What to Know About LLCs with Mark J Kohler CPA, Attorney

Hey, welcome, everybody, to this week's Facebook Live. And we're talking about LLC is limited liability companies. That's not limited liability corporations. Now, I know some of you're like, I know everything I need to know about LLCs. I went to LegalZoom and set it up. Or LLCs are easy. Whoa, whoa, whoa. At our law firm, we're helping clients around the country. We get calls all the time. Hey, I set up my llc. That was the last thing they were supposed to do. LLCs are good, but they can be misused or screwed up really quickly. Now, I'm not saying you got to hire a lawyer every time you want to set up an LLC. But this right here, YouTube, Facebook Live. I'm going to break it down. I want to field your questions. You're going to love this. There's three main areas we use LLCs and where we don't. I'm going to throw that out as well. Now, also, I'm going to give away right here, some books. I'm going to give away a book today for everybody that shares this broadcast on their social media. And we're going to raffle them off right here live. I'm going to announce the winner today. So this is the tax and legal playbook, game changing solutions for your small business questions. And I have a whole chapter on LLCs. You're going to love it. And also, I'm giving away my eight steps to start or grow your business. A workbook. 99 bucks on Amazon. So seriously legit. And it is awesome. It's got like 60 videos, podcast, webinars. It's a workbook where you actually build your business plan or a marketing plan and scrap plan for your current business. Now, last week, it was Wendy Bullock that won the book and taxon Lee. Oh, that was Gilberto Padua that won this book and Wendy Bullock eight steps. So that was last week's winners. And I'm going to announce today's winners as we give it away. And I want to give a big shout out to Entrepreneur magazine. I'm on live on Facebook Entrepreneur, my own Facebook and on YouTube live on my own channel. Thanks for watching. Throw down your questions below. I'm all yours. This is free info, strategy, support, and help on you as a small business owner, how to use an llc. I'm a CPA and attorney and I love this topic. I love entrepreneurship. So let's get into it now. Here we are on the whiteboard and I've got my diet Mountain Dew. Mmm. It's a good year, I think it's this year. People drink it too fast. All right, now do an llc. Now, I'm going to get them out here, and then we're going to tear through paper. As I answer your questions, type them down below. Whenever a client calls me from around the country, our lawyers and our CPAs in our office, they call up and they go, hey, I need an entity. And I go, really? Like, talk about your business? Well, I thought I had to have an LLC to have a business. No, an LLC is a shell that goes around your business. So my first question is, what kind of business are you running? Are you running operations? Are you selling a product online? Are you doing a service? Are you mowing lawns? Are you selling on ebay? Craigslist? Are you an Internet marketer? MLM. What if it is operational? You're getting 1099 and you're selling a product or a service. We're going to be over here. This is operations. If you're holding assets. Now, I know some of you have watched my Facebook lives before my new life. Be patient, as you've heard me do this before. But if you're doing operations, you're on this side. If you're holding assets, you're over on this side. So think rental property, holding, cryptocurrency investments, raw land, a farm, second home, vrbo, Airbnb assets here. We're going to have operations over here. So what I want to do is talk about the first place I use llc. The first place we use it is when a client graduates from a sole proprietorship into an llc. Now, that's option one. And when they go to this LLC looking for asset protection, they want to say, hey, I'm selling tacos in a food truck. I'm running a lawnmower with a landscaping business. I'm an electrician. I'm a plumber. I'm selling online. And I'm worried about getting sued. And if you're worried about getting sued, you might have a sole proprietorship transitioning to an LLC to get