Tax WOD Roseville CrossFit

I like, I like your hoodie though.

Oh, thank you.

Awesome.

Where are you guys at?

We're in Utah.

Utah, cool.

Yeah, so I'm a Broncos guy, but—

Oh.

The Chiefs, well, this year, this year they're struggling, but I like the Chiefs. Is it just, is it just you two then?

Uh, yeah, we might have some more joining on the link, but Otherwise, it'll just— we'll just take notes for everybody else.

Awesome, awesome. And you guys are in California?

Yeah, okay, by Sacramento.

How's the weather over there?

Oh, it's pretty nice.

It's perfect. Yeah, it's like 60 degrees, nice and cool.

It's hard to complain about California weather.

Yeah, we're sitting at like 22 degrees right now.

Yeah, it's cold.

Yeah, a little chilly. Yeah, nothing, nothing too glamorous over here.

That's why you gotta work out, right? Stay warm.

That's true.

Ryan's the best at working out of all of us. He's faithful.

Yeah, did you guys already work out today?

Oh, not yet. Did you? No, no, not yet.

What's the WOD today?

It's 4 mini workouts. It's a 3-minute AMRAP of Bike for calories and 2 minutes rest, then a 5-minute AMRAP, 15 deadlift, 15 burpee over the bar, 15 chest-to-bar, 2-minute rest. Then you just repeat that. So 3-minute bike for calories and 5-minute 15-15-15 AMRAP.

Yeah, that sounds nasty. We, uh, we did 12 Days of Christmas today.

Oh yeah.

And it sucked. It was so brutal. Um, we had, we had clean and jerks at 115, which is usually just— I mean, it's not heavy, but it was number 7, so we did it like 37 or 42 times or something. I'm like, I'm gonna die.

So that's a lot of clean and jerks in the middle of that workout. Yeah, that's terrible.

Yeah, it was brutal, but it was a good one to, uh, start the holidays on, so now I can go eat a bunch of crap.

Didn't try to do that this morning.

Yeah, exactly. Okay, awesome. Well, we'll go ahead and get started. My name's Ryan.

I'm Samantha.

And I'm Nate.

Nice to meet you.

I'm the one we've been emailing. Yeah, cool.

So, yeah.

Oh, sorry. So our goal for you guys today is to help you save a shiz ton of money.

Yeah, that, you know, that sounds good.

Yeah, yeah. So we think the IRS is— they're bullies, and we think they suck. And so we want to show you guys, and especially you, Jesse, as the owner, right? You're the— are you the sole owner?

Yeah.

Okay, so especially you, um, but Gary as well, there's all these things will apply to you as well, um, how to save a ton of money on your taxes. So we're going to talk about strategies, some methodologies, different deductions and things that hopefully you guys will be stoked about.

Awesome.

And Gary, are you a 1099 coach?

Yes.

Okay, perfect. So all these things are going to apply to you. And these are the Tax Geniuses. I actually do our marketing, so I'll be here kind of doing the screen share and all that stuff, but These guys are the geniuses that'll help you kick your taxes' ass. Cool.

How many coaches do you guys have?

Excuse me, I think we have 6 coaches.

Okay, so that's 7 people that need to be kicking ass, right?

Although we had, uh, 9 in 2017, but 3 of them moved away. So we're down to 6.

Okay, and are they all 1099? All your questions?

Okay, good, good.

Perfect. Well, we'll jump into deductions. If you guys have any questions, feel free to ask as we go along. This is really casual. Um, there is quite a bit of material, so questions are great. Feel free to ask at any time. So one thing I recommend as we go along Maybe write down the total income that you brought in. And then as we talk about the different expenses, kind of write down what you think the, you know, the amount of those expenses are. And then we can talk about that at the end to kind of get a feel for your— the end situation that you have with your taxes a little bit. So being a 1099 contractor or a business owner, there's some awesome deductions that you guys get to take, and we want to go over those a little bit with you. Make sure you're taking all the deductions that you possibly can. As a 1099 or as the business owner. So the— so things like advertising, there's actually a lot that can go into advertising for you as a Coach or a business owner that's more than just marketing your gym or your services. So your workout clothes that you guys get, your shoes, different things like that. That is advertising yourself with your members that come in and things like that. So we actually put that under advertising. So all your workout clothes and related items that way. Um, specialty foods is another one. If you're going to like the Whole Foods store and you're buying like organic groceries and things like that, that's part of keeping you fit and keeping you looking the part. of that coach. So we put that under advertising as well. And then any of your supplements and things that you use that way, those are definitely a business write-off as well. Any questions on those?

