You'll NEVER want an Investor Again!

5, 4, 3, 2, and 1. Welcome, everybody, to a live broadcast here about your life, tax and legal strategies. Small business helping you build money for your next venture, your next business. Got to get me all my stuff spread out around here. Grateful you're watching. Give me 30 seconds before you cruise along and say, I don't need to watch this. If you're ever going to need money to expand your business, buy equipment, grow, create a partnership, buy real estate, whatever, you're going to need money. We're going to talk about the I word. Investor. I want to tell you and give you some important guidance to protect you from getting sued or causing problems when you take money from others. I'm gonna give you three main options. Partnering, borrowing, and using investors and what to expect with each one. You're gonna love it. It's gonna be simple. You can freaking break it down and take it to the bank. No pun intended. All right? Now with that said, I'm also gonna do some Q and A. Now, my name is Mark Kohler. I'm a CPA, an attorney, author, podcaster, YouTube personality, blah, blah, blah. And I love helping small business owners get straight answers to hard questions. And there are a lot of I'm going to say it attorneys out there that when you walk in the door and say, I'm trying to raise money, you're like fresh meat. And they're going to try to sell you something you may or may not need and not give you all the options. So I want to give you those options today. And it's so, so important. We'll be fielding questions from around the country on this process. Now here's an important disclaimer right now. If anybody on here on the feed sees some sort of offer to buy Bitcoin or any sort of cryptocurrency, it is not me. Ignore it, delete it, whatever. Do not fall for any of these scammers that jump on live feeds on YouTube and Facebook and pisses me off. So be careful. I. You may see them cannibalize my picture or something. Now, my. I'm verified on there, so there should be a check mark whenever I do comment, but my team is working to delete any of those. So watch out if anybody is trying to get you to buy Bitcoin during this, this broadcast, well, we're going to hit it. Sound good, Corey? Got it. Got my producer in here ready to roll. All right, now I'm just going to lay this out. This is really quite simple. You guys will be surprised. There's three ways to get money from people. And what drives me crazy, and this will help you so much when you're talking to others, is please never say the word. I'm looking for an investor. We get that phone call every day in our law firm from around the country. Hey, I've got an investor. I'm looking for an investor for my business or I'm at a workshop. Hey, I'm looking for an investor for my real estate deal. No, you're not. Investor is a dirty word. It is like the F word of I'm going to go to jail. You know, investor is very, very scary. And there's three letters. Y, S, E, C. Securities and Exchange Commission. When you start throwing down the I word, investor word, the SEC is like, what are they doing? Are they ripping someone off? You do not want them in your world. So I'm going to give you three options. Now, you may want to use investors, but it's a big project and it can be very well worth it. And you might use crowdfunding, you might use 504 Reg D, or you might use this other reg or this. There, there's all these options out there to raise money, which we're not going to go in depth today, but I want to forewarn you of where to go. Okay, so there's. You need money. Okay, so you need money and you've got three options. Pretty straightforward. 1, 2, 3. The first one that is the most easy, the most simple, and really can protect you the most, is you're going to borrow money. You're going to borrow money from someone. Now you may say, well, I'm going to give them a note and then they get a part of the back end. That's not a note. That's a participating note, which creates a partnership. Whenever you give someone a piece of the deal, it's a fricking partner. It's no longer. Well, I'm going to give them x percent on their money plus 20% of any profit on the back. You just created a partnership, right? Think about it. You're going to take money from someone and then you're going to give them an interest rate and a piece of the deal. That's a partner. That's joint and vicarious liability. That is a general partnership. So you've just got to be so, so careful with that concept of I'm going to borrow, you know, get money from someone and borrow it, then kind of go and make him a partner as well. You want to be careful with that theory. All right, so borrow. Now, if you're going to borrow money from someone. They are going to have the term lender. Now, they may not like that term, but we're going to talk about it. You're going to be hanging with it. Thank you, Corey. So, yes, there's a mysterious person with a hand that just reached up here. There we go. That's Cory's hand. All right, So a lender is who's going to loan you money. You're the borrower, and you're going to sign with them a promissory note. Promissory note. And you're going to give them an interest rate. It could be variable, it could be convertible. That's another version of I'm going to convert this note from borrowing to equity. But you have this promissory note. There's going to be an interest rate and there's going to be terms. There's going to be terms like a period. I'm going to put terms is in a period of years, months, whatever. Now, some of you in real estate see hard money loans all the time. You borrow money, higher interest rate, yada yada, you try to flip the property as quick as possible and get out of that loan. That's a note, promissory note. Now, sometimes you give security. You say, oh, well, I'll give you a lien against a piece of real estate, or I'll give you security with a auto, you know, your car, some sort of auto lien. It's called UCC3. You