protection. Now, here's an important point. This is so important. Llc, do not say taxes. They don't. Now, let that sink in. LLC is limited liability. Companies do not save taxes. Here's why. Now, this is where this LLC starts to get tricky. Because some people set up an LLC and then they get screwed in taxes and they go, what happened? Here's what happened. Let's say you bring in 100 grand in your business, you spend 25 on expenses, and you net 75. You're going to pay Employment tax right out of the gate, that's 10 grand. Now I know watch my videos before, so hang tight. If I'm going to pay ten grand in taxes, then I'm going to pay state and then I'm going to pay federal. I'm going to get dinged three times. All right, that's cool. We all that. Well, when you set up an LLC, the same thing happens. You're going to pay the 15%, you're going to pay the 10 grand. The state and the federal. The LLC does not save taxes and it protected you. You're not going to get into a personal judgment as long as you weren't negligent or fraudulent or crazy. So you're protected. That's what the LLC gave you. But it saved you no taxes. Now this is, I'm still on option one for LLCs. So what we do, why we love this LLC is you went from sole proprietor to llc, but now I can convert you to an S Corp. 120 bucks. That's what we charge at our law firm. Very easy. So you take the LLC and I convert it to an S corp. It's informed and during the year I can do it. I can retroactively backdate an LLC anytime during the year. So if you set up an LLC now in the month of April and then down in November, you're making a ton of money. I can back your LLC to an S corp. And you say, well Mark, why do I want to be an S corp? Here's why. When you make that same 75 grand, I can split the income. Just using a basic example, I might take 25 grand as a W2 and 50 grand as a K1 or pass through. Now I get the 20% pass through deduction. I take a W2 for 25 grand. So my FICA, no FICA, no FICA on the 50,000. That's the self employment tax. No F word. I don't want the FICA. So 15% on this. I just saved $7,500. That's why you do an S corp. You're going to spend ten grand on an LLC. You're going to spend 2,500 on an S corp, you're going to save that much in tax people. That's why we do this. Well, you say, well Mark, now this is, this is the deep trick. Some people say, well Mark, why don't I just set up an S corp right out of the bat? I don't know how much money you're going to make, so I don't know if I want to set up an S corp and then you don't make the money, but you got to file an S corp return and some of those things. And so what I do is the LLC now, so I have the flexibility to backdate it into an S corp later. So that's where I want to be. And that's my first choice for an llc. Now let me get the second and third choice out there and then I'm going to fill some questions here. So the first, next place I use LLCs to hold rental property, boom. I get asset protection. There's no self employment tax on a rental property anyway, so who cares? I can put in the rbo, I can put in an Airbnb, I can do the rental, a duplex, apartment building, storage units, mobile homes. I can put all those in different. We could talk about that too. But I use LLC's asset protection, not tax savings. Here I'm doing an LLC so I can backdate it into tax savings. See the difference? There's two different LLCs. And you say, well, Mark, why don't I have one LLC in the middle and I put my rentals over here and I run my online business here. Ooh. I do not want you to commingle liability and commingle two different types of income. I want you to split it up. You don't put the LLC in all that operation in the same llc. Now I'm going to hold off on the third one. I'm going to. Let's take some questions here. Let's see where we're going. And I'm going to again, don't forget, if you're just joining me, I'm going to raffle off both of these books and give them away and sign them and ship them free to you here at the end of the broadcast. So I'm here for you. So type in your questions below. Now we're going to try out our microphone here. We're going to see if you can hear Mallory. If not, I'm going to repeat the question. What do we got?