No, that sounds awesome.

Yeah, so basically we're telling you, if you want a new pair of Nanos right now, the new Nano 8s, go buy them and write them off. Or any, any of your workout gear, like, oh, I want to buy myself a Christmas present, Some new Reebok shorts or some new whatever, barbells, whatever, write it off.

Yeah, if there's business purpose, if it in some way contributes to your success in what you guys do, we say write it off.

Cool.

Put it on the business card and make sure that it gets claimed on your, you know, so it ends up getting claimed as a tax write-off.

Okay, yeah, so the next expense that a lot of people don't think about, but You guys can do where you're in the athletic industry is massages. That's actually a business expense for you guys. So we would put that under like employee benefits because that helps keep you in, you know, good working condition and things like that. So any massages that you get or anything related like that, take as a business deduction. So that's pretty cool there. The next one that I wanted to hit on Was travel. And this one is really cool. So you guys are going to competitions, things like that. Of course, those expenses are business related. Your hotel and airfare, any miles that you drive, any meals that you get, those are business deductions. But one thing that a lot of people miss is like, okay, let's say you're going to go on a family vacation or, you know, it's not necessarily work related. How can we take this trip as a business expense? So before you go on the trip, the IRS just wants to make sure that you have a business purpose in mind. So are you going to go check out other gyms in the area wherever you're going on vacation? Are you going to talk with other box owners? You know, different things like that. If there's any way you can relate that trip that you're going on with your family or friends or whoever, you know, if you can relate that back to your business. Then that becomes a tax write-off. So again, your hotel airfare, meals, things like that, now that was personal, now becomes a business write-off.

Cool.

Cool.

What would you need to like prove? Like my question, like being the situation of an audit, since me and my wife, we just went to Kansas City, right? And say we had gone to a gym out there to work out like we wanted to. How would we make it so if we didn't do it, do you need to do something before? You need to have like an email to the owners of the gym like, hey, can we drop in and talk to you guys about stuff? Or if we just take a trip to Tahoe, we can write off everything, stop at a gym there. It's 2 hours away.

Yeah.

What do we need for like proof for that?

Uh, like you said, if you have any emails, that totally helps. Your receipts. Keep your receipts and on the back of them, write down the business purpose. Who did you talk to? Where did you go? You know, kind of what, what business was involved in that expense. But just keep all your receipts. And with receipts, you don't have to organize them in any way. Just stuff them in a big envelope for 2018 and, you know, kind of put them away. But just keep all your receipts, write the business purpose on them, and then you should be good to go. With those.

Yeah, your, your best defense, Gary, is it's that predetermined, like, business purpose. But that being the case, even though you went to Kansas, and I'm assuming you went to the game— a game. Yeah, yeah. So those tickets, you can deduct those tickets because you went, you went to Kansas actually because you wanted to work out or you wanted to go research the local box. And see how their coaches are handling drop-ins or how their coaches are, you know, teaching the different WODs.

Yeah.

So, I mean, there's a lot of stuff that you can claim as a deduction, and you can even go back. All these things we're talking about apply to all of 2017, so you can go back in your records and really categorize those, right? But yeah, as far as like your protection to make things audit-proof, Really, the best is that predetermined business purpose. So yeah, emails, you can even take pictures that like you probably post to Instagram. So if you're working out at a different box on your vacation, post it on Instagram and say, hey, I'm just checking out the local box here in Kansas. That's proof. That's great.

Yeah, every little bit.

Good question.

Definitely. Any questions on travel?

Um, my only question, one question would be, is it if I just put it on the company card, if I, if I travel to San Diego and I put on the company card and it automatically through QuickBooks gets sorted into travel, so then I don't need to do anything extra, right?

No, just keep your receipts for a trip. Yeah, like I said, just stuff all your receipts in a big envelope and hold on to those in case you ever need them. So, but yeah, just categorize it as travel like that's how QuickBooks is doing it. So yeah, you're good that way. So—

And make sure everything on that trip was travel though, because you want to categorize different things that you spent on that trip as travel. So you want to make sure in QuickBooks it matches that, right?

Gotcha. Um, so like if I go out to dinner, instead of categorizing as meals and entertainment, Categorize it as travel, or does it really not matter?

I like to actually create sub-accounts under travel. So like, I'll have a travel header account, and then I'll have sub-accounts under that— meals, entertainment, uh, you know, parking, airfare, lodging, or, you know, that kind of thing.

That's—

it's the best way to do it.

Yeah, it's up to you.