could also be giving them a personal guarantee. So you're going to sign and promise in person they could sue you personally if you do this. So you what, you got personal guarantees and you've got, let me see. And then I'm going to call it trust deeds, where you give them a lien against a property. These two are the most common. Not a lot of people are hawking their car to get a loan. So personal guarantees and trust deeds. Okay, people, there's pros and cons to each one of these, but this is option one. You're going to borrow money from someone. It could be a bank, it could be your best friend, it could be a mom, it could be a dad, blah, blah, blah, blah, blah. All right? Now option two is you're going to partner with someone. Now, if you're going to partner with someone. Now, we're talking about two general scenarios. A JV Joint venture agreement. I'll put a JV agreement and then I'm going to put llc and I'll put a little circle for that. LLC so we have these two options. Joint venture agreement or llc. The there's pros and cons to both of these. A joint venture agreement is usually a couple pages, two, three pages. So it's like a contract. And one of you might hold title to the property and promise to pay the other one. You may actually file a partnership tax return. So you could have a partnership scenario. PHP is for partnership and. Or it could be a subcontractor relationship. So you promise to work together and one of you is going to get a 1099. Or you could be doing a partnership tax return. Where I like the JV agreement and it's very limited is first. It's kind of a short term deal. Corey calls me up and says, hey Mark, I'm going to go buy this truck, detail it and flip it. You want in? Let's sign a contract. Joint venture agreement. Let's see how it goes. He may put the title to the truck in his name. I may throw in the money, we sell it, he takes title or I mean he collects the money, claims the income. And 1099 is me. I mean there's all sorts of ways of how the money could go through him or me and then I pay him and we pretty much split the profit but with one of us being the primary receiver of the income and then I just pay the other person. If it's a short term deal, just a one off thing, and it's small and a JV agreement could be good. But number two, I don't want persons doing it. I want your two entities to do it. So it might be your LLC or your S Corp partnering with someone in this contract. So you have two little entities that partner. Because if Corey and I sign that contract together, we just have a general partnership. Now if he goes out to meet the seller, buys the truck, gets in a fistfight, punches a guy in the nose, he can sue me, the guy he hit can sue me and, or Corey, we're general partners. I'm liable for anything Corey does in that deal unless I have an entity between me and the contract. Now I have some protection. So you want to be really careful personally signing on a JV agreement. Again, not a big fan. And most of my people that are partnering together is kind of a long term relationship. And, and that's why I love the llc. So the llc, it takes title to the property, the project receives the money. There's typically a tax return because you have a partner. So you're going to have to do a tax return. It's called a 1065. You've got a bank account in the name of the llc. You've got an operating agreement that defines everything. I freaking love it. That's a partner. When you go out and say, I'm looking for an investor, if they're going to throw in money and be 50, 50 with you, they're not an investor, they're a partner because they're involved with you. Now, we're going to debate these for just a bit more. Now, the third one, the big one out there is the investor. And I want to encourage you to be very, very careful using the I word. Again, investor people say, well, I want an investor. I want them to give me money. And then they're shut the heck up and I'm going to go out and make money and I promise to give them 5 or 10% or I promise this or I promise that they're going to give me money. And I go, are you looking for a silent partner? Yes, Mark, that's what I want. I want a silent partner. Tell them to shut the heck up and just give me their money and I'm going to make all these promises and they're going to love me. What happens if they don't love you? What happens if the deal goes bad? Well, it went bad. Things deals go bad. Yeah, but if you were in complete control of the project, you made a promise to give them a rate of return, they really didn't have a chance to vet every step you took. It wasn't a democracy. They were just silent. And you lost their money. You just breached security laws in almost every state. And with the federal government, it can be criminal. And the civil penalties are not fun. That's what happens when you promise people things and take their money. You don't want that. The way to get around all that liability is you follow securities law. And securities law could look like a variety of things. It could be a crowdfund, that's one of the most common now. Or it could be what's called a reg D offering, where you're going to take money, give them a prospectus, a little option. Option. I'm sorry, a little prospectus is the best word. A budget of what you're going to do, all the legal documents. You're going to have an llc. They're going to become one of so many partners and they sign up to be a silent partner. Now you can use the investor word. This process of a reg D and all this, we're talking 15 grand or more to go through all those Hoops because as a lawyer, we're liable if they lose their money. And all the boxes weren't checked and all the I's weren't dotted and all the T's weren't crossed. This is like an ob GYN delivering babies. It's the most litigant, you know, liable thing you can do as a doctor is deliver babies. Like they carry the largest malpractice insurance. We have an attorney in our office that's good at