How do you get a board of advisors? Do they need. Do you need to know them as your advisors and do they get paid?

Okay, so Norman asks, do I need a board of advisors with an llc, Technically you don't have to have them, but I highly recommend it. It's going to give you better asset protection, better decision making, and it's going to help you grow your business. So here's what you do. You set up, let's get a new Piece of paper here. So when you set up your new llc, you're going to set up your llc. Now, it could be for operations or it could be for a rental property, right? So you've got two different llc. You can have a board of advisors. So you set up this board of two. Three people. I have three people on mine over here. I've got three people over here. You can use the same board of advisors for both, or you can have two different ones, but you'd have minutes meeting in your book of your llc, and you say, I hereby call my board of advisors. Here's who they are. You share your plans, you talk about your business, and you get their advice and help. That's what a board of advisors do, and you don't have to disclose it publicly. And it's simple and easy to do. And I want to share. On a personal note, I kind of had a feeling this last week, it's actually been for about two weeks, that I need to ask this guy in my town to be on my board of advisors. And I was like, I don't want to bug this guy. He's like. He's like 65 years old, used to be an attorney, is very successful. He's got a plane and blah, blah. You got all these cool things, and. But he's. I really like his style, and he's a smart guy, and I kind of know him. He knows who I am. I felt I should ask him to be on my board. I was like, nah. I put it off for a week, and I kept getting this feeling, you got to go talk to him. So Saturday, just this last. I do this, guys. I'm just like you. I'm an entrepreneur trying to make it happen. So this last Saturday, I called him up during the day, and I said, hey, can we meet for 10 minutes? He's like, I'm busy today, but I'll catch you Monday. I'm like, all right. So this Monday, just three days ago. This is just three days ago. I met him out, and I met him in his place, and I. I asked him, hey, I need a board. I'm trying to be smarter in my business. Would you be on my board of advisors? He was totally honored. He's like, mark, I would love to. And I think I'm blessing his life, he's blessing mine. And, hey, we all need people to bounce our ideas off of. So when you set up your llc, you want to put together your board. When we set up an LLC for clients around the country, we include it we have our DIY, cheap down and dirty $400 LLC in any state. We do it for 800 bucks. And you talk to a real tax attorney. You talk to Devin or Christie or Jerem or Lee or Kevin, and one of these attorneys is going to get on the phone and make a plan for the year. It's affordable, it's simple. And once a year you circle back and see how it's going. Anyway, it's not the end of the world. It's cheap, simple and affordable. Okay, who we got here? Carly?

Okay. Pablo asks, should I create a rental, An LLC for rental real estate?

Pablo says, an LLC for rentals, Pablo, I love it. And some people say, well, when should I do it? When I have three rentals or five? Pablo, you buy one rental, you want protection. You don't want someone garnishing your wages, suing you. Some kids licking the wall because there's mold on the wall, there's asbestos flying off the ceiling, the rain gutters are going to fall down and decapitate someone. I don't know. Once you buy a rental, you put it in your llc. Now, I know some of you are going, well, I closed in the loan in my name and if I transfer the title, the bank is going to call the mortgage due and it's going to be, no, no. In 20 years of transferring thousands of rental properties around the country, Mallory, right here that's taking some questions. She's helping out in the studio today. She's a paralegal that helps people transfer their rentals into their LLC in any county in the country, 3500 different counties around the country. She can help you out and you can call right now. Malloryqslawyers.com Sorry, Mallory, I'm selling you out here. Okay, so she's doing deeds for this. Do we get the due on sale clause called by banks? No. Once you close on your rental, deed it into your llc. Make sure the LLC is on the lease agreement, the LLC is on title, the LLC pays the mortgage, and there's not going to be any problem with the bank debt. Go in and ask permission and freak out the banker. Remember, they're from Mars, we're from Venus. They have no idea what the hell you're doing. Just transfer title and it's going to be fine. Worst case scenario, transfer back. It's not the end of the world. I've talked to so many banking attorneys that are like, we don't care. We've only already sold your mortgage five times out on the Wall street market. So pay your mortgage, transfer to your LLC and get protection Pablo, as soon as possible. Alright, next question.

Josh, what's your opinion on Wyoming LLC as a parent llc? Should I get a registered agent? Okay.