I didn't know if it gets deducted differently from your taxes if you say, look, this was a meal in town for business purposes versus this is a meal during my business trip. Is it taxed differently because it's travel or does it not matter really?

Meals and entertainment is one of those things that it's always meals and entertainment, but everything else would be put under travel.

Gotcha.

Okay. Yeah.

The thing of it is This is kind of an area that can be a little confusing. If you're, if you're traveling and it's a, it's a business trip, like, like in Ryan's example, you know, you go to Kansas City and there's a business purpose there. You go to— you end up going to the game as kind of part of your trip.

Yeah.

That would be business entertainment, right? So that one goes in the— that one would automatically go into meals and entertainment. But it— the reason why it was business entertainment is because it was a business trip.

Yeah.

Same thing goes for meals. If you're on a business trip and you go to a restaurant, that's a trip. Even if you go all alone and it's just you and the waitress, you know, and that's it. Even if you don't talk about business, because that's a business trip, it's business travel, that one gets booked as a business meal. That's why, that's why I like to create a separate account that goes under travel. Your local meals entertainment, I put in meals entertainment in its own, you know, its own account. And then I have a sub-account for travel meals because every meal that you have while you're traveling is a business meal.

Cool.

So, but they— but it's still 50%, like Sam said. It's meals, meals, still 50% either way.

Gotcha.

It's a deduction you take.

Okay, so the next one is auto expenses, and this is one that a lot of times gets overlooked, but it can rack up to be a huge deduction. So we recommend taking your miles. So anytime you drive anywhere that has a business purpose, keep track of that. A lot of people use apps on their phones for things like that. But like, if you're going on a trip, of course those are all travel miles. But even if you're just going around town between your house and the gym, or you need to run out for gym supplies or whatever, those are all business miles. And the tax deduction on that is awesome. For each mile you drive, you get 54 cents of a deduction. So it's really easy for that to rack up throughout the course of the year. And that's Those are miles you're going to be driving anyway. You should take them as a tax deduction. So with those, just keep some kind of an app or some kind of a log to keep track of those miles. But around town, you know, going to trips, if you're going to games out in another city or whatever, those are all business miles.

So—

What about driving from home to the gym?

Yes.

That does count?

Those are business miles. So I mean, that's easy right there. How many times do you go to the gym a week? You know, and then figure that out for the whole year, and there's a big chunk of a tax deduction right there for you.

So, question is, if coaches didn't deduct for last year's taxes?

Like, I like her suggestion. Just figure out how many times do you go to the gym each week, multiply that by 50 or however many weeks you're, you know, you're working it, and And just claim that for 2017. If you haven't been tracking it, you know, every trip, you can get to a good, a good estimate that way.

Okay, I think if they didn't take out any deductions for 2016 and they're like, oh, I took this trip and oh, I drove this many miles, can they adjust their taxes?

Not for 2017. It may be worth going back and amending 2016 to put on those deductions. But if you had an expense in 2016, you really can't take it in 2017.

That's what I meant for amending. Is that worth doing?

It would just depend on the situation. That's something that we could look at. If you have enough expenses that would justify getting a return on your taxes, yeah, that's something to consider. Gotcha.

Yeah, it's really individual. Like, maybe, maybe it's worth it, maybe it's not. Just kind of, you have to meet one-on-one. We could look at it.

Yeah, something we could look into though, for sure.

For sure.

Okay, just a couple more business expenses. We kind of touched on the business meals and entertainment. So let's say you're going out to like Costa Vida or something for lunch, something you're going to do anyway. Maybe it's just yourself. How can we make this a business write-off? Well, maybe you're talking to the cashier or you're talking to the person serving your food. Hey, by the way, I work at this, you know, I'm a coach at the gym just down the road and This is what I do, you know. Now suddenly that cashier becomes a potential member. You're advertising your services even though you were really going to go just get a burrito at Costa Vida. But that now becomes a business expense because you were advertising your services or your gym. So on the back of that receipt, hey, I talked to this person about, you know, our services or whatever, and then keep that receipt. So now all the meals you're going to go out and eat anyway can now be a business write-off.

Cool. And then you write down on the back of the receipt, just write down their name, like I talked to—

Yep.

About— About whatever. Yeah. And then there's your proof in your receipt. So that makes it audit-proof there.

What if you use the meal just to plan like personal training?

If there's another person involved in that conversation, then you can take it.

Yeah, but not if you're by yourself.

Yeah, if you're just by yourself, then there's no— there's definitely— it's, you know, you're doing it, but it's, it's not, um, it's just one of those things that the IRS wouldn't allow. It's kind of like, uh, same thing goes if— are you guys married? Either of you guys married?

