The 3 Phases of Starting Up Your Small Business with Mark J Kohler | 2019

Welcome everybody to this week's podcast broadcast. YouTube Live, Facebook Live. I'm here with you. Please don't go anywhere for a minute. Let me tell you what this, this broadcast is all about. The three phases or the first three steps of starting your business. Now that may not sound sexy or cool, but you've got to hear this because even if you already own a business now, you thinking of expanding into a new product line, a new service. These are going to be the same three steps you use every time you launch a new business. Now I want to get in and all the technical stuff. Are you down at the bank? Are you setting up an LLC or corp? I'll be filling questions this entire time. That's cool, we'll do it. But I want to get through these three phases and I've got steps under each one. I think you're going to love it. Now I'm also going to give away two books today. I'm going to give away the tax and legal playbook. Also my new 8 Steps to Grow and start a business, both free. This is 99 bucks on Amazon, 20 bucks, whatever on Amazon. Got prime get. You can get these books and check them out on Amazon on my website, markjkoler.com but today is about you. So please don't go anywhere and hear this out. Hear me out because again, I had talked to so many new clients every week around the country speaking in workshops about starting their new business. And a lot of people think it's here, it's there, what do I do, where do I set it up and all that good stuff, banking, everything. We're going to hit it. So let's start with number one and I'm in here tight with you. And then we're going to get to the whiteboard here in about two to three minutes. And then if you have a question in YouTube or Facebook, just type it down below. My team's going to throw those out as we get rolling. Now step one, step one is concept design and your product and service development. Again, even if you already own a business. Now, are we going into a new food product, a new service? If I'm in landscaping, am I going to start fertilizing? If I'm in a food service, am I going to start serving a certain type of drink? What am I going to do with a new product, a new service? And I'm going to go online and sell. I'm going to do multi level marketing. Maybe you're going to go into real estate and do a rehab. It's all the same practice. Now as you're developing this concept, the question I ask so many clients on the phone, literally even millionaires, I ask, what's your what? What is your what? Why are you doing this business? Are you really passionate about it? Because no one's going to be sitting behind you pushing a hot poker to get you up every morning. Are you going to lay awake every night thinking about how can I make money at this? Am I going to be passionate about what I'm doing? Because it takes self starting, it takes motivation, it takes this inner drive that you're going to love doing this. And so when I have clients call me up and go, mark, I'm ready to set up my llc, or do I set up an S corp or do I set up, I go, what? You what? Why are you doing this? Well, I want to make more money. Okay, well, do you really like what you're doing here? Why are you passionate about it? So number one, I always want to talk about that. Now that was our intimate, close up, face to face. Now I'm going to take us back and we're going to hit the whiteboard. This is important. We're going to do it. So number one on this concept design is finding your what so what? Your what is your what. And so I'm going to just put concept design, concept design. And number one is what is your. I'm just going to put what. We're going to save time here. I want to get rocking here. So what is. Actually, I'm going to spell it out. What is your what? Number two, once you find out I've had clients that are like, mark, I love fly fishing. I'm going to do fly fishing. I'm going to, I love cars, I'm going to collect and restore and sell cars. Whatever, whatever you love doing, let's make money on it if it's legal. So number two, number one, number two in this whole process and it's so, so important and I want to make sense of this before you even think of a business plan is I want you to think of who's your competition? Who's your competition? I've had so many clients that say, mark, I'm going to do this. I'm like, did you realize 10 other people have websites doing that? What, what's going on? You know? So I want to always say, as soon as you figure out what you're going to go into, find your competition. Someone, I guarantee it is. Unless you're a complete genius with a patentable idea, someone is already selling what you're doing. Now, they may be doing a crappy job at it. They may have a crappy website. I don't know. But find your competition so that you can improve on it. Find out what they're charging and start doing some analysis and say, man, if they're charging that, are they really making any money? Because I got to compete against that. How am I going to differentiate myself? So find your competition. This is just first phase. I mean, and again, I have so many people call me up and we can do it today. You want to talk about LLCs and S Corp? Should I set up in Nevada? How do I pay myself? How do I pay my kids? How do I write off my car? I'll talk about it. But first of all, I want to know, what is your concept? What's your what, why are you doing this? And what's your competition? Then number three, I want you to do a rough business plan. A rough business plan. Just, is this even going to work? Do you know, I have people that have come to me and said, mark, my business isn't doing well. Da, da, da, da, da. And I say, well, two years ago when you started this, did you do a business plan? They're like, no. And we start to go through the numbers and just do some basic business plans. And they're like, oh, my gosh, I could have saved three years of my life. Sometimes the best result of a business plan is to tell you it's a bad idea. That's sometimes the best thing. It's not always, you know, am I going to make millions? It's like, should I even do this? Don't be doing a business plan to justify your venture. Do a business plan to poke holes in it and figure out, is it really worth it. Now, on this note, this is where my little eight Steps workbook comes in. Free. Now, if you share this video with anybody else today, whether you're on YouTube or Facebook or Rosalie gets a ping of all the people that share it. She's going to do a drawing first thing in the morning. I'll sign this and send it right out to you free of charge in the morning. Now, if you want to get this comes with a business plan, a marketing plan, a strap plan in word so you can modify it. But if you're