Wow, Josh. Anything else? World peace. Now, if some of you heard that Josh said, what should I do about a Wyoming llc? Is that a good idea? Now this is deep. You ready? Guys, I'm going to another level. This is probably number four. I said there was three reasons for LLCs. I'm going to throw out a number four. I haven't even got to number three. So we're going to hop, skip to number four. So let's say you have an LLC for your operations, blah, blah, blah. We already talked about that. You're going to convert it to an S corp when the time is right. Done. And Pablo's over here and Pablo's like, hey, I got my LLC and I got a rental property. Well, Josh says, well mark, I got 10 rental properties, they're worth $1 million. I got these 10 rental properties and I got like three LLC. And he's like, man, I don't want to get sued if I've got all these rental properties. Now this is, I don't set up a Wyoming LLC for my brand new clients, Josh. This is where I use them. So for some of you that have a lot of assets, I once had an NHL hockey player that had just retired and he was chasing fast women, driving fast cars and we had to protect his million dollars. That's where we use a Wyoming llc. So Josh, we want to protect those rentals from you texting and driving. That's where Wyoming LLC is. Come in. See, normally Pablo, we set up an LLC to protect Pablo from his rental. Now what Josh is really asking is I want to protect the rentals from me being an idiot. That's where the COPE, or Charging Protection Entity comes into play. There's about 15 states and I've got a table here in the back of my book. There's a table in the back as to which LLCs work and how they work in which state. Wyoming is one of our top three states. We love them. Utah's good. Wyoming and Nevada, not bad. Cheaper and easier. In Wyoming, people. He even threw out registered agent. We'll get there in a minute. But what we do, and I have a chapter in on advanced Asset Protection, we put the Wyoming LLC right here. This is where the Wyoming LLC comes into play. It owns your other LLC. So Pablo, when you get five or 10 rentals, you're going to set up a Wyoming LLC like Josh, and we're going to have it own all your other LLCs. Now, I've doubled down on protection. I've got asset protection three ways till Sunday. That's why we do it. But I don't do it for my brand new investors. Now, how much do I charge? Thousands of dollars? Like some cheapskate attorney in Nevada? Hell no. We charge the same price that we're going to charge Pablo to set up his LLC. I'll set up a Wyoming LLC for 800 bucks. You can talk to Christy Parker office and she's going to talk to you about why we're doing this and why you're going to have an LLC and explain to you how you're going to maintain it. You get an hour with a real tax lawyer, you get your LLC set up, you're off to the races. Boom. So that's why we use Wyoming LLC is for better advanced protection. Now, one last thing, and I've got Debbie, Debbie, I'm coming to your question here in two seconds. Josh said, should I have a registered agent? I just got chills because I love this topic so much. I'm a geek. I'm such a freaking geek. We now have to move to the topic of privacy. And that's really what Josh is talking about. Think of a bulletproof vest. Camouflage. They provide two different purposes, right? Well, that's where privacy comes in. So, Josh, when I set up your Wyoming llc, I probably will do mail forwarding. Registered agent. Your name's not going to show up anywhere. Not even your address. So now what I've done, Pablo, is I've taken Josh's LLC to another level. Not only are we getting double asset protection, you can't even find them. I have a whole chapter in my book on privacy planning. I just interviewed on my podcast JJ Luna, last month. If you want a podcast that rocks, get over to refresh your wealth. Just get onto Stitcher if you're an Android user, or itunes if you're Apple. I've got a podcast. Every week I interviewed the father of privacy protection in America. His name is JJ Luna. He's on his third edition of the book how to Disappear. Josh, you would freaking love it. So anyway, how much do we charge? 125 bucks to be a registered agent in any state. We have mail forwarding for $200. Virtual mailbox where we scan all your mail. You can look at your mail online. Done. We do it up to three companies. $200 total for three companies. Mail forwarding will hide Your butt, Josh. So you're not in trouble. All right, what do we got, Debbie? Whoo.

What do you do if you want to be taxed as an S corp but have been paying the member guaranteed payments?