Gary is.

Gary's married. So Gary, if you go out with your spouse and have a nice meal with your wife, And you guys talk business, like, that would be something that the IRS would disallow. Because I guess they, I guess they think that, you know, husbands and wives can talk anytime they want, so they don't want you to do that, right? So, so it's just one, it's just one of those rules, I guess you could say. If it's— If there's a business purpose behind the meal, you just have to have another person there, either a Maybe it's a member that you want to chat with about their experience, or maybe it's a, you know, yeah, or some advisor, marketing advisor or something, you know. So there just has to be another person involved there to make that a business meal.

Because the idea is if it was just you going out for a meal, the IRS would come back and say, well, you can do that at your gym or at home. You know, that's not technically a write-off. But now if you include that other party, that the waitress or whoever, now that becomes a business purpose. So, okay, any questions on that?

Cool.

And just a couple more. So cell phone and internet, those are 2 that a lot of people sometimes don't think of. But if you think about it, you cannot do your job without your cell phone and you cannot do your job without your home internet because I mean, you're on the clock and, you know, you're trying to make sure things keep working smoothly, you know, be in contact with people. So those 2 things should be coming out of your business account, should be a tax write-off for you. So things like that. And then, yeah, any continuing education or training that you guys do, things like that, those are all business write-offs as well.

Yeah, all your certs, make sure you write those off. Those are big.

Yeah, for sure. So, so again, anything that has a business purpose, potentially anything can be a write-off. We've kind of gone over some of the rules with some of the special ones, but, you know, if it's, if it's something that's going to help you be a better coach, better business owner, you know, in any way has a business purpose attached to it, then you take it.

That's the basic Yeah, we, we work with a lot of box owners, a lot of coaches. We even have coaches and gym owners write off tattoos because a lot of box owners look that part. That's kind of the persona that they put on. So haircuts too, you guys got to look good or else potential members aren't going to trust you or have that loyalty, you know, like, oh, he looks like a slob. So write all those off, advertising.

And just kind of in conclusion with the business deductions, we like to tell our clients, think about it. If you're going to spend a dollar, is that dollar related to your business in any way, shape, or form? If you can prove that it's related to your business in any way, then take that as a business write-off, take it out of your business account, and then that becomes a tax deduction. So just think next time you're going to go swipe your card or whatever, Is it related to your business? If it is, take it out of your business account.

Yeah, and also get creative and think, how can I make this related to my business? Yeah, so good point.

One thing I catch, you guys, uh, keep using the term, uh, business account. For 1099, do I need to set up a separate account that is my CrossFit Roseville if I'm gonna go buy a new sweatshirt from Rogue? I need to buy it from that account versus if I buy it from just from my checking, then I cannot write it off?

Great question.

So we definitely recommend having a separate business bank account. If you haven't had it up to this point, that's okay. Go get one set up and then start getting all your, your income deposited into it and taking your business expenses out of it because it helps create a separation between you personally and your business. And it helps make those business deductions stronger, and then it gives you protection by separating your business. But any money that goes into your business bank account, if it's not a business purpose, if you need to go buy personal groceries or pay your rent or whatever, that's still your money. So you can take your money and transfer into your personal bank account at any point in time. That's still your money, but it just helps to take all your business expenses out of that business account and just kind of keep things separate. So we would recommend A business bank account that way.

Perfect. Yeah, but I just reiterate what Sam said though, really important. The fact that you haven't had a business bank account until now, that doesn't mean that everything we've talked about is still not a legitimate business deduction. Okay, still want to take those, just it's a best practice and there's some advantages. And we're actually going to talk a little bit about how having a, you know, a properly structured entity Can also, you know, help you with some additional tax deductions beyond what we already talked about.

Yeah, and just last thing about the separate business account, it just makes it super easy to track everything. Oh yeah, sure. When you just have a separate bank— a business bank account, it's like every transaction in that account is business, so I don't have to think, did I use my personal card? Do I need to go— oh, I bought that Rogue hoodie from my personal account, but I gotta go put money into my business, or yeah, just, it's just so much easier just to have the 2 separate accounts.

Cool.

Great questions though.

All right, so we move on to the next strategy. All right, let's go ahead and we're gonna do a screen share here with you guys because this helps a little bit to get a visual on this next piece. We are going to talk about business entity just a little bit. Turns out that when we're talking about business entity, by the way, you know, we're talking about is it a partnership, is it a sole proprietorship, is it a C corp, an S corp, an LLC, all that kind of stuff that has to do with the, you know, the business entity that you choose.

