Main Street Business

#560 How Business Owners Hold a Family Board Meeting

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business Podcast, Mark J. Kohler uncovers the secret to saving big on taxes and strengthening your business—the family board meeting. Discover how to legally write off travel, meals, and payments to family members, while staying compliant and building financial security. Mark breaks down the process step by step, making it easy for any small business owner to implement.

Here are some of the highlights:

  • Mark explains why every small business should hold a family board meeting and how it can unlock valuable tax deductions while enhancing business legitimacy.
  • Discussion on how travel, dining, and other expenses related to board meetings can be legally written off, reducing taxable income.
  • Mark covers the importance of maintaining proper documentation, such as meeting minutes and corporate records, to ensure compliance and asset protection.
  • The process of selecting board members, including family and friends, to provide valuable advice while benefiting from tax write-offs.
  • Explanation of how to structure family board meetings with clear agendas and actionable discussions to improve business planning.
  • Mark outlines the tax benefits of compensating family members for their participation in board meetings and how it can serve as a wealth-building strategy.
  • The significance of holding board meetings at least once a year to stay compliant, with suggestions on how to schedule additional meetings for greater tax advantages.
  • How having a properly structured family board meeting can help business owners align their financial goals with their long-term vision and legacy planning.
Speaker 1:

Welcome to the Main Street Business Podcast with your distinguished hosts, mark J Kohler and Matt Sorenson. Both are best-selling authors and have over 25 years of industry experience, with 10,000 client consultations, making them the leading tax and legal experts in the nation. Together, they'll unpack the most complex tax, legal and financial strategies crucial for saving more, stressing less and building generational wealth. Today they're your personal advisors, ready to break it down for you and make the tax and legal game easier than ever. Here is Mark and Matt.

Speaker 2:

I am absolutely convinced that one of the most underutilized strategies by small business owners today is the family board meeting. That's right. Every small business should have a family office. In fact they do. It's a room down the hallway. It's right, every small business should have a family office. In fact they do. It's a room down the hallway. It's a corner of the studio apartment. That is your family office, just like Microsoft and Apple and the big boys, and it's an opportunity to take tax write-offs to go somewhere to hold your family board meeting. It's going to give you better asset protection. You're going to be able to talk about your business with your family members that should be on the board and it's going to help you be a more successful business owner. Having a board meeting is an awesome strategy for the small business owner to save taxes, build wealth and be more successful.

Speaker 2:

Now my name is Mark J Kohler. I'm a CPA attorney. I've been in the tax and legal industry for over 25 years with a law firm, an accounting firm, and helping small business owners all over the country. But, most importantly, I'm a small business owner. I have a family. I have a mom and dad and friends and people that I want to meet with and talk about with my family, and this isn't hard to do. If you have an LLC or a corporation, you're in fact required to have a board meeting every year. This is what shareholders and board of directors have to do in a corporation, but with LLCs it's the same story. Every LLC we set up on our law firm, we ask our client who are your board of advisors, who are the people you hang out with, that you get advice from. This is so easy to do. Now I'm going to give you the steps to hold your own family board meeting and it doesn't cost you anything. The tax write-off is the fun having the meeting, the travel cost, the dining cost and getting somewhere as a family and friends to have this board meeting. Now I want to take you through five steps to hold an effective board meeting and to make your company more legit and be more successful as a small business owner, and a couple other points.

Speaker 2:

You don't have to be a billionaire to have a family office. Having a family office just means that you're organized with your business as a family, and business is family. What is your legacy? What is your vision? Are you talking about this with your family members, you don't have to again be super rich to simply sit down and talk about your business. You can have also multiple board meetings a year. You can have one a month, one a quarter or one a year, but for legal purposes we want to have them at least once a year, and the bigger you are and the more legitimate the meeting. They're all tax write-offs.

Speaker 2:

Number one it starts with having meetings clean legal documents. Some of you have one sheet of paper that you filed online with some company five years ago and that's your corporate book. Uh-uh, that will not help you in court. It will not help you in an audit. There are things that need to be in your corporate book for tax and legal purposes that are absolutely critical. At our law office we call it a cleanup. We literally have a team of paralegals that that's all they do every day is clean up people's LLCs and corporations. That are a disaster, and it doesn't have to be expensive. It might be three to 500 bucks depending on the state and if something needs to get filed. Some people have a member managed LLC, which is wrong in the first place. It better be a manager managed LLC.

Speaker 2:

So step one is cleaning up your documents. You should have an