just looking for a basic business plan, get over to SBA.gov they've got some wonderful resources, I think. SBA.gov let's write it up right in here. SBA.gov does a great job helping People design their basic business plan. I think I do a better job, but they're not too bad. Now once you do your rough business plan, if this idea is making sense, then you're going to go with a legit business plan. And I want you to just seriously buckle down, put together a 10 to 20 business page business plan and figure out how you're going to market this. Really tear apart your competition, do your financial analysis, your budgets and the whole nine yards because you're going to move forward. But the rough one can be done in a weekend. It can be done in a weekend. All right now my friends, that is step one. Now again, if you've got a question on any basic business strategy or tax write up, type it down below. I'm here for you. Even though tax season's over, we got the whole year here, people. Let's get to work on this. This is good stuff. Now step two, this is so, so important I'd like to talk about with clients is the financials. If you're going to start a business, we've got to start with the numbers. And the first thing I want to ask you is nail down your startup cost. What is my startup cost going to be to get this off the ground? Now for some of you that might be selling on the web, it could be really affordable and simple to just get your product up and going. Website design, a shopping cart, PayPal configuration, you're off to the races with the merchant account. But other times it can take a lot of money to get that off the ground. So I'm going to put startup cost, nail it down. What's every expense I'm going to need to get this thing launched. That's part one, that's step one in the financials. So I'm going to call this phase two, Phase two and then step one is nailing down your startup costs. What are they going to be? Put it on a spreadsheet, have someone look over it for you, which we're going to come to later here. This is going to be good. Now number two, I want you to think about your break even analysis. This is really important. Now on the break even, I wanted, there's three types of break even analyses and I'm going to just do one of them. But I want to talk about a product and then a lot of you, it's going to be obvious after this to either do a service or even a real estate project. And so those are another two type of break even analysis. I won't get it into those in Depth today. Unless some of you have a question. But I want to talk about a product. There was this place down the street. This is totally funny. You guys are going to love this. Down the street. It was a new churro place. They're going to sell churros. I'm like, whatever. Churros, that's it. They had, they sold some hot chocolate too. I'm like, man, you better be freaking parked outside of Disneyland to sell the hell out of churros to make it worth it. But they. And I thought it was kind of a dumb idea, but whatever. So I went there and I even told my wife and kids to go. Mark my words, four months out of business. I hated to predict that, but they were. Now here's the deal. Let's think through this. This is a break even analysis that you can do on a freaking napkin. At Denny's, their churro was four bucks. Four dollars for a churro? Alright, that's cool. Now before you even get to the $4 churro price, you've got to say what are the fixed costs? Now they were open five days a week, six hours. They had two employees there. The rent, I estimated this joint was around 750amonth. It was a small little dive, kind of one of those shack scenarios. I just being generous was saying 2000amonth. 2000amonth and break even. So I'm sorry. Whoa, whoa. So back up 2,000amonth in fixed costs. So when I start to do a breakout even analysis, the first thing I want to know is what are the fixed costs? Just to open the door before I sell one churro, what are my fixed costs? I estimated 2,000. Now they're selling these for four bucks a pop. Now is every churro profit or is there a variable cost? So if you think of the cost of the dough and oil to, you know, deep fry this thing, they would put cream in it and then you have cinnamon sugar and all that jazz, right? Most restaurants going to push a 50% cost of food, food cost ratio. So if this churro is costing me four bucks, my variable cost is going to be two bucks. So my variable to just produce a churro is $2. I'm selling it for four and my fixed costs are 2,000. So if we start to do the math, how many churros do I need to sell to just cover fixed costs before I even take $1 profit? You take your fixed cost divided by your gross profit margin. My gross profit margin was $2 per churro. So if I have 2000 in fixed cost. I divide up my $2 per churro profit. That means I have to sell a thousand churros a month just to break even. That's a thousand churros. You say I could sell a thousand churros. Man, I've seen, you know, people eat churros. It's a pretty popular food. I think people would eat churros all the time if I opened up a good churro place. All right, fair enough. I ran some numbers. Let's say you're open five days a week with the average month throughout the year. That's going to be 24 days that you're open. Now if I take a thousand and divide it by 24, that's 41 churros a day. Now if you're only open six hours, I've got to average seven churros an hour to just break even. So but, and you got to keep that up from the minute you open up. If you're going to open up at 3 o' clock and go until 9pm at night, those are probably your hot times. Maybe your start at lunch and then it's, I don't know. But you got to be averaging seven churros an hour just to break even. Now do you think the people that open this place maybe thought through that? Did they do a test market? Did they just open a little? This is where test market in a business plan can pay out. If you go out and find another churro place even in the region, go to the next city over the next state and go, oh, I finally found another churro place. Take a day, get a diet Coke and a bag of chips and sit out there and count how many people are going in and walking out with a churro. Do some analysis, guys, before you waste the next three years of your life freaking run the numbers. Find out what is it going to take to make some profit in this small little business. Is it really going to pay out what I think? And when you start looking at a Cheerio place in Denver compared to this little small town in Idaho, and you go, man, I don't know if I'm going to have the traffic this place does in Denver. I better rethink. You just saved time. All right, now before I get into my third one that I want to hit here, Nishan, what do we got?