this. We call it securities law. You want to find a lawyer that knows securities law and make an appointment with them, pay them per hour for the first consultation and say, here's my deal. What do you think? Now, Jerem Bergeson is our guy. He's been with us over 10 years now. Love, Jerem. Jerem, you can call the office if you want our firm, you know, I guess I'll put down the phone number. This is not a sales pitch, but I just want to let you know where to reach him. 435-9366. So you can call Jerem and say, jerem, I want to consult for a securities law offering. And he'll go, okay, tell me what you have in mind. Well, I want to raise a million dollars or I want to raise 100 grand, or I want to raise 500 grand. And he'll say, are these accredited investors? Are you going to advertise on Facebook? Are you going to try to do a crowdfund with $5,000 per person, or what? And he'll run you through all your options and you can say, oh, I love this, how much? And be ready to pay for it. Now, the money you raise can help pay the legal fees, but you got to go through these hoops or you're going to jail if something goes wrong. So I'm going to put this in red. What really happens at our office, everybody, what really goes on every day in most law firms around the country is you're going to fall into one of these two areas. You're going to borrow money from someone or you're going to partner with someone. And a participating note. And I know this makes some of you mad, and you go, mark, I've been doing it for years with a participating note, and I've never gotten trouble. Count your lucky stars. Well, my attorney says I can do a participating note. Sure. Is he doing your tax return or is she doing your tax return? Well, you know, it's so easy to go out on Google or find someone that gives you the answer you want. Take a little extra time to find out if it's the right answer. So if you want to go out and raise money, I want you to say, I'm looking for a partner. And you can typically have up to about five partners and have a democracy where everybody gets a vote. You're having monthly meetings, everybody's involved. And you're like, well, I don't want everybody involved. I don't want them firing me or telling me what to do. Then go get a freaking security document. Well, I don't want to pay for that. Well, I guess you're in a hard spot because you can't have silent partners without exposure. It is scary, scary, scary. So we like to see no more than five partners on a. Oh. Scenario with an llc. No more than five partners. Let's get it. Make it a democracy. Everybody gets to vote, and you know, yada, yada, yada. Kurby, would you give Jack a call, too? I'm not sure what he's buzzing me about. All right, now, borrowing. They're borrowers. They're not partners. Partners are not borrowers. They're partners. And we're going to stay in those different realms. Okay, well, I'm going to just kind of feed through some of these questions now. I'm going to put on my glasses and folks, you've got me here for another half hour. 40 minutes. I'm all yours. Grateful to be here with you. I love small business. I just having a good day. Excited to talk with all you. All right, I'm going to go with Eric's question right off the top. He says, hi, Mark. I'm in the process of purchasing six duplexes in Georgia. Do I need to have an LLC for each property? I'd probably say no, Eric. But let's go to our trifecta, everybody. This is. If some of you are like, what's the trifecta? You're going to love this. Eric is down here. And what I want for Eric is his 1040 tax return at the foundation and his revocable living trust. We're going to have this for privacy. And this little revocable living trust is the foundation. Over here is his day job, or he maybe has a side hustle, or he has a little S corp, or he has an llc. That's cool. These are his ops. This is where he's making money on the daily basis. But over here, he wants to buy six rental properties, and I'm going to assume he has no partners and it's just all Eric. Really, what it comes down to is not Quantity, it's quality. If each one of these duplexes is 500 grand, I might put two of them in each LLC. If each one of these little rental properties is 100 grand, you know, I might put all six in one LLC. I'm worried about how much equity is at stake, not how many properties are at stake. Now you guys want to go down? I'm going to throw down. This is high level stuff. You ready? This is really the four options of rental real estate holdings that I like to consider. Your first option is you have one llc and maybe you got it in multiple states. This is a Georgia LLC and, and Arizona llc. You could have it set up in two states. One of them's foreign, and I could have maybe three or four rentals in here. They're low cost, they're not expensive. Maybe there's 40, $50,000 of equity in each property. Frankly, people, I'm going to go with one llc. That's kind of where I'd start. Start there. You can always upgrade. That's option one. Option two is I go, well, Mark, this is an Airbnb worth 500 grand. This is a apartment building. And then these are crappy little rentals over here. Okay, well, let's do three. Let's do three LLCs. Let's put the Airbnb in one because it's got about a half a million in equity. This one's a commercial building, so it's worth more. And then over here, we're going to put our two or three little rentals that are little meth lab rentals. They're adorable. So you've got three LLCs. Now you've got extra cost of having three LLCs and three bank accounts and all that. But look at, you have a firewall between each llc. Over here, if something goes wrong with property one, they can get at the other properties. And Eric may be going, well, I don't want all my properties in one bucket. Think about it, though, Eric. If they're only worth two or three hundred grand, you've got homeowner's insurance or renter's insurance or a landlord insurance. You've got, you've got a proper