you want to go get licensed under the sec. So you can't start managing other people's money unless you get licensed to do that. So you're in this weird space where you get to be a consultant, an educator, a trainer, a coach, a great guy and charge for it. But that's trading's not the business. That's the business. AJ thank you.

All right, next question was from Core Couchman. I don't know what these titles Describe.

What could that mean? That's what I have the equation. You're like, I'm on a couch or I'm a core couch man. At my core, I like being on the couch.

All right, well, let's roll with this question. I says I just started my new small business LLC in Colorado, an advertising agency. Three questions.

You sucked his head.

Three questions. All right, thanks for the heads up. When can I file my S Corp election? The Form 2553 is confusing where it states it will not be considered if submitted before for November 8th. Am I reading that correctly?

No.

All right, so you can have an effective date on the 2553 of when you want it effective. But also you can go back in time with what's called a rev proc, which our team knows how to file, where you can go back in time. Let's say this is January of 2026 and you want to go back in time. You can even elect that. As long as your LLC was set up before that time or the entity was set up, we can go back in time to create that. So now maybe this is talking about forward looking. I don't know this instruction where this November 8th date is confusing you or if this is a state form that goes along on the state side of the 25 3. But don't worry about that. If it's confusing you, that can be effective when you set up the entity from day one or it can be effective at a future date or we can go back in time.

So that's question one. Is there a second question in there?

That's question one. Second question. I have my first paying client. When distributing a fair salary wage to myself versus the dividend distribution, what percentage should be distributed? How to remain in line with taxes and paying the least.

Okay, and let's get last question on the table too, just so I know.

Last question. What are all the things to be aware of? What are all the things to be aware?

How can we have world peace or

doing before the end of the year for my small business and looking ahead the next year.

I'll take the world peace question.

Okay, the last one for Mark. All right. And you know, this, this question, I mean, we could, you know, that's. We'll get to that one. All right, this is a good question though is you've got some income now and now you're talking about paying yourself. And what am I going to distribute to myself? Well, keep in mind, the first thing we're going to look at is have you been doing your bookkeeping do you know what expenses you have versus this income that's coming in? Now you've got some income to pay yourself. Now, maybe this is just going into the bank account, I don't know. But you're going to start taking some payment out of here. Now, wouldn't it be nice if there was like a matrix or something? Have you ever ran across what you're making and how much salary versus the dividend?

If only there was a, maybe even a Kohler payroll matrix.

Oh, if Mark did one, that would,

that would be freaking awesome.

That would be great. Yeah.

Well, if you get lucky, like, like,

maybe like a CPA and a tax lawyer, like that did one.

Yeah. So that's out there, Cor. I've created a matrix that'll tell you what to pay yourself on paper to satisfy the tax planning strategy here. But I like what Matt said. Get your bookkeeping done. Make some money. Take money out. Just call the draw. Just start making money. Get proof of product. You're doing it, you're going. And when you start taking home more than five grand a month after your expenses, call your mom, tell her, she'll be so proud of you. And then call us and we'll tell you how to go. Next step, next level. Do not make this a selection, my fine sir or woman, please do not do that. Just start making money.

Yes, yes. And what I would say too on this question is when you start doing that salary, dividend, split, whatever we want to call it here. Remember, you're not like cutting yourself a salary check and then taking a second, a separate checkout. That's like your dividend or profit out of the business. This is like an after the fact payroll where you're looking back at the quarter and you're saying, all right, I took 30 grand out of the business this quarter. I'm going to say 10,000 of that was salary and 30,000 of that was dividend or profit out of the business. And then you do a payroll report for 10,000 for the quarter. Okay, so don't think you gotta like write yourself multiple checks here and everything. You're really looking at this quarterly, after

the fact and your final question. And by the way, thank you for submitting a question. We're not trying to shame or demean you in any way.

We have been a little feisty.