Nishan says if his LLC purchases a house to flip, how do you record the purchase and expenses on the tax return?

Okay, Nishan, great question. He says he's going to do a fix and flip. Now, he said he's going to pop it. Now we're going to come back to number three here and frankly, what Nishan saying is that I'm going to play with this Nishan and he's going to do a real estate deal now before he starts getting all hopped up on fixer upper and Chip is my hero too. And you're saying Joanne's adorable. Chip, you're a stud. You're always down there doing the tear out. I love you, Chip. Here's the thing, Nishan, before you go out and buy this place, let's run the numbers and let's see where we're going to put this. So if you're out there, you're going to put left side, right side, you're going to put your W2 over here. So some of you may have a small business, some you may have an S corp, but you're putting your operations over here. You're never going to put your rentals in an S corporation. We're going to drop your rental into an LLC and let's say you're going to have a partner on this deal. Now, he said if I go out and do this deal, what is, where do I record the profit and how do I record it before I put it on my tax return? Well, let's say you go out and buy this property and I'm just going to use some examples that my son and I this morning I was out doing some cement and helping out over on his little fix and flip. So let's just run some numbers there. He bought this place for 80 grand. That's the purchase price. Now we're expecting to put into this thing about 70 grand. We're going to be into this thing, 70k and we're going to have a total investment of 150,000. That's going to be called basis. That's called basis. I'm into this for 150 grand. And then we're going to sell it for probably two. So we're going to sell this thing, sales price for 200 grand. That means we're going to have profit of 50. Now you're going to take out realtor fees and some cost of sale. I know some of you are freaking out going, mark, it's not that simple. So let's take out 10 grand for cost of sale. We're going to be at 40 grand in profit. Now if I once you do the math of how much money you borrowed versus how much you invested, I've got a $40,000 profit. Now here's the issue, Nishan says, where do I put this on my tax return? Because I started it in 2017, maybe 2018, but I'm not going to sell it till 2019. Is this a business? Can I take write offs for all these repairs and improvements? The answer is not until you sell. So this is going to go, Nishan, typically on a schedule D, we're going to drop this on a schedule D and you're going to show a capital gain of this and it's going to be short term capital gain, by the way. And you're going to put this on the books and you're going to put your cost of investment minus your sales. Here's my profit. This is not a business unless you start flipping more than just one. If you're not in the business of flips, it's going to go on a schedule D. Now Nishan, if you're doing two to three flips a year, I'm going to pop this in on a schedule C, as in Charlie. If you're on a schedule C. And Charlie now I can write off your cell phone, your home office, your auto, because you've got a business of flipping and rehabbing. But if you're just got a day job as an engineer and you're going to flip a property on the side, that's capital gain investment. Now you're going to get a write off for all the expenses related to that property you invested in, but not until the day you sell. All right? Okay, next question. What was that? Rosalie, what do we got?