Yeah, so Jesse and Gary, do you guys have a business set up then? I mean, I'm sure Jesse Mine's an LLC.

Okay, okay, right on. So Gary, as a contractor, like every deduction we've discussed up to this point, you know, that all applies to you. What we're gonna talk about now can apply to you if you get set up. And for this part, for our purposes in discussing 2017, getting set up means that you get your LLC filed with the state of California and you're official, right, by the end of the year. So if you do that, then this strategy we're going to share with you here can also apply to you and obviously can apply to Jesse as well. So this is really for both of you guys, but just something to keep in mind there. So, okay, here's the mouse. Now I can kind of point to things as we go. I get rid of this thing. I get rid of that right here. Is this the, uh, there we go.

That's zoomed in. Oh wow.

Just scroll up.

That's what we'll do. Okay, all right, so let's kind of start at the beginning. So let's say that, uh, after taking it, have you guys been kind of writing down, you know, each of these deductions and maybe an estimate on what What each one might be for you?

Uh, no.

Okay, that's okay. So that might be something— this is definitely an exercise you can do, you know, later on when you're done, you have a chance to sit down and maybe look at, uh, uh, look at your records. But let's say that you made $50,000, and this is just an example just to illustrate the, the concept here, and you had $20,000 that, that you figure out where your Tax-deductible expenses, right? So now we have what we call net income. So this is, this is what's left over after deducting all your expenses, $30,000, right? So as things are by default, that $30,000, the IRS considers that to be what's called self-employment income. Self-employment income is just income. It's not coming to you on a wage. It's like for Gary, this is a 1099, right? You get a 1099 for your self-employment income. For Jesse, you know, by default, your income would just be filed as, again, personal income on your personal return.

Mm-hmm.

And so you end up, because of that, just because you're a business owner, you know, You're working for yourself, you end up getting taxed 2 different ways on that income. One is something called self-employment tax, and this is separate. This is actually separate from your federal and state income taxes.

Hmm.

So this little guy here, on $30,000, you end up forking out $4,600 of self-employment tax, and that's with the income tax apply based on your individual, you know, based on your situation, your income tax rate may be between 15% and 35% pretty easily. So we don't like those numbers and we definitely don't like the extra self-employment tax on there. And so that's what we, that's what we want to address with, with this strategy that we're talking about here.

Okay.

So instead of this, instead of this, you know, getting taxed 2 different ways. What we wanna do is set up your LLC, set up your entity. And actually, I'm gonna call the LLC from now on, I'm gonna call it an S corp. All right, 'cause the reason is that we're gonna ask the IRS, we're gonna tell them, look, we want the LLC, we want it to be, to have S corp status. And the IRS may approve that. Now you have a separate tax entity that we can flow this income through. So rather than coming directly to you and you get hit with the self-employment tax, now it's gonna come to the S corp.

Yeah.

Is this making sense to you guys so far?

Yep.

So here we got this S corp here, and from there, There are— you're going to get the income 2 different ways. One way is you're going to have what's called a reasonable wage paid to you by the S corp. So let's say again on that, that $30,000 of net income, we're just going to pay a wage, not of $30,000, we're going to just pay a fraction of that. So that's what this 30% equals, $9,000. Right here.

Okay.

That's the reasonable wage.

Yeah.

So that's what you get paid as the officer of your S corp.

Okay, yeah, that makes sense.

Okay, so you get it because it's a wage, it's a salary, you get a W-2 for that. And the W-2, um, so the, uh, the payroll tax, let's just say that you pay on that, on that, uh, Wage is $1,400.

Yeah.

Okay, now compare that to the self-employment tax right here, 46%.

Right, much better.

Okay, it's definitely a lot better figure, isn't it?

Yeah.

So the other— so what happens to the other 70% of the income, the other $21,000? Right, that comes to you not as an employee but as a shareholder of your S corp. And as you can see here, sorry, I got kind of cut off a little bit, but it's taxed only one way, right? It's subject to, yeah, your federal and state income tax, but there's no self-employment tax, payroll tax. And of course, the difference is $3,200 more money that you keep in your pocket because you're not paying self-employment tax on that full $30,000.

Gotcha.

And so for this person here in this example, using the S corp will be worth $3,200 for them.

Yeah, 'cause it's $800 in California per year for your S corp, but then you're still saving $2,400.

