Mark Kohler shows how an LLC taxed as an S-corporation paired with a solo 401(k) cuts taxes for small-business owners. You take a reasonable W-2 salary and pass remaining profits through on a K-1, then contribute up to $30,000 yearly to a self-directed 401(k) that can hold crypto, real estate, private notes, and other assets.
Chapters
It's easier to save money than make money, trust me. So let's look at our trifecta over on the left side. We're now going to have an S corporation. It again, be a little LLC taxed as an S corp. The sales from your business are going to come in, your expenses are going to go out, you're going to take a W2 and you're going to get the K1. That's your profit and we're saving taxes and that profit that you're making and those taxes you're saving. We're going to fund a solo 401k. You can have as many 401ks as you want, but we need to fund them. And this year it could be as high as $30,000. Go deferred and come out of your W2 saving you more in taxes and fund your solo 401k. And then the company can match that contribution up to a certain amount. So this deferral in combination with your match starts to build a bucket of wealth. What entrepreneurs start to build and grow on the side and notice what you're doing is you're diversifying. You've got wealth you're building over here with the operations of your business and you're building a bucket of wealth with your 401k. And you can invest in what you know best. You can invest it in crypto, you could invest it in real estate, you could invest it in notes or even buy your stocks, bonds and mutual funds. So this 401k, you get to be the trustee of this. And now you've taken the savings that you're generating here and you're plowing it into additional deductions and write offs and tax deferred growth inside solo 401k.