Wow. Okay. Debbie asks, we'll use this diagram. So Debbie's got maybe her rentals over here. This is Josh and Pablo. They're over here. Debbie's over here going, I got an llc. I'd love to ask Debbie what kind of business she is. So she's a woman. So I'm going to be a total male chauvinist and tell assume that she might have a bakery. Is that really bad? I mean, she could be an electrician, but I don't know. I'm going to say bakery because two doors down from right here there is the cutest little bakery shop with sugar cookies. And I'm taking the whole team over there for a sugar cookie after this. Shoot. It's the cutest little business. So anyway, let's assume Debbie has a bakery and Debbie is worried about people walking in and slipping on frosting and breaking their leg. So she's got an llc. She's got protection. But is Debbie really saving taxes? No, she's got protection for her little bakery, but she's not saving any taxes. So what? Debbie's done. And I'm sorry, Debbie, I had a phone call earlier this week just like this. So I'm going to be blunt. Debbie's got a bad cpa. I'm not kidding. It is an IRS rule that if you take a guaranteed payment out of an llc, it does not save you taxes. You still pay self employment tax on the entire income in an LLC when you're the owner. In fact, it is IRS ruling that you cannot take a W2 out of an LLC of which you own. It doesn't work. It doesn't work. Debbie, get a second opinion. Your accountant is being a dumb. You know what? So here's what Debbie may be doing. Let's say Debbie's making 100 grand. She's making 100 grand with her little bakery. Well, she does a guaranteed payment of 40 grand and she takes pass through a 60 and her accountant has told her, oh, you don't pay self employment tax on this 60 grand because you did a guaranteed payment wrong. Debbie, if you get audited, I would sue your accountant. I've done it before, gone after other accountants for jacking this up. So what you do, and if you accountants are watching this, do your research, I'm not kidding. I'll back this up. In my book site, I teach CE courses on this. What you have to do is simply convert this to an S corp and issue yourself a W2. You're done. That's the get out of jail free card. You're done. So it's not the end of the world, Debbie. You charge, you file one form. It's called a 2553. We charge 120, 125 bucks to do it for you. So you do it right and we backdate your LLC into an s Corp for 2019. Done. So get a new accountant, start a W2, do it right, make the S election, and now you'd never pay FICA the F word on this 60 grand ever again. You're good to go. Okay, we got Nicole on the line. What do you got, Nicole?

Nicole says, should I start an LLC if I'm a WT W2 government employee, but I have a 1099 Sidekick.

Okay? Nicole says she's got a job over here and she wants to start a bakery just like Debbie. But she's like, I got a day job, I work for the government and I get a 1099 over here because I do catering. Let's say she does catering and she gets a 1099 from some of these companies that use her for catering. I just had a client call me today. Literally one of my consults was a client that is doing app food delivery services, making eight grand a month just delivering food for a food app in the local area. Very popular. That's a 1099. That's going to be self employment income. And Nicole's going to get hurt over here. The real answer is, Nicole, how much Money is your W2 and how much is your 1099? The real answer is I would get on the phone with you, Christy, Devin Lee, any of the attorneys in my office. We get on the phone with you and say, how much is your W2? How much is your 1099? If you've got a bigger 1099 and a smaller W2, we're going to do an S corp right away. We're going to do an LLC taxed as an S Corp, knock out two W2s. So you're going to get a W2 from your small business and you're going to get a W2 from, from the government, you're going to get both. Now if in Nicole's situation, she's got a pretty nice W2, let's say 80 grand, 60 grand or more, and her 1099 is 20 grand, not going to do it. I'm not even going to worry about an llc. I'll keep her as a sole proprietor. Let's say she's just selling crap on ebay or Etsy. There's no liability exposure. Nicole, don't even set up an llc. Guys, here's the biggest takeaway. Nicole probably doesn't even need an llc, but she's going to get on some online application and go and set up an llc. She doesn't even need it or she's going to take this 1099. It gets screwed in the shorts on self employment tax because she needs to have an LLC taxed as an S corp. That's why. Guys, I just want to say if you don't like my style, you don't like my accounting firm or law firm. That's cool. Get someone. Don't go online and do the DIY and screw this up. Take a little time to get it and some advice from a professional that understands the legal and accounting and brings it together. That's why we've been growing so quickly around the country and why entrepreneur allows me to come on their show on their web channel, on Facebook and talk about this. Because it's legit. Anyway. Okay, few more questions. All right? Then we're going to go out for cookies and I got to announce my winners. Rosalie, so tell me who my winners are. Austin, what do we got?

Carly, I am currently running an SaaS Single Member LLC. At what ARR should I elect? S corp. Don't I have to pay myself salary?