Yeah, that's a good point. There is a— what's called the franchise tax, and California is notorious for having the worst franchise tax in the history of the world. But it's still gonna be worth it, right? Because, yeah, it was an $800 deduction from there. So I guess in you guys' case, this $3,200 in savings would be reduced by that nice California tax. But you can see it's still definitely a worthwhile strategy. And the more money you're making, the more worthwhile it gets.

Gotcha. Okay, so thoughts, questions on that?

Um, so for Gary to make it worthwhile, he would just have to figure out— well, okay, here's a question. Let's just say Gary made, uh, $26,000, and let's say he could expense with travel and driving and clothing and haircuts and all those other things.

$13,000.

So, let's say he's got $13,000 net income from the gym. What's the barrier where it would still make sense for him to do the S corp thing versus not?

Yeah, awesome.

Yeah, really good question because there is kind of a, you know, there is a cost associated with this strategy. You've already noted the $800 franchise tax for California. Obviously, the other cost is just associated with filing a separate tax return.

Yeah.

There is some cost associated with that. So all we have to look at is, is the tax— is the self-employment tax saved gonna be more than that? And I'd say, you know, to Gary and other coaches, let's talk about it, you know. But what I would do is just take your You know, when you have time to kind of break this all out for your situation, take your income, subtract your expenses, see what that is. If it's like $5,000 or more, then I would just recommend go ahead and set up the LLC. You know, it— well, see, in California, you gotta pay that franchise tax whether it's an S corp or not, Ansha.

Yeah.

Um, let's, let's make it, let's make it something more like $10,000. If it's $10,000 of income, then we can definitely help with this strategy. And then I would just say go ahead and set it up, set up the LLC effective prior to the end of the year. And then, you know, we can talk in early January and we can, you know, move forward with making that strategy work for you.

Cool.

But yeah, if it's $10,000, even the franchise tax is not gonna be something that we can offset with additional tax savings. So unless there's any other questions about the S corporation and how that works, Sam's actually got another great strategy she's gonna tell you guys about. And this is, this is one thing that You know, yeah, self-employment tax, big deal, right? This thing is equally, for our clients, something that is gonna save them between $3,000 and $6,000 every year. So if, you know, even if nothing else, you know, definitely this is something that you guys should be checking out, seeing how this can work to save you guys money on your income, right, your taxes.

Okay. All right. I love this strategy. It's super fun. So there's kind of 2 trains of thought that I want to talk about before, and I'll tell you how they come together. So the first train of thought with this strategy is we've all heard of those big businesses that they go out to a hotel, they rent out their convention center, you know, they have the audiovisual, the meals and things like that. You know, we've heard of big businesses doing that. So kind of keep that in mind. So the second train of thought with this strategy is the IRS has a rule that says if you rent out your asset, so in this case your home, for more than 14 days, so 15 days or more, then you have to pick up all that money as income. But what a lot of people miss is that 14 days and under, you don't have to pick that up as income. So these 2 trains of thought come together like this. Yeah, we'll pull up a kind of a diagram here to show you a little bit.

Maybe?

Okay, so the idea here is your business is going to rent out your home from you 14 times or less a year. Because big businesses can do this, so why can't the small business owner do this? So you're going to hold in your home, you know, a business meeting. You know, you guys are talking about your business all the time, you know, planning, you know, lives and things coming up in the future, talking about your members, things like that. You know, you're doing this stuff anyway as a business owner. So your business is going to pay you to rent out your home. For corporate business meetings 14 times or less a year. So what this does is this creates a rent expense on the business side. You're picking up a rent deduction that you didn't have before. But you're not picking that money up as income on your personal side, on your personal return. So this becomes a deduction for your business and basically a tax-free bonus for you. And so here are the fun numbers. We've done the market research for you guys. If I was going to go to a hotel and rent it out, it would cost me about $1,250 a day to do that. So if I do corporate rent and I do 14 transfers, you know, 14 meetings in a year, that creates a $15,000 tax deduction on my business that I then don't have to pick up on my personal. So that in our, in our S corp example, if you had $30,000 of income and then you do corporate rent, now you're only down to $15,000 of income just by doing this. And you're just, you're paying yourself for things you're already doing. You're already having these meetings and talking about your business and things like that. So this is an awesome strategy. You do have to have an LLC set up. And have a separate business bank account because what this looks like in practice. Is once a month or, you know, 14 times throughout the year, you're going to transfer money from your business bank account into your personal. And we actually have a handout that we can give you that has like the contract that you need between your business and you and corporate minutes. We have like the paperwork for you to make this compliant. But this is an awesome strategy to save, like Nate said, anywhere between $4,000 to $6,000 in taxes. Just by doing what you're already doing anyway. Any questions?