How do I know? How much money do I need to start up my barbecue business? Jackboy looking to start my barbecue business.

Okay, okay, Jack, and his name's Jack. Jackboy. All right. Jackboy says he is going to start a barbecue place. Man, I had some great barbecue last night, I'll tell you. So Jack, you're speaking to me. All right, Jack says, how do you figure out not the break even. Jack says, what are my startup costs going to be? Now the difference between startup, fixed and variable, they're three different things. So let me use the example of the churro shot. See, I've got, here's the difference. I've got to go put in equipment, tables, chairs, decorations, a sign. I got to get this piece of equipment that if I feed this batter into, it's going to spit out a churro. Might have a drink machine. I might have just the equipment. That's a startup cost. How many? And you may even have the down payment for your rent, maybe first and last month. So you're go through Jackboy and you're going to say, I'm opening up a barbecue place. Maybe it's going to be a truck, maybe it's going to be a van. Maybe it's going to be a little shop down the street. If it's going to be a van, how much is it to cost the van to equip it with a deep fryer and an oven, and I'm going to pull barbecue pit behind me and smoke my meat all night long, whatever it is. What does the equipment cost you to open the churro shop? That is your startup cost. Write it down and go, I got to come up with that money. And maybe you partner with someone. You go find someone, say, hey, if you'll put in that money, I'll go 50, 50 with you. I'll work my butt off. We'll get this going and you get every dollar of profit until you're paid back. And then we split profit 50, 50. Or maybe you come in and say, hey, I get a salary and this and that. So you're going to have your startup cost. Then you're going to say, what are my monthly costs to run this place even before I sell one piece of meat? Am I going to have rent employees? That is going to be your monthly fixed cost. Then your variable cost is how much does the meat cost to produce? I got to go down to Albertsons and buy this meat or to some butcher. Then I got to smoke it, I got to put seasoning on it. I got to have pates and napkins and paper plates and silverware. Those are going to be my variable costs. So I love your question, Jack. You're going to go through your startup cost to open, your fixed costs every month to stay open, and then what are your variable costs to sell your barbecue? Once you nail down these numbers guys, this will happen automatically. You'll be sitting at your kitchen table crunching these numbers, and you're going to go, wow, this is a great idea. Or you're going to go, wow, this is a freaking stupid idea. And that's why you're doing this. People on the kitchen table go pounding this out. Okay, we got Jeff. Those. He say.

About 3,000 with them already.

Okay, so Jethos says he's doing online marketing. He spent about two or three grand getting off the ground. He hasn't made any money yet. That's right. He hasn't sold one thing yet. So what Jethos is in, and people, you need to know this, he is in startup mode. He is in startup mode, where he is like thinking of a lemonade stand, you got to get all the things geared up before you sell that first cup of lemonade. You're going to buy cups, you're going to buy ice, you're going to build a sign, and you're going to be out there trying to get people to stop and buy a cup of lemonade. The minute you make your first sale, you're in business. So these are called startup costs on a tax return on your. I think there, it's fair to say that in my analysis of financials, you're going to say, that's my startup cost to open up this online business. The minute he makes his first sale, Jethro's, now you're in business, and you're going to say, okay, if I make sales, here's what the cost is to produce that. Here's how much time it's going to take. Is it worth my time? And you're going to start doing your analysis with your monthly costs, your variable costs, your time. Is it worth it? So you're going to do this analysis in here before you open the door. So then Jetho says, do I open an LLC? It depends on the type of business. I think nine times out of 10, if you're going to go to the point of investing $3,000, you're going to make this work. You're invested in it. Start your llc. But Jethos, I might just call it JB Enterprise. Make it a generic name. It may not be digital marketing. Next week it might be drywall. The next week it might be chocolate chip cookies. I don't know what. Have a business name for your LLC that's generic so that you can start testing your ideas. Small business owners don't fail. Small business owners are flexible. They're going to change their idea, they're going to change the business plan, because they're going to know I can start making money if I just tweak this a little. I get sick of those statements like, oh, three out of five business owners fail in the first two years. No, my business owners just changed the idea. Didn't mean they fail. Means they're flexible, they're agile. So, Jethros, I would set up a generic name for your llc. Set up the LLC in the state where you live. Open a bank account, start working on corporate credit, get your credit rating going, start looking at your funding, maybe a partnership. Get this thing rocking. All right, what do we got, James? One more question, then I'm getting back

to my financial at what point should you incorporate? Should I create one upfront and then just adjust as needed?