Okay, so Austin uses all these cool initials. He says he's got a single member llc, an SM llc. And at what ARR do I convert to an S corp? Boy, Austin, you're pretty jazzy there. Okay, so here's what he's got. He's got an LLC, and it's a single member LLC, which means that he owns it 100%. So Austin is over here. This is little Austin. And I'll be a male chauvinist again and say Austin is a plumber. He's a plumber and he's got an llc. Single member. I'm just messing around, guys. I'm keeping it real. Okay, so Austin is here as a single member llc and he loves Debbie's Bakery. But anyway, so this is Austin, single member llc. And he asks, when should I convert it to an S corp? And then he said he threw in at the end. Does that mean I have to take a salary? Yes, when you convert to an S corp, bam, you got to take the salary. You got to do it. But it's okay because you're going to save thousands of dollars. Let's say. Let's say he's making 75 grand and he's paying self employment tax out the rear end. Now he's going to take 25 grand and 50 grand. We just saved 15%. We just saved 7,500 bucks. Boom right there. Let me see. Do a tax return, take salary, save 7,500. Boom. This is the way to go, folks. This is absolutely critical. Now the question was when to convert if he's not in California, because the S Corp and LLC cost a little more in California. Going to say if any of you watching are making 30 to $40,000 net. So if your gross is 50 grand or 60 grand and you're spending 10 to 20 on expenses and you're netting 30 to 40, make the s election. Now, Nicole, who's got the day job at the government, I want to see this a little higher maybe, depending on her W2 level. So there's a sweet spot, people. Okay, we got Dara.

All right, Dara, can you issue yourself a 1099 miscellaneous instead of a W2 in an S Corp?

No, Dara says, can I just give myself a 1099? I'll just 1099 myself. And forget the W2 because it's a pain in the butt. I don't want to do my quarterly 941s, guys. We charge 150 bucks quarter to. Do your W2s in any state around the country. Very affordable. And it's simple. It's not the end of the world. You don't have to take a paycheck every two weeks. Dora, I know you want to. Dara, you want to wait till the end of the year and just do a 1090. You can't do it. The IRS will audit you. Let me say this another way, people. Okay, listen, llc, you cannot take a guaranteed payment in an S Corp. You can't 1099 yourself. See the difference? You've got to do a W2 if you're an S corp. And you got to take it in the shorts if you're an llc. Those are the rules. So do it right and you can save thousands. Just play the game. Don't hate the player. Just hate the game. This is the rules, people. Live with it. Okay, Jerry, what do you got?

Jerry has asked a couple of times. He wants to meet in person, but he's in New York City. How can he do this? Mark, he needs help.

Jerry says I'm In New York City. Mark, you're out west. I want to meet face to face. Now, here's a couple thoughts, people. First of all, I've got five amazing attorneys that work for me, and this is not an infomercial. Ryan Shea, the CEO of Entrepreneur, said, mark, we want you on Facebook every week. But don't make it a cell a thon. I'm not. I'm here to give away some info, and I'm here to answer your questions. But if any of you want to work with me or any of my five attorneys, tax attorneys, very affordable. You get an hour with them when you set up your entity in any state. Jerry, we use webcams. They're pretty cool. You can still see me face to face. So give me a call. Any of my attorneys will webcam with you. Phone, FedEx, fax, email, all that good stuff. And I will say this. I am giving a workshop in Philadelphia in September. It's 200 bucks. I include lunch. I'm going to do Philly cheesesteak for lunch because I'm in frickin Philadelphia. So I do a Philadelphia workshop this fall for $200. You get a whole day with me and Jerry. Maybe we can go out to dinner for drinks. Give me a. You know, just get signed up. Also, everybody, I'm going to tell you, I'm going to be in Seattle, in Philadelphia, Honolulu. I know I got to go to Honolulu. It's a tough job. And Orange county and Chicago. I'm doing five locations this fall. 200 bucks. We're eating Portello's in Chicago, Philly cheesesteaks in Philadelphia. We're doing Mexican food in Orange county, and I'm doing a luau in Hawaii. So you got to come to one of those locations. I don't know what we're going to eat in Seattle yet. Some. Something good. Maybe salmon. I don't know. Okay, what do we got, Cynthia?