Yes.

I don't know.

I don't know what my question is yet.

Okay. I have a question. Can you go over that again, Sam?

That is a normal response.

Yes, it is.

So, okay, so it's 1 day at a time for 12 different days throughout the year. And it said if it's $1,250 a day, that would be $15,000 a year.

Yeah, 14 transfers. The, the code, the IRS code says you can go 14 days or less. So what a lot of our clients do is they set up a transaction for once a month, and then before the end of the year, they'll do an additional 2 to get up to that 14,000— 14 transfers. So You can max it out.

Okay, and so it's, it, if I just wrote myself a check for this, 'cause my business bank and my personal bank are different, I don't know how to, so I just write myself checks. But if I just write myself a check for this, I just write myself a check for $1,250, you know, put in the notes like corporate home rental, Mm-hmm. I don't get taxed on that because it's a business expense.

Yes, it's a business expense, and it's okay if it's a check too, because what it does is it creates a paper trail. Money is being withdrawn from your business bank account and being put into your personal, so checks are fine.

Gotcha. But I'm assuming there's no way to— all the times that I did do this in 2017 but didn't I didn't write myself checks for it. There's no way to go back.

Right now, we have till the end of the year. You got excited there. You can do a transfer every day between now and the end of the year. So start today and then do a transfer tomorrow and the next day until the end of the year so you can get in as many transfers as possible.

Also, if you have— because technically this is almost like a distribution, Jesse, so it's like Okay, I'm paying myself my regular distribution for the month, right? In some cases, if you've done that throughout the year and it's a pretty consistent distribution, we can go reclassify that as corporate rent.

Okay.

So if, if you've already done that and it's a reasonable amount to what we're talking about, we can go look at that individually with you if you want. There's just a couple things we would need to do to make sure, you know, it passed. But yeah, potentially that— yeah, we could make that happen for you this 2017 year.

Okay, cool. But then for contractors to do that, they would have to— that's another reason for them to set up the LLC.

Yep.

So even if they're only— if they're under $10,000 in net income, then they still should do it, right?

Potentially.

Yeah, it kind of gets between 5 and 10. It may or may not. That's why I say, you know, I'm erring on the side of being conservative and say if it's 10, then yeah, we, we can definitely make that work.

Um, but you're at— you're on the right track because it's awesome. If you're getting that feeling like, oh, this is sweet, yes, definitely be thinking that way.

Yeah, one thing too to think about with corporate rent is like, if it— and this would be especially something to consider for, you know, for the coaches, if, you know, because I know some coaches, they maybe go in once a week and it's not going to be a real high level of revenue. We don't want to use corporate rent is like, okay, I have $6,000 in revenue, you know, $6,000 in income, and then maybe a couple thousand in other expenses. I don't want to then take, you know, I don't want to then write off $15,000 of rent expense, right? Because that's going to look pretty funny on a tax return. But if it's, but if it's, you know, $100,000 of box income, And rent expense is $15,000, that's looking pretty normal. Or even $20,000 of, you know, for a coach, $20,000 of income that they earn as a contractor and having $5,000 as rent expense, that looks pretty normal too, you know. So we use the, I guess, the philosophy that pigs get fat and hogs get slaughtered. That kind of applies here when it comes to corporate rent.

We—

and this applies to every other expense category as well. We don't want one expense category to look ginormous compared to the person's income.

Right.

So, you know, we— and that's why we work with clients, because we can help them in making this a strategy that's going to help them save money. But we're going to make sure that, you know, all these strategies are used With good judgment, you know, because we definitely want to make sure that we're not putting a neon sign out there for the IRS either.

Another question is— thanks, that makes sense— how would this make sense, or how would this work if you already deduct for your personal office space at home?

We can combine the two.

Okay, cool.

Yeah, we can talk about that. And you don't have to do all 14 transfers too. Maybe only 3 or 4 a year makes sense for your situation, right? It just kind of depends, and that's something we can look at, but you have up to 14 transfers. So yeah.

Sweet. Yeah, that's cool.

Perfect. So if, if this is sounding good to you guys, I, I think it is, um, what we want to do for you and for the rest of your coaches, um, and Jesse, you got my email address. So I'm just gonna, you know, I trust you'll share this information with your Coaches and any of those that are interested in just, you know, getting some information and getting help with this. We're gonna send to anyone that emails us, and actually either me or Sam, let's get the—

If you guys just put, there's a little chat box. I guess, Gary, we already have your email, Jesse, but if Gary, you can put your email in this chat box and we've got this pretty cool business organizer. It's automated, so it helps you keep track of all these different expenses. We can send that to you.