LLC that's protecting you. If someone goes after one, they really, it's not may not worth it to go after the others because there's just not a ton of equity there. But over here, you're like, I got to protect these others because this one's worth, again, 500 grand. This one's worth 300 grand. And then these little Ones I can throw into one. I know many of you are like, well, what's the break even? It's up to you. I mean, I'd say most of my clients, once they get about 400 grand of equity, we go to another LLC. All right, now option three is what's called a series LLC. So you have a series LLC and you have these little baby series and you can have as many little baby LLC as you want. They're only working about 16 states. They're fun. Series LLC are nice, but again, you got to look at what state you're investing in. The final one that I really like is I use a Holding Co. LLC that this is for clients that have a million dollars or more of real estate and we really want protection. This is a COPE charging order protection entity, typically Wyoming. We really like the protection Wyoming offers and privacy. And then all my other LLCs are owned by that one parent. So it kind of acts like a series LLC but even gives you more protection. This is the Cadillac of planning. I don't know if you like a Cadillac. I don't. The Lamborghini of planning, whatever. And very common for Those clients with 10 rental properties or more. Down here, your trust is the owner. Down here your trust is the owner. Never you. Down here, your trust is the owner. So we're going to make sure your trust owns these llc. Okay, I'm going to jump to the next one. Jh, does it matter if we buy the domains now or would it be better to buy them through a revocable living trust? Or should we have the LLC set up and buy the domains through that? Now, Corey, you might have to scroll around. I don't know what domains JH is talking about. JH says, can I fundraise on a website asking for donations and auction swag and promotion items, gift cards. We don't have the business registered our location yet. Okay, now JH is throwing down a bunch of stuff here. So jh, you might only get one bite at the apple today. There's a lot of questions from number of people. Let me say this. And there's no more above that, Corey, of JH coming in before that because you just kind of jumps into that first question. So I didn't know what that meant. Nothing above that. Okay. All right, well let me throw this out, people. Back to our trifecta. If you're going to be doing URLs and operating a business, typically they're going to be up here. I don't want your trust to own your GoDaddy. Account and URLs. And I don't want you to own your URLs. That doesn't make sense. URLs are there to make money, so not a typical good idea. So your businesses should own your URLs, your GoDaddy account. The other thing JH said is that you're making me so nervous. He goes, well, I'm going to auction off swag on my website for donations. Okay? You could have several state agencies really pissed off. Donations mean charity, so be careful. The word donations. Well, I'm going to be selling stuff, but they, but they're putting money into my business. Okay, sounds like crowdfunding. And you're going to give them something. Jh, I hate to say this and don't be offended with my bluntness, don't try to figure this out on your freaking own. Save up the money. Go meet with a securities attorney that says, what are you trying to do, jh? Well, I'm trying to raise 50 grand and I'm giving away all the crap I can out of my garage getting people to donate money so I can raise 50 grand. Okay, what are you going to do with the 50 grand? Well, I'm going to do this. Well, here's some ways to go at it where you don't get in trouble with the gambling commission of the state, the charitable arm of the irs, you know, monitoring charities and donations or the state websites, state agencies that go after fraudulent charity raises. You're not getting the SEC in your grill because you're trying to act like a crowdfund. But you don't want to spend to do a crowdfund. People, you can't cut corners when you take money from other people. I'm sorry, you want to cut corners, you know, remodeling your kitchen and going to Home Depot and jacking it up. Feel free. But when you touch other people's money, it's. It's bad if it gets jacked up. Alright, Loving Life say if I buy a rental property under my name and live in it for one year VA loan, can I move my rental under my self directed IRA after I move out? No, but Loving Life, I really like what they're talking about. So Loving Life says down here, let's get our trifecta. We've got our rlt. They're going to create an LLC and, and they're gonna get a va. Oh no, no, no. It's in his own name. They're gonna live in it. Okay, so let's start over. This is Good. Everybody, this is so important. Cause I want you to own your own home in your revocable living trust. So Loving Life says, I'm gonna buy a home, I'm gonna get a VA loan and I'm gonna live in it one year. Then I have a lot of clients that'll say, after one year, I'm gonna create an llc. I'm gonna move that rental up here and turn it into an Airbnb or a long term rental. Okay, I'm okay with that. Now you deal with the VA loan and what you promise over there. But for the most part, as long as the lender's getting their money, they're not going to care. So we deed the property over to an llc. The problem here is Loving Life says, I really want my IRA to own that rental. Now, I want your IRA to buy rentals. But it can't buy a rental you already owned. You got to go out there and buy a rental from a third party. Now we just last weekend had our summit in Phoenix where we talked about self directing and all the things you can do with a Roth IRA, traditional IRA, 401k. So loving life, you keep learning, keep doing it. And I want you to buy rentals with your ira. But you can't take a property you already own. You can't buy one