Should I do an S or LLC for a startup credit repair business?

Okay, Cynthia says, should I do an LLC or an S Corp for a credit restoration. Credit repair business? Okay, now let me ask all of you, help me out here. This is Cynthia. She walks into your office and says, I'm doing credit repair. That short term or long term. Is that ordinary or passive? Remember, passive is over here. Ordinary is over here. She's doing credit repair. Does that sound like services? It does to me. So we're going to be on this side of the equation. Well, Pablo has got a rental property. He's over here. Okay, fair enough. So we know we're on this side now. If Cynthia is going to make what was the break even? Austin asked, what's the break even? Around 30 or 40 grand. So I'm going to tell Cynthia, cynthia, how's it going? Are you making a lot of money? She goes, I'm just getting started this year. I'm going to kick some butt. All right, so she. What is Cynthia going to need in the long run? What does she need? People she's going to pay self employment tax if she doesn't get it. You're right. She is going to need an S corporation. But here's the problem. We don't know if Cynthia is going to make enough money by the end of the year to justify it. So what do we do? What do we do? We set up an LLC now. And then Cynthia calls me in November, goes, mark, Mark, I did it. I made 40 grand. I'll say, congratulations, Cynthia, and we backdate the LLC into an S corp. Done. But Cynthia, if you don't do the LLC now and you call me in November and go, mark, mark, I made 40 grand your SOL and I'm not talking statute of limitations, you're screwed. I cannot make you into an S corp in November if you weren't an LLC now, see, the LLC is like tax insurance. Oh, I know how to call that. Self employment tax insurance. I love it. Set up the LLC now, see how you do during the year, and then backdate it into an S corp. That was really cool. I got to write that down. Going to use that, Cynthia, in the future. So set up your L.L.C. now, Cynthia, get out and kick some butt. And Cynthia, if you don't win this, get my eight steps to start a small business. It comes with a business plan, marketing plan, and strap plan. Start building your business. 60 little videos and stuff. Because if you're starting this year, take baby steps. Don't kill yourself. The American dream is out there for the taking, but it's a process. It's not a get rich quick scheme. Do it and hopefully you win this book today. All right, And Rosalie, let's start getting our winners. I'm ready to go share this video. And you're in the drawing. And Rosalie's going to choose two people here in the next five minutes. Okay? Shay Ron.

Yes. Wants to know, do you recommend an S corp for a trucking business that's grossing over half a million dollars?