Okay. James says, when should I incorporate? Now Jethos, this is important. This is right along this question. So Jethos says, mark, I'm getting started. I haven't made any money yet. I've invested three grand into my business. Open the llc, James, open the llc. I would not call that incorporated. I would call that establishing your llc. When do we go to an S corp and really change this into an S corporation? We do that when we're netting around 30,000 a year. That's when it makes sense. Now let's back up. I want to blow everybody's mind here. This is how we do this. You're going to love this. This is Mark Kohler 101. If I'm going to go out and buy rental property, it's an llc. There are my rentals. But if you're going to go out and start an operational business, you're going to either start out as a sole proprietor, which right now that's what Jessos is. J those I apologize. Couldn't say your name. So you're a sole proprietorship starting to online market. Then you could set up an LLC and graduate to an llc. But at some point some people just go straight to it. You're going to do an S corporation. Now let me tell you why. If you make, let's say you bring in 75 grand in your small business, you spend 25 grand on expenses and you net 50 grand, you're going to pay self employment tax right out the front gate. That's going to be point one five three. That is going to be 7,500 bucks right out of the gate. Then you pay state and federal tax. So a small business owner, Jethos, it is an llc. You don't want to stay here too long. But if you're only making 10 to 20 grand, I don't have many options. But once you're netting at least 40, maybe 30 grand, we're going to pop over to an S corp. Now here's why I make the same 75, I spend the same 25 and I net 50. Apples to apples. Now check this out. There's no self employment tax, there's no corporate tax and there's no Obamacare. See what I'm saying? This is awesome. So we're going to rock it. Three. We avoid all three of these taxes. But what I have to take is a salary. So I take a salary of 25. I take my pass through is 25. So you still made 50 grand. I just split it. I split it between payroll and K1. Now I only pay FICA, that self employment tax, the F word. I only play it on the 25. So instead of paying 7,500, I'm only paying 3,250. Just saved three grand, graduating to the S Corp. So people, in summary, start out as an llc. Start out as a sole prop. Get your business plan, then start running your numbers, start testing your product, Use a generic name for your entity. Get out there, see how it's going. Then as you start to make money, we can always backdate it as to an S corporation when the time is right. We only charge 125 bucks to convert it over to an S Corp when you're ready to roll. Now this, by the way, I'm going to say this. In my tax and legal playbook, I have a whole chapter on sole proprietors. I have a whole chapter on llc, a whole chapter on S Corps. Hiring your spouse, hiring your kids. How do I write off my car? How do I write off my home office babies? This is your handbook. It is called the playbook for a reason. You need this. So I'm going to give it away to anybody that shares this and is in the drawing in the morning with Rosalie. Okay? Now before we go on, I want to get back to my financial plan. I've got my startup cost. Look at this, everybody. Startup costs. I'm going to calculate my variable in this piece. You have to do your sales projection. That was a mouthful. Sales projection. You're going to look at what are my costs, fixed variable and startup, and what are my sales projection. And guys, I'm not kidding you. One of the best ways to find out what your sales projection is going to be is analyze your competition. Get out there, play Magnum, PI, Starsky and Hutch, whatever you want to call it. Sit in the car, watch your competition and see how many sales they're making. Are you going to be able to improve on that? What are you going. How are you going to differentiate yourself? Guys, we're only on step two. I got eight steps here. I'm going to hit these last, this third one real quick and then we're going to go on to Q and A for the rest of the time here. Now, on my third step, what I want to hit here, and I wrote down some numbers on this, is I want to do the most masterful piece that I've changed my life is you want. This is step three. You want to start and maintain. You guys this is so awesome. Start and maintain a strategic plan. I call it the Strat plan. This is your strategic plan. It starts. There's three steps here. I want you to do your 10 year vision. What do you expect from your, what do you want to see financially? I won't even talk about your family, your health, your marriage, your plans to run a marathon. Yeah, you worry about that outside the box here. What I want to ask you is where do you see your finances in 10 years? What type of business do you own? What does your cash flow look like? What is your 10 year vision? Taking away the restraints of time, finances and really resources, education. What could you realistically do in 10 years? Write that down. Go to your favorite spot in the mountain, each the park down the street and write it down. Guys, when I wrote down my 10 year vision, it was about three to four years ago. It took me two months to write down what do I really see? Then you're going to share it with your significant other. And I shared it with my wife and I'm like, hey, look at my 10 year vision. She's like, any of my 10 year vision. I, I was like, what? That's not your 10 year vision. And we got started another two month debate and we came together because we wanted to work together. But you're share your 10 year vision with the people that you love and you're going to tell them, here's what I want to do in 10 years. If they're not on the same page with you, there's got to be a change. You got to figure that out. That's called your 10 year vision. Then you're going to work backwards. If you want to have ten rentals in ten years, you're going to say if I want ten rentals in ten years, I better have five of them in five years. And if I want to have five rentals in five years, I better have three in the next three years. And if I'm going to have ten rentals in ten yearsS, I better have one this year. You're going to start working backwards to make a plan. Now step one is your 10 year vision. You're going to work back into your year plan because I want to know where do you want to be in 10 years? And we're going to work in reverse and say what do you got to do this year realistically to get where you want to be in 10? That is your strap plan. And I'm going to break it down to a 3, 6 and 12 month task list. See guys, if you want to have a small business, you just don't say, I'm going to have a small business. You got to have a plan. What do I need to do in the next three months? What do I need to do in the next week? What do I have to do tomorrow? If you don't put pen to paper and lay out your plan, you're going nowhere. You got to write this down. And it's just not something you throw into Siri on a note. This is something you carry with you. This is your life. And then you're going to work backwards and come up with your plan for the year. Then finally, this is step three. And this is guys, something I believe in. And I myself. Who are the three to five people you love in your life that will give you a straight answer and not tear you down? That's your board of advisors or board of directors. So if you downlook it, for all of you that are geeked out on LLCs and S Corps, this is really easy. When you go to start your business, you're going to have your S corp eventually and you're going to have your LLCs, and you might have multiple LLCs. You're going to have a board of directors for your corporation and you're going to have a board of advisors for your llc. All right, this is three to five people. And guess what you're going to talk about in your first meeting. Your ten year plan. You're going to share it with them. You're going to ask them for advice, and you're going to share it. Because when you share it, it comes alive and it becomes real and people hold you accountable. Boom, There you go. People say, that's my first three steps or phases of having a small business get started. Rewatch this video, write it down. I've got all sorts of YouTube videos and books that can help you get there. Now I want to do Q and A. I'm here for you, Eddie. What do we got?