from your kids, you can't buy it from your spouse, and you can't buy it from your parents. You, anything lineal is not going to work. Okay. Damian says you can't mention investment property to the bank either nowadays. Well, Damien, I kind of like what you're saying here. If you go into a regular banking branch and you go, I need a loan and I'm going to buy an investment property, they're going to hit a button and freak out because they're not used to that. They're thinking Fannie Mae and Freddie Mac. But if you go to the right type of bank, like lender that does commercial loans, which is what you're supposed to get, Damien, when it's an investment property. Because you're not going to lie and say, oh, this is my home and I'm going to live in it and then turn it into a rental. BS Damon, if that's what you're doing. Of course you can't say investment property because you're committing mortgage fraud. You're lying on the mortgage application. Now if you're really going to live in it for a few months or a year and then turn it into a rental, I'm cool with that. But People, you can't tell the bank what you want them to hear and go do it something differently. Go do something differently. You're going to get in trouble. Now, Damien says, okay, I'm going to go into the bank. I'm going to talk to the business department to get a business loan for an investment property. Well, Mark, their interest rates are 2 or 3% more. That's because you're getting the right type of loan. I'm sorry, Damien, that's how it works. So be careful, all right? Anthony says if I have an hra. Oh, my gosh, this is such a deep question. We're going to go into medical. Man, you guys are running me through the ringer today. Okay, Anthony says if I have an HRA and cannot cover the full 15,000 in medical expenses in my startup year, can I reimburse the remaining expenses the next year? I don't know what you mean by cover the whole 15. Okay? I have an HRA and I can't cover the full 15k in medical expenses in my startup year. I don't know what a startup year would have to do with it either. Let me say it this way. An HRA is a health reimbursement arrangement. It's built in a C corp for single people or a little sole proprietorship for my married couples. I've got a whole chapter on it in my book, tax and legal playbook. I've got videos on my website on it, videos on YouTube. So study up on HRAs. What I think Anthony's saying is, I had 15,000 in medical. 1320. I don't care what it is. You had 15,000 in medical and you can't cover it in your startup year. I still, I'm not. That's not adding up to me. Because either your business has the money you paid for it, so the business is going to reimburse you. Now, if you're saying, well, my business doesn't have enough money. Oh, okay. Or maybe that's what you're saying. My business doesn't have enough money to reimburse me. Your business can only reimburse you for the expenses you have during this calendar year. Now, if your business doesn't have enough money to reimburse you, put the money in your business and reimburse you and then put it back. You can put money in your business. It doesn't have to be sales. And. And maybe that's where I'm getting confused. Some people think, well, I have to have sales to cover my medical. Put some damn money in the business, then cover your medical. See, you should never say, well, my business doesn't have enough money to pay my cell phone. Put money into your business to let it pay your cell phone. It's okay if you contribute money to your business, that's okay. You're the owner. Put some fricking money in it. Damian. Put money, borrow from your credit card to put it into your business to reimburse you for your medical and then get reimbursed to pay off your credit card. This is how you launder money. And that was legal? That's legal. You put money in your business, reimburse yourself and pay yourself back. All right, now, Corey, we're sliding down, right? This is the question you want me to cover. We got grandpa's place. Is that where you want me? Okay, Grandpa's place. Rental properties around Texas and a couple of small businesses. If I want to buy a plane and fly myself around for business, what is the best way to structure the plane Ownership and usage. Love it. Helped a lot of clients with this. Before we go back to your trifecta, we always start with your trust at the bottom. So grandpa has a bunch of businesses over here and he has a bunch of rental properties over here. Those are two different businesses, operations, holdings. And he lives in Texas and he says I got to get all over the country, state of Texas to check on my businesses. All right. What I do with planes is I set up a separate LLC owned by your trust, just like your LLC for your rentals, owned by your trust, just like your S corp for your businesses, owned by your trust. And this little LLC is going to own your plane. Oh, I don't know if I can draw a plane here. I'm going to do my best. Okay, there's your plane. Boom. Look at that. That's not too bad. There's a little jet. Are you talking about a 172 or a little bonanza? Okay, you're going to get a twin, okay, that's twin Cessna. But I'm going to just give you a little jet. So here's your plane and you cruise all over Texas. Then you're going to charge your LLC for the use of the plane. You're going to charge your S corp for the use of the plane. We're going to depreciate the plane over seven years and it's going to be a freaking awesome write off. And I. You can use it personally, but I'd love every trip to have a business purpose. Then I could ride off 100% of that plane, baby. Love it. Okay, Laura, if my partner and I are going to buy a vacation rental together, Love it. So we got Laura down here. And, guys, everything for me is just like a picture. It's visual. It just makes so much more sense. So Laura's got a revocable living trust. And she says, and maybe Laura. Let's think about it. Maybe Laura has an ira, and her IRA owns a rental, Little LLC owns a rental. And let's say Laura has an LLC that she owns 100% and she has a little rental. Okay? Very common. But now Laura says, well, I have a partner and we're going to buy a vacation rental together. Would we get one LLC for both of us or an LLC each showing 50% ownership? Laura, 90% of the time, unless you're super rich and we need it, and I would. 