We've been feisty today. But I'm glad you're contacting us about this. And your last question is, is there anything else I should know? Yes, a ton. And I would encourage you strongly Please continue to binge on our podcast. Binge on my YouTube channel. Matt's YouTube channel. We have our 360 event here in November. You can catch up virtually or come to Phoenix. It's a three day event with 20 different classes or more. And immerse yourself in this. It will make you money. It will make you better. It is going to save you money. You are onto something here, people. The number one cost in your life is taxes. And when you can get organized and dialed in, the universe will bless you with success. Good bookkeeping. Understanding what you're trying to do and saving on taxes makes you a more successful business owner. And I know that resonates with you. It just feels right and it's scary. And you're like, I don't know where to start and I don't know what to do and I'm not that smart. And this is hard. It's not that hard. You are smart enough. We are our special sauce. Our claim to fame is that we make tax and legal easy to understand. And yeah, you can dive deep and get technical and we train accountants and lawyers and all that too. When you want to go deep. But really it's about proof of product. Get out and market. Collect your money, pay your bills. Let's do the bookkeeping, see where you're at. Take it home and keep learning. Keep being here. You are in a safe place. We are not selling you some $20,000 boot camp or Wyoming LLC to be a part of this plan, to be a part of the American dream. So keep listening and thank you for being here.

Amen.

All right, Jean Marie says I. For two and a half years we've owned a vacation rental in Hawaii. Wow. Good luck. You got around all the vacation rental law issues. Hawaii has been tenacious with the Airbnb short term rental rules. Last year we purchased a car to alleviate renting a car when we were there working on the condo. I love those keywords condo. Starts to make me a little nervous. You're going to work on a condo? Boy, that's like saying I have a leased vehicle with repairs. Really? You do? I can work on a house. I got, you know, things to do with a house, landscaping, all sorts of good things. A condo. What are you going to go in and like, tighten up the sink and paint the bathroom for the 38th time? Okay, but whatever. So which, which we combine with days of vacationing, so we record all meals and food and mileage and travel. And however we missed the bonus depreciation on the car, a Subaru Crosstrek. You're hurting me with the Subaru. Okay. Just the fact you chose a Subaru of. No offense. Okay. Last year, according to our tax preparer, we should have done bonus. This year we need to buy and install a new window and purchase a new sofa bed which will take you a half a day at Ikea. But that's okay. Is this the best year to do it? And should we both. Should we buy both in the same year? We are both retired, no debt, small farm in Illinois. Oh, I love that. Live in California.

Ouch.

Move to Illinois. So I would say this and thanks Gene. I'm being a little feisty. You've got a vacation rental in Hawaii. Love it. It's going on a schedule E as an echo, it's on your tax return. You're writing off your expenses to get there. You're going to have fix up days. You're going to keep a good log of what you're working on. Again, be careful. Not too aggressive with the condo. I just don't know how much real work you're going to be doing there. And then you're going to write off a vehicle while you're there. By the way, you can only depreciate it if it's used 50% or more in a business. And you're. You've got to have a decent log to show that you're there 50% or more of the time working on this thing. How many days you're spending vacationing there. So it appears. I like the strategy. You're going to take write offs when you go there. Love it and you're checking on it and you're working on it. Just I tongue in cheek here. How much work is really happening? Be careful on being too aggressive with the write offs. That's all I'm saying. And the last question, we need to buy and install a new window and purchase a new sofa bed. Do it. If it. Okay, we want to make money with this STR short term rental. If it needs a new sofa bed, if it needs a new window, do it and write it off. By the way, you can write it all off in the same damn year. A write off today is better than a write off a year from now. And an STR with a new sofa bed is better today than a year from now. Make money. Make this STR rock. Get in there and do what it takes to make it the best STR in the neighborhood or whatever you're trying to do to optimize it. Little shout out to Daniel Rustein Airbnb profit book is amazing. Go get it on Amazon, everyone. But this is a question about financial decisions, not tax decisions. Do what's best for the property and don't be too aggressive on your write offs with a condo and probably limited repairs. So man, just go hang out in that farm in Illinois. Just I dream of that. Okay, thank you.