Awesome, thank you.

Let's, let's also tag on that. Let's also send the corporate rent package. Can we do that? Yeah, so let's We'll just send anyone that reaches out, we'll send, you know, the tracker that Ryan just mentioned and also the corporate rent package that has everything that you need in there to make this work. It has templates, you know, for doing the meeting minutes for your meetings, the contract in there, so it's— and all the information that anyone would need to make this work for them. We'll just send that out to you for free. Usually we Now, this is something that we would charge $175 for, but for you guys taking the time to meet with us and any of your coaches that, you know, that you got under you, we'll help you share the love with them and we'll make the same deal with them. So just, we're actually going to be out of the office for the next week hanging out with family, you know, doing the Christmas thing. But when we get back in January on the 2nd, We'll get this stuff out to you guys, or if you guys can— well, for you guys, of course, we'll go ahead and send it out today. For any other coaches that email us during the week, next week we'll get back to them right away when we get back.

Awesome. Did you get Gary's email in the chat box?

Yeah. Yeah, looks like we got it.

And then the thing on the top left that says recording.

Yeah, so I actually— because we do a lot of these tax wads with other boxes, other coaches, so we record them. And then yeah, your other coaches, I'm happy to share this recording with them so that they can glean off the same info.

Cool.

So yeah, I'll just— I'll put this together, I'll put a link, and I'll send you a link to it, Jesse, and then you can just distribute it to your Perfect.

And then Gary should then probably set up an LLC or S corp before the end of the month.

Yeah.

Do you think that's— I mean, is that something possible? I know you guys are in Utah, but in California, can you set up an LLC in 8 business days, something like that? However many days we have left in the year.

Yes, so we technically can't set up the entity for you, but like here in Utah we can do it online. So you may be able to do it online in the state of California. And then also the other thing is we need— we just need the LLC set up. In the new year we can then elect you to be an S corp. So the LLC is the only critical thing at this point, is getting that done before the end of the year.

Yeah, so Utah, for us to set up an LLC on the website, it's It takes like 30 minutes and then you have an LLC. So I don't know, I don't know specifically how California does it. I'm assuming it's pretty similar.

Yeah.

But yeah, definitely set that up and then you can apply all these things we've talked about today. And then if you guys want, in January, you know, we can set up a specific like tax planning session for you guys where you individually or your coaches can really dive into the numbers We can look at your expenses and then get a real good estimate of your tax savings for this upcoming year. So we'd be happy to do that with all of you guys.

Yeah, for sure. That's absolutely— we want to make ourselves available to you guys, you know, to discuss your individual situations. Another comment I wanted to make is if, you know, after you've looked at setting up your LLC in California, if you're like, man, I'd really like to just get some help with that. I can send you— I'll just go ahead and send it today just in case— just some contact information for a service that can help you out with that. So if you want to leverage them, you know, they do charge. I think it's like $300 or something, and then they can just take care of that for you. So if you need that, you know, you got a backup plan if that's looking like it's going to be more than you want to— what you want to take on. So yeah.

Okay, so any final questions from you guys? I know that was like a lot.

Yeah, I mean, yeah, no question. It's just crazy the things you can write off. I think that was a lot of learning right there. It's kind of exciting to see like what we'll be able to do. Yeah, coming up here before April.

So yeah, absolutely.

Um, and then For my coaches and for myself, what are your guys' costs for doing personal taxes and doing corporate taxes?

So it's one of those things that does vary depending on the situation. Obviously, you know, Jesse, your, your situation is gonna be a little bit different from Gary and, and so on and so forth. So we like to just chat with you guys individually and kind of see what we got going on and what services you really want. Because just depending on what you want us to do and what you might want, you know, the services that you want, that's really gonna determine what it all works out to.

Yeah, well, we pride ourselves on being very untraditional tax and accountants, tax and accounting firm. We're not your typical accountant. We like to work with our clients proactively, especially our CrossFit clients. Like, we love you guys, we love CrossFit. And so it just really depends, like Nate said. But we do monthly packages that our clients love, our CrossFit clients love. But yeah, like, if you reach out and we do a little tax planning session, we'll definitely get into those numbers, go over that for sure.

Cool, perfect.

Thank you guys very much.

Yeah, thank you. Yeah, so I'll put this together and send you a link, Jesse. for this recording.

Perfect.

Awesome. Thanks, guys.

Okay.

Thank you.

See you later.

Happy holidays.

Merry Christmas.