90% of the time, you're going to set up a new llc, buy the Airbnb vacation Rental in one of your names, deed it to the llc, don't care. And here's your partner or your partner's trust. 50%. Here's yours. 50%. So we're going to take this LLC and go 50. 50. Your trust owns 50, his or her trust owns 50, and you go buy an Airbnb. Now, remember that idea when I talked with Eric just a minute ago and I said, this is a. For my clients that are really kind of wealthy with real estate. A million dollars, ten rentals. Well, let's say this is you, Laura. Your trust is down here. You've got this holding company, LLC. Ooh, I like it. Well, your holding company, LLC, would own 50% of this LLC, and your partner's trust would own 50%. But I think you would graduate into this. I definitely would not do this for you out of the gate. And we can always add it later. So there you go. Very good. Okay. Robert sun, my partner in North Carolina, and I in Arizona formed an Arizona llc. Okay. We are just in our first year of investing and have a property in Georgia and Texas. What happened to freaking Arizona? You threw me off. Okay. Domesticate LLCs versus filing as foreign entity, which costs less to file, maintain. Which costs less to file and maintain. Okay, Robert. Not conventional, but that's okay. Hold it. Go back. I got to read Robert's facts again. Okay, so here's. Here's the revocable living trust. Here's Robert, His partner, she or his partner, whatever he or she is in North Carolina, and they're going to have their own trust. Okay? And they formed an llc In Arizona. Now, remember, we're not over on the operations side. This is all rentals. Okay? We formed an Arizona llc, but apparently they didn't buy any real estate in Arizona. I think the reason why they bought it is because Arizona. Robert lives in Arizona and he's like, let's set up a freaking LLC in Arizona. If you'd done a consult with our team, we might have not done that, but that's okay. It's done. Water under the bridge. Let's not get rid of it. So you have this Arizona llc. Now, option one is you can say, bag it and let's go set up a Georgia and a Texas llc. You're going to have two different tax returns. You got two different LLCs. I don't like it. I think it's too expensive and not what I would like. But some of you were thinking that let's just set up an LLC in Texas and one in Georgia. 50, 50, 50, 50. And leave Arizona alone. I'd like to use the Arizona LLC and what we would do and I'd like what you're saying in this example, Robert, is we would register your Arizona LLC to be foreign in Texas and foreign in Georgia. Susan, my paralegal at my office. I'll write it over here. Susan Compy. So, Susan K. Call our office and go, Susan, I need you to do those foreign filings. And I'm hoping you've got your LLC in Arizona all tight. You got an operating agreement, a tax ID number, you got your bank account, yada, yada, yada. You've got all the pieces and parts, and it's owned by both your trusts. Susan can do a cleanup and tidy up your LLC if needs be. She's got a team of 6, 6 paralegals doing this every day for clients all over the country. So you get your Georgia registration and Texas registration, and then you go out there and you put your two properties in there, deed them in there so you have an Arizona LLC that's valid as primary. Arizona foreign, Georgia, four in Texas. Now, what's Robert says, which costs less to file and maintain domestic versus foreign at the state level, they're the same. You're going to pay the same renewal fee for Georgia as you're going to pay for Texas generally. And you've got one LLC. You're going to file a 1065 tax return. And Robert, do not do domestic LLCs for Georgia and Texas. I guess the only thing I would say, and this is why a consultation is important. And all of you, I hope everything I Say here, I need to say this more often than the show. I hope you're not taking what I say on the show and go and f around on LegalZoom. That's not the goal of the show. All right? Because you're going to screw it up. But what I'm hoping to do is give you enough direction that when you go interview your attorney or you call my office, you're a step ahead of the curve. You're a step ahead of the game, and you're like, I talked to Mark. You know, watched his show. Here's what he's saying. I do. What do you think? And if an attorney looks like deer in headlights, you got the wrong gal, you got the wrong guy. So hopefully I'm giving you enough parameters to go out and get a consult and do it right. Because, Robert, he may say, oh, well, that Texas property, it's a fourplex worth 800 grand. Well, then, hell, I'm going to set up a domestic company in Texas. It's worth too much, so we want to be careful not trying to cut too many corners. Robert, it's okay. All right, next call. Next, let's do a veto. Can you talk on crypto tax? Ooh, wow. Yeah, let's do it. Crypto taxation. Well, crypto. I own cryptocurrency. I think crypto is going to be around here to stay. Maybe it goes up in value, maybe it goes down. I don't know. I'm not making any promises for any of you that joined us late, please do not listen to anybody on here. Look at. There's one of those bozos. Now. They're trying to let you think that I'm buying crypto or I'm trying to get you to buy crypto. Do not click on any link on this feed that's offering any sort of crypto. It's a scam. It's not me. Gosh, I hate them. All right, when it comes to crypto, everybody, there's really so many different variations. There's defi, there's staking, there's all these. And today is not the time to get into