Yeah, probably the number one piece of

advice that you probably don't get out of California.

I know you love the sunshine, but from a tax standpoint, I don't know. Illinois is not that great either, but yeah. All right, next question. This is from Mugs338. Mugs338 says I have a W2 job in the public sector. I have a 457 plan that I max out. My wife is self employed and has a 401k that she offers to employees. All right, she's got a 401k with employees. What is the max amount of tax deferral for deduction purposes? We can do as we are married filing joint. All right, great question marks. This really comes down to both of you individually. Doesn't really matter that you're married filing joints so much. Let's break it down here. Now in a 457, this is like an employer plan, government sponsored, similar to a 401k that you might have in the public sector that your wife actually has with her company. So for you, you can do 23,500 as an employee that you can put in the 457 of your money and take a tax deduction. Now you could do Roth and not take a tax deduction. But you said you want deductions, so I'm presuming we're going to do traditional here. Now the amount of match you're going to get that the employer is going to put on your 457 depends on the plan. You don't get to dictate that. All right, now your spouse has a 401k and she owns the business that she offers to herself as she's an employee in the business and to her employees. So she can also do 23,500 in that that she can put as an employee contribution. Now if you are 50 or older or your spouse, you can do $7,500 on top of that, which would bring you to 31,000. Okay. And by the way, this is 2025 numbers here. That 31,000 will be deductible dollars. So between the two of you, I know you can at least get in $62,000. Now, for those of you that have a 401k at a job where you work, you may be able to do the mega backdoor Roth and do additional after tax contributions as an employee to get up to 70 grand a year into it. However, there are a couple categories of people that can't do the mega backdoor Roth where you can get more money in. Now, keep in mind, these would be Roth contributions. You're not getting a deduction, but it could be more retirement plan dollars. The reason I note that is it will not work for your spouse because she owns a business with employees. Me, our 401k plan in our law firm at directed Ira. I'm an owner in the business. Mark's not in the business. I can't do the mega backdoor Roth, even though I'd want to. So who can do the mega backdoor Roth? If you have a solo 401k with no employees, you can. Or if you're an employee at a company that you don't own, you can do the mega backdoor. There's an ownership issue rule where it just doesn't work. But I know that mattered for you Mugs. But bottom line, you can do 62k each at a minimum. This is addition. On top of that, you can have matching from the companies that determined. That's determined based on the plan and what the employer offers. Now, your wife could adjust that in the business, but if she's matching more for herself, she's gonna be matching more for her employees. But keep in mind, on top of this, you could do a backdoor Roth ira. I assume you guys are high income if you're trying to max out retirement accounts here. So I presume you're high income. You can't just do a regular Roth ira. You actually can't even do a traditional IRA and get deductions because you're high income here and you're contributing to 401k plans. But you can do a backdoor Roth IRA, which can get you another 7,000 in each, which could. That's another 14 grand. So now we're up to $76,000 into retirement accounts in the year, and we're not even including the match. That could come from the 457 or from the 401k. So there you have it, Mugs. I think that's a lot of money you can get in each year. Hopefully that was helpful. I love it.

Well, I think we'll wrap up the day with one. Or I'll do my last Question. If you want to do one more, it's up to you.

Now this one you finish.

I'd like to transition to the IRA conversation. This is great, points Matt just made there. This is from Elle McCoy. My self directed IRA owns an LLC. Okay. And that LLC is part of a joint venture with another company. So we have an LLC owned by an IRA 100% and then it owns part of another LLC with another company that is not a self directed IRA LLC. So it's kind of like my IRA owns an LLC that partnered with Matt in an LLC, but just Matt. There's no other IRA on the other side. Okay. So that's the facts. Does any property the jv, so that's the partnership LLC get with a loan still have to be non recourse or a non recourse loan? Probably, but I don't have enough facts. It would depend on your ownership percentage in the JV partnership. Now let's just assume you're 50. 50. Yes. It would have to be a non recourse loan if they want you to sign as a guarantor. If you do not sign as a guarantor but someone on the other side is willing to do it, that's cool. You just cannot sign as a guarantor. So theoretically it would have to be a non recourse loan to you. But someone else could sign on it and be just fine. But that's again assuming you're 50. 50. If you're just a 10% owner in this deal or 20% owner. And this is where we get the shades of gray from 50 to 0% ownership, I think you're going to be better off to stay away from a recourse loan. Period. But ownership percentage could play a role.