Oh, my gosh. Shay Ron. Shay Ron says if we're. Hopefully the audio is working. So you heard Mallory there. He's got a trucking business. He's making a half a mil gross or net gross. So he's doing a trucking business and grossing 500 grand. I would hope he's making 25% profit on that. Right. So that would mean he's maybe making around 125 grand a year net. Now think about it people. Same question. Let's do a new piece, new piece of paper here. I'm going to kill another tree. Shay Ron is a trucker. He is providing services. It's not a rental property or obviously we're on the upside. He's making over 40 grand. We're going to assume he's netting about 120. 140 grand. So he needs to be. Let's compare it. Let's do that. This will be my last sheet and then we're going to announce our winners. Let's compare it. Let's say Shay Ron, this is Shay Ron. Oh you're going to love this. Let's say Shay Ron, he's a trucking business. He's going to do an llc or he's going to do an S corp. Alright. Now this could be an LLC taxed as an S corp, but he's an S corp. So let's say he brings in 600 grand. Let's go to red. I just got chills again. This is so fun. I'm a nerd. 600 grand. And let's say he's in the trucking business and he's going to net 20%. That would be around 120 grand. Fair enough. So that means he's got 480 grand in expenses. Now Shay Ron may say, oh, I'm making more profit than that. Congratulations. Shay Ron. Chill out. I'm just using an example here. Alright, so you got 120 grand net. Fair enough. Everybody gets it, right? 600 grand gross, 480 in expenses. Got to pay for that big diesel truck and he's going to net 120. Alright, cool. He's an LLC. What's his tax? I don't, I don't even know if I want to calculate this. This is going to be ugly. 15.3% on 120 grand. So that's 15,000 on the first hundred. Another 15.3 on 20 grand. That's going to be another two and a half, three. That's going to be $18,000 in self employment tax. Are you kidding me? And then let's say he lives in a state with 5 or 10% state tax. Then federal, boom, boom. 18 grand. Shay Ron what the hell is your accountant doing? Really right now? We go to the S Corp. Now what do we do? 120. You can go to the Kohler payroll matrix. I've got a matrix in my book called the Kohler payroll matrix. Go on, on YouTube, type Kohler payroll matrix. You'll freaking love it. I would probably do a third, maybe 50, but I'll do easy math. I'm going to probably take 40 grand in salary and I'm going to take 80 grand in K1. Now here's what's cool. He doesn't have to get a paycheck every week and he still takes home 120 grand. Shay Ron, you still take home 10 grand a month. Just put it in your personal account. Go buy groceries, underwear and pay for your house payment and buy a boat. I do not care. You still take your ten grand every frickin month. But every quarter, my. My payroll team is going to call you up and they're going to go, shay Ron, how are you doing? You're like, I'm making 10 grand a month. How do you think I'm doing? I'm living the dream. I'm like, sweet. So what do we do? We take salary of 40 grand for the year. So that means every three months we're going to kick out a payroll report. He doesn't get a paycheck, he just takes a payroll report. 10 grand. 10 grand. 10 grand. What does that equal? 10, 10, 10, 10. It equals 40 grand and a W2. And we send in his deposit every quarter. He's on the open road, eating at Cracker Barrel. I'm just calling him up, running his freaking payroll. 130, 140 bucks a quarter. We're running his payroll. He's on the open road, under enjoying those chicken and biscuits and the. Oh my gosh, they are so good at country, you know, Cracker Barrel. So he's doing that on the open road, hopefully working out because as a trucker, you can get really fat quick anyway, so he's out there saving. How much is he saving? 15% on 80 grand. See over here, he's going to pay 15% on 120. He's only paying it on 80. So 15% times 80 grand. 8,000. Two. That is four. That's 20. He just saved $12,000. Are you kidding me? How would you like an extra thousand dollars in your bank account every month? Cha ching. That's literally what we did. That's literally what we did. In summary, people, a little advice goes a long way. Don't think you can go onto a website and click, click, click and set up the right entity. Just do a meeting with a tax attorney, a tax accountant, lawyer, slash, whatever that you trust once a year. Once a year? If I met with Shay Ron and we set this whole thing up with filing fees, we might be out of grand. A thousand bucks. Let me see now. This is hard math. Okay? Hard math. Here, help me out. Spend 1,000, save 12. Now I know it's hard. It's hard. Spend a thousand, save twelve. I think, Shay Ron, it's a good deal anyway. I'm being sarcastic. I'm being what my wife would call passive aggressive sarcastic. Sorry, Shayron. I'm just joking. I need more marriage therapy. Okay, here's the deal, people. Live the dream. Don't give up. Get some freaking advice once a year from a tax strategist that understands what the hell you're doing. And Jerry, I don't care if they're in Brooklyn down the street. Love that pizza. Just get on the phone, give me a call, we'll get on a webcam, touch and feel each other, and come to Philly for a cheesesteak. Who are our winners? Mallory Spinner, Ramon Wilson. Ramon Wilson wins. What's he win? Which book you call it? Mallory, it's you. Okay. Ramon Wilson or Ramon? I have an uncle Ramon. Ramon Wilson wins eight steps. I'm going to sign it and send out to you tomorrow. And Angel Mora wins the Tax and Legal playbook even though they did not throw out a question. Maybe they did. They just didn't get selected. But they are our winners of the books, people. I'll be here next Thursday. I'll be here helping you save taxes, protect your ass sets, and helping you better live the American dream. That's a drop right there. That's a pen drop. I'll see you next week. Later.