that. I would highly recommend all of you to get over to my Main Street Business podcast, Main Street Business podcast. And we've done several shows this year just on cryptocurrency. Please go listen to them. I've got slides and videos. Also get over to YouTube and just type kohler, Mark Kohler, Kohler, Crypto. And you'll see all my videos on crypto. Please watch those. But everybody, let me Just say a couple basics. Cryptocurrency is considered personal property by the irs. If you buy it and you hold it and you keep it less than 12 months, you're going to pay short term capital gain. If you hold it 12 months or more, you're going to pay long term capital gain. Short term capital gain is whatever bracket you're in. So the same tax rate you'd pay on your W2 long term capital gain can range from 0 to 20% right now. And we're going to see if the new tax bill with Biden hits harder there. We're not sure. So it's really about short term capital gain and long term capital gain. The mining. If you're going to mine crypto, it's subject to self employment tax because it's a business. And so you got to run that typically through an S corp. That's what we're helping all of our clients do that are mining crypto. Now if you want to blow this up and make it pretty darn sweet, don't even buy crypto in your own name, people. In your trifecta. So here's your trust over here. I want you to take your IRA and go by crypto right in your Roth. Right in your Roth IRA or traditional ira. You, you can go right here. This is fun. I won't show it cause someone might steal it or whatever. But I can go to my Gemini app right now and I can look at the cryptocurrency in my Roth ira. You can be trading in your Roth in minutes. Oooh, Bitcoin hits 60,000 today. Ethereum's up to 42. Let me see what my portfolio's at. Looking good. It's up. Okay, so if you wanna go start trading Cryptocurrency, our trust company, we have a direct relationship with Gemini. Now some of you are like, well mark, the coins I want are over in Europe. Or there are this and they're not on Coinbase even. They're barely on Kraken. And they're. Okay, fine, then you have to set up a Roth ira. We do this too. I know what the. I know what you're talking about. And I want a cold storage and I want to. We know all the terms, we get it. But if you want to go out and set up a wallet with a unique location, you take your Roth, you create an llc, you and you go get an institutional wallet if you want to get trading right away. And you can live with the coins that are on Gemini and they're not too bad. You go to set up your Roth and you get a Gemini portal immediately. Within a couple of days, Gemini, you're trading crypto. So if you want to get started, go to ww directed ira.com and when you get there, look at our open an IRA transfer an IRA. Look for the crypto Roth, the crypto IRA, the crypto Coverdell crypto 401k. We got them all. But you don't pay tax when you buy inside your retirement account. So either you're going to pay short term capital gain, long term capital gain, and if you're mining, you're going to pay on self employment tax or if you can do the whole thing in a retirement account, you may pay no tax at all. If some of you are looking for a way to get out of these taxes, I'll put it in red here. I've been teaching for days on weeks on the end is the Charitable remainder trust. The CRT. They are crazy. Get over to YouTube and type Kohler Charitable Trust. Okay, Did I already answer a Laura S question? I don't think so. Oh, you're so nice. Could you please do a seminar in Florida, Jacksonville or Amityville Island? It would be fantastic. You know what, Laura? I'm going to be in Orlando in two weeks. I wonder if we could throw something together. What do you think, Corey? That could work. Will you bring that up with Jack and Ali? Because I'll be in Orlando. Everybody please make sure you're on my website and sign up for my newsletter because as I do announcements, you'll see them there. So let me just remind all of you, I have a free ebook when you sign up for my newsletter and it's free. I've never charged for my newsletter. Get over to WW markj Kohler and I'll announce workshops from time to time. Orange county is next week. I think we're going to open it up. Right, Corey? Is it open? It's sold out, but we're going to sell maybe 25 more seats. But I think we have to email one of my people internally. Yeah, we may have already blown that. Stay tuned. If you're on my website and you're signed up, you're going to get notices of that. I'm in Honolulu in three weeks. Okay, Subhash, should I capitalize property less than 100 grand too? I didn't see the first question, but I think you're talking about depreciation. I don't know what Subhash M is talking about. So a couple people have some dialogues going on okay, Mr. Dr. Pro bought a 55 in a Roth IRA LLC. Can you buy and sell NFTs or is it prohibited like collectibles? Oh, MrDrPro Bata 55, I'm glad you brought this up. NFT utilities, we might have some options, but plain old NFTs are collectible and you cannot do them in your IRA, your Roth or your IRA, Roth LLC. They are collectibles. We are trying to find ways around it. We'll keep you posted. Nathan says if I own a. Let's go over to food for a minute. This is fun. So Nathan says we'll do two or three more questions. Nathan says if I own a food manufacturing company under an llc. Okay everybody, when I have a consultation with folks and questions like this, let's all take it in baby steps. That's what I do. Alright, so here's our trust, here's Nathan. And I would always ask, are you married, are you single, you know what's going on there, kids, blah blah, blah. And he says, I own a food manufacturing business. Now I'll ask all of you, is that operational or passive? Food manufacturing, pretty clear. It's operations. I'm going to go out and make food and sell it. Over here are assets more passive. So I have my entity and I'm going to be doing food