Eddie says, guys, my IRA own part of my LLC so I can put profits in my IRA as games, not pay taxes on those games.

Eddie, I freaking love it. You know what? I'm gonna have fun with this because we were talking about this last week with my son who was here when we were talking about his last little real estate project. He has worked out a plan where he can have an LLC where he's like 20% and he's got a partner. He put in a lot of the money for this real estate project. Oh, but did he put in the money. No, it is not a person. It is an IRA. So you can take your IRA, your 401k, your SEP, your HSA and you can start a business with a retirement account. Now what I like to do with this is you can do multiple things. You can say, hey, on my investment side, I can do rentals, can buy cryptocurrency, I can buy gold, silver, I can buy racehorses, super bowl tickets and resell them next year. You can form an LLC owned by your IRA, your HSA, your 401K, any of these types of retirement plans and self direct it. I've got a whole chapter in my book on self directing. You just YouTube Kohler self direct. Boom. Start watching some of those videos and you see what you can do with your retirement account. Next question. Isaac, No, this is great. Eddie says, mark, I already have. This is good. This is good. Isaac. He says, mark, I've got my S corp. I'm like, all right, we'll call this Eddie Inc. So Eddie has his S corp and that's cool. S Corp. And he goes, but I haven't figured out what my what is. I haven't figured out what my business plan is. I don't know what I'm going to sell. Is that going to hurt his corporation? No, not at all. Is he got the cart a little bit before the horse? Sure. But Eddie, it's done. You've spent the money to set it up. That's cool. You got a bank account. You're going to have to maintain this thing. You have to file a tax return every year. You have to pay a filing to the state to keep this S corporation active. So keep your S corp active. Then when you start to launch your small business, boom, throw it in your S corp. Bud. I love it. The carts before the horse. But let's not throw out the baby with the bathwater. Let's not get rid of this thing. Keep it. It's great. It's ready to go. And if you're not going to start a business in the next year, maybe let's get rid of it. Kris, what do we got?

Chris wants to know, can I direct deposit my W2 income into my business?