But usually if in that structure, if you're doing it right, the J, there's going to be a new LLC that's a jv. Are they not doing a jv?

No, it's her LLC is a single member LLC with her IRA with a, in a JV llc. But the other partner is not an ira, but there's a jv.

Llc. So yeah, the partnership, partnership LLC will be the borrower on the loan.

Yeah.

So what recourse does the bank have? Well, they only have recourse to the llc. So I don't. For me I'm like, as long as that LLC is the borrower, not you, not your ira, it could be recourse, but like Mark said, don't be guaranteeing it. That's what's the problem. Most of those Banks are going to be like anybody that's a 20% or more, you know, underlying owner here has to sign a guarantee. So. So you want to make sure as long as the loan is done just to the llc, that is effectively non recourse.

When your partners could sign, try to

backdoor it with a. But you need to sign a personal guarantee. That's where you'll get.

Yeah, but your partners could, is what I'm saying. Yeah. Now the second question was, can I do some business functions like book work and get a fee, but have the fee go to my self directed Ira, LLC? Oh my gosh. Where did you go with this, El McCoy? You were like doing so well, you understood the non recourse loan. You said, can I do some business functions like book work?

Okay.

Oh, you're going. You want to get paid? Oh, no, you don't even want to get paid. You want your IRA to get paid. Bless your heart. It's a slippery slope to hell, isn't it? Just joking. Okay. Right. So the answer is yes, you could do some basic LLC management of your own ira, LLC as in this state of bookkeeping would be fine and things like that, but you cannot get. Okay, this is again where we need more facts. Percentage of ownership could play a big role here. If you only own 10% with your IRA, LLC of this JV partnership, where non family members, non related parties own 90% of the LLC and you only own 10%, then you would be allowed to take a fee. But it's got to go to you, not your ira. Your IRA cannot do human work, so they cannot get paid for your work. So you can work for the jv, LLC if your ownership percentage was in a minority position, but it's not going to your ira. So.

Yeah, but keep in mind any like bookkeeping, administrative tasks you can do anyways for the llc. You just not get getting paid for or compensated for it, nor is your ira. The IRS wants you to be keeping track of the records and what's going on and the bookkeeping and everything like that. And that's just good management that anybody should have for any of their investments. And so that's okay to be doing. I'd recommend you do that. But you're not getting any special payment or benefit personally, nor should your ira.

Yeah. All right, well, are we wrapping it up? Yeah.

I just want to say thanks everyone for the questions. Despite Mark and I's little angstiness on some of these, we are so grateful for those you submitted questions. I don't want to discourage you.

Yes.

And it's okay if you got to do some, you know, secret screen names like mugs338, whatever you got to do, you know, to just, you know, be a little incognito. That's okay. We do like at least a first name and what state you're from or

if you're male or female just so we can say you he street, whatever. But anyway, but thank you everyone and we are going to be here every week and we love your questions and please don't give up on the American dream next week. Well, by the time you hear this, it could be right on top of you. And that is the Alt Asset Summit. Get over to alt assetsummit.com you can watch virtually and we are going to be parading all sorts of investment ideas and strategies from third parties that are bringing it to your IRA or 401k and you get to just watch and listen and learn. I think you would love it. Get to all assetsummit.com and then in November we have our tax and legal and finance and business wealth building Main Street360 event. So get to mainstreet360.com to check that out as well. Thanks everybody and we'll see you next week.