manufacturing. Now I don't know what entity Nathan has yet. Let's see where his question goes. If I own a food manufacturing company under an llc. Okay, so he's got an llc. Now all of you out there, if Nathan is making money in his LLC and he's got profit, what is his first tax that he's going to hit? It's going to be nasty. It's going to be self employment tax. LLCs do not save taxes. Let me repeat this, Nathan. LLCs do not save taxes. And Nathan may be saying, and I won't be able to see the feed, but Nathan will go, oh well, I'm really an S corp. I'm an LLC taxed as an S corp then damn it Nathan, when you make a comment to a professional helping you say I have a food manufacturing business in an S corp, don't say you have an llc because in the eyes of the irs, you have an S corp, not an S corp in Vegas. I'm saying an S corp as an S corporation, as in small corporation. So people, an LLC does not save you taxes. But if you make an S selection. Oh, now I've got all sorts of options. Now Nathan, if that whole topic's new to you, and you're like, mark, what the hell are you talking about? Go over to YouTube and type Mark Kohler S Corp vs LLC, several free videos there. Learn about it. You'll freaking love it. But okay, so first of all, I'm not even through a second sentence. So he says, I'm looking to expand into another city or same city. Do I need to put that new business in an LLC or use the same LLC to expand? The answer is yes. Both. Yes. You're like, mark, what do you mean? If Nathan has a Parent S Corp LLC, owned by his trust, owned 100%, and he's got all those crap put together properly. See? So Nathan's like, I need a consult. I got to get my crap together. My. My accountant sucks. Or my lawyer never told me this. So first of all, I would call this his parent company. His parent is going to open a new location across town. Now, when I have clients do this, the subsidiary is an llc, but the parent is an S corp in our law firm. Matt and I say it all the time on our podcast. There's no major reveal here. Our law firm is an llc, but our S corps own it. Here's my S corp. Here's Matt's S corp. Size matters. Okay, now, but our S corps own the llc. We funnel our profits through our S corporations. Okay, now let's go back to Nathan. Nathan's got his S corp. He's doing a salary dividend split. I call it the salary dividend, but I know it's a K1 pass through all you attorneys and accountants. Don't freak out. Just makes sense for people. So W2K1, and it's a reasonable salary. We never abused that. Never had a client audited in 20 years for abusing the W2. Just had a client get through an audit the other day and they were like, oh, that's the W2 for the owner. Great fit. My matrix done. But let's say Nathan's going to go out and set up the subsidiary. First question I'm going to ask him is, are you going to have a partner? We're back to the very topic of the show. He's going to say, well, I have an investor. Hell, you do. You better not have a partner. I mean, an investor. You're going to have a partner, and this partner is going to come in with money and they're going to be a part of the project. You're going to keep them informed. You're going to let them know what's going on. You say, well, I want a Silent partner. Not on my watch. Unless you want to pay for all that investor crap. So he has a partner. We set up an LLC and his S Corp owns that percentage. We have protection for the new location. Now, if you want protection at this new location, Nathan, it's going to have its own payroll, it's going to have its own lease, it's going to have its own llc, its own bank account, its own merchant account. And if you're like, well, I want it all to go through here, well, then don't set up a frickin llc because if you commingle, you're going to have problems. Now, if you have a partner, you're going to want separation anyway. But let's say there's no partner. It would be 100% owned subsidiary by your S Corp. And I have clients, people that go out and set up subsidiaries, other operations, and they all flow into their S Corp. And on a personal note, I'll finish with this note. Here's Mark Kohler, Revocable Living Trust. I've got an S corp. I have 1s corp in my life. It owns part of a law firm, part of an accounting firm, part of a real estate development. I have URLs. See, that was a question earlier. My S Corp owns my GoDaddy account with all my URLs. It owns DBAs, it owns this, that and another. I do hair and nails, I do drywall, whatever. It all goes into my S Corp. And I do my W2K1 split. I have a board of directors with my family on it. And we're off to the races. So, people, my goal is to try to keep it simple with One S Corp. Then over here, you have your IRAs, you have your Roths, you have your 401ks, you have rental properties, you have LLC, you have crypto, I don't know. And then over here, like Lara, she has an LLC with a partner and they're going to own a rental property, a little Airbnb. So this is your trifecta and you want to keep building it and always modifying it. Everybody, thanks for being here. Don't give up on the American dream. Keep working hard. You just keep cranking. And the next three weeks, I'm going to be on the road. So maybe no live broadcasts. We'll see. But next week I'm in Orange County. The week after, I'll be in Florida. Maybe we put together a little evening workshop for all you Floridonians. Florida, whatever that word is. And the week after, after that, it's Hawaii before Thanksgiving. So finally, the first week of December is my virtual workshop. I'll be right here for two and a half days teaching. Very, very affordable. 3, 400 bucks, maybe I should say 4 or 500 bucks for both days. And you get all my education. A workbook. You're going to freaking love it. So stay in touch. Keep getting educated. You're the captain of your ship. I'll never steer you wrong with a fraud or a scam with Want to help you set up the business that's best for you. God bless you. Thanks.