No. Kris says he'd like to deposit his W2 into his business and then write off business expenses. Oh, Kris, if we could only wish it so. No, you cannot take your day job and turn it into business income and get a write off for your car. Your W2 is kind of like stuck. That's something you're going to have to claim and pay taxes on. And you withholdings to cover that. That's what your employer, Premiere W2. But guys, I want you to have this whole other world. I want you to have this bipolar Whatever. It's Dr. Jekyll and Mr. Hyde. I want you to have this other life. That's your small business. So many people say, I want to save taxes. I need something to make more money. I want to have retirement. Well, that may not happen with your day job. So let's take this other life, this other side of you, and let's make money at it. What are you passionate about? What do you love to do? Let's make money at it. Now I can write off your cell phone. Now I can write off your auto and your travel. That, my friends, is your small business on the side. This other side of you.

Okay, Kathy, what are some low cost options that you suggest for startup marketing and advertising your business?

Oh, Kathy. Ooh, I love this because I love marketing. Kathy says, what are some low cost ways to get going on your business? All right, let's have fun with this. I don't know what Kathy's business is, so I'm going to keep this very generic. Kathy, in today's day and age, the first thing you've got to start with, you've got to have a website. You know, I'm even going to do that. I want to have a name. What is this name that you're going to brand? Because as you start to go marketing, you got to have something you believe in. It could be again, you could have an LLC that's a generic name like Eddie Inc. But then you can set up what's called DBAs or URLs, a different website. So you can have multiple businesses going into 1s corp. I only have 1s corp in my life, Mark Kohler Inc. And I got multiple businesses going into it. So the first thing is, is I find a catchy name. I like to brand. You got to brand this. What are your colors going to be? What is your logo going to be? And make sure that it pops because you want to be able to sell this bad boy number four. I got, you know, I was going there. You got to have a website, even if it's just a landing page. Because the first thing people do today, hey, you got a small business, what's the name of it? They look on their phone. It should be redundant, meaning that it's just as cool looking on your phone as it is on a laptop or a desktop. So make sure that Your website's up and going number five for marketing. I'm going to deal with it. I'm going to throw out social media. You got to get it out there. You're going to have to choose the core social media you like. I do the big four. I do Instagram, Facebook, LinkedIn, and Twitter. Those are my big four. Some of you are going to have more of a good time with maybe Snapchat or what's some other ones. What am I missing, ladies? I am doing Instagram. I'm there. I'm a teenager at heart. Okay, we're good. Get your social media going. And then number six is you want to come up with a referral network. I think one of the best things you can do is find other people that are going to refer to you. A referral network. It was really funny. I had this client. What was he selling? Maybe his best. I don't remember. But he figured out the best referral network was hair salons. Ladies would sit in the chair, get their hair done for 4 freaking hours, and spend $200 or more. Makes no sense at all. Anyway, these ladies would be sitting in the chair forever at the hair salon, talking about their business, you know, life and their crappy husband and all these things, right? And so they're in this hair salon. And he said if I could get my hair salon ladies to recommend my business, it was my best referral source. So he started to go to these hair salons and give away freebies and money and all this stuff. You need to find out who is most likely to refer customers to your business. Start building some referral network, an affiliate program. Anyway, there's six. Those are fun. I've got here. Oh, you would love this. I'm just going to say this in my marketing section here of my book. I have 72. Let's see what it is. 72 different marketing ideas, from social media to standard media to events to technologies to print and signage to networking. And you can go through and say, am I going to do this in the next three, six, or nine months? So I'd really recommend you get over there. Kathy. Rami, one last question. Should we do it or 1, 2. We'll do two more questions. Rami, what do we got?

How does she report them in tax?

Okay, Rami says she's got one S Corp. This is very similar to me. Rami, she's got one S Corp. And this is Rami here. And she's doing her payroll and she's doing her K1. We're writing off all these wonderful expenses. She has a board of directors here to share her plans with. Right? Isn't this sweet? She's got a tax ID number, she's got a bank account, and she's doing her QuickBooks. Right? This is what we're. This is what we dream about, right? This is what small business owners do. She's got three llc. Let's see. What is Rami doing? Let's say Rami has a food truck and she's doing sprinkler systems. And what else is Rami doing? Let's think. And Remy is doing drywall. Okay, so Rami, she is very, very industrious with her hands. These might look like three guy things that, you know, all here, but who knows? I'm just being dumb. Okay, she's got three different LLCs owned by her S Corp. Is there a problem with that? No, it's great. She's got asset protection between each operation. So if one person's putting up drywall and gets hurt, they can't touch her food operation, vice versa. So you've got three different businesses all funneling into one S Corp. That's a beauty. It's called a consolidated tax return. This is going to be an 1120s tax return. She's going to do one payroll for herself, write off expenses that relate to all three businesses. She might have partners over here. She might have different websites over here. So these are three different businesses, but all funneling into one consolidated entity. Very efficient. That's what I do. Rami. I like where your head is. Any last questions? Okay, Ravi.

Yes. How many checking accounts do most small businesses have? And do you fund help with any?

Okay, well, Ravi, she threw me a softball. She said, how many checkbooks should you have? And does our company help with this? Well, let's do checkbooks. Let's use Rami, who was our last example, looks like her business. How many checkbooks should she have? Well, you always want to have a checkbook for every entity you set up. So we've got, you know, and you need to have a personal checkbook. So let's do personal checkbook is number one, because I want you to pay for groceries, underwear, your car payment, your house payment, your rent is got to come out of your personal checkbook. You always, always have a personal checkbook. Then you're going to have a checkbook for your main corporate entity. Number two, then you're going to have a checkbook for each entity. 3, 4, 5. So you're going to have checklists. Now, guys, you may already Be freaking out. Now. Hang with me. Some of you may be saying, mark, why am I going to have five freaking checkbooks? Guys, do you have one big bucket in your bedroom? And you put your underwear and your shirts and your pants and your shoes all in this big bucket? And when you come home, it's a nightmare. That's what you do when you have one checkbook for all your businesses and your personal life. You're screwing up your organization. So many people come to me and go, mark, I can't have five checkbooks. That's just too crazy, guys. That's like having five Chester drawers in your. In your bedroom. You want to separate your socks and your underwear and your jeans and your shirts. That's what helps you be efficient. Get dressed quicker in the morning and keep your clothes clean and organized. That's the same way with your books. I want you to have five checkbooks in this example because I want to keep your personal separate from your main business. I. I want to keep your drywall business separate from your food business. Now you can have a QuickBooks file for each one of these. One desktop QuickBooks allows you to have five different bank accounts, five different checkbooks, five different sets of books. Now you may even have a checkbook for your spouse. You might. This would be number six. You might have a checkbook for savings for just emergencies. You might have a checkbook for taxes that you're setting aside for your deposits. So that's seven, that's eight. And then each one of my kids have a checkbook. That's 9, 10, 11, 12. Then any other little small businesses? Oh, you've got rental properties. There's another checkbook. Okay. So, you know, I go on my Wells Fargo app. I've got like 25 checkbooks, but it's okay. Each checkbook is a different drawer in my closet for a different type of clothing. Stay organized with your checkbooks. It's not too big a deal. Now we have a law firm, we have an accounting firm. We help clients all over the country. This is not a sales pitch video. This is here to help you. I love Entrepreneur magazine. I love what my team's doing over there. And it's just Ryan Shea, the CEO, does such a great job of getting excellent information out there. Continue to get to your Entrepreneur website, the Entrepreneur social media post. Read the articles. They're so, so helpful. But if you need a lawyer, if. If you need an accountant, we're here. We help clients all over the country, and probably your best bet is just get to my website. Because you can go to any of the other websites from mine. So go to ww.markjkohler.com there you can sign up for my newsletter. It's free every week. I've got videos and blog posts that are free every week to help you in your tax and legal area. Please subscribe. If you're on YouTube, subscribe. Get over there. Click the bell. So every time I do a new video, get a ping and please finally give it a like give it a share. And Rosalie in the Morning is going to let you know who the winner of these books are and I'll send them out. And finally I have a business owner's workshop in five different locations this fall. Chicago, Philadelphia, Orange County, Seattle and Honolulu. I know I go to Honolulu. It's a pain. I don't really want to go. I do it for you. So you can get a tax write off. Go to Honolulu now. You might my Hawaiian clients, you know I'm just joking around because I love to get over there. We're going to surf the North Shore in November, baby. Now we also have our self directed IRA summit in Chicago and also in Hawaii. We're doing Chicago in June and Honolulu in August. Tax write off to come visit. We talk about how to self direct your IRA, your 401k, your SEP, your SIMPLE, your HSA, your Coverdell. And we bring it all together with a Luau in Chicago and Portello's. Sorry, did I say Luau in Chicago? Luau in Honolulu and Portello's in Chicago. There we go. So anyway, check those out. They're all on my site. You can sign up anytime you want. I appreciate you. I'll be here next week for another Facebook Live and YouTube Live. And if you've got a topic you want me to cover, mention it down below. Rosalie will take a note and let's do it. I'm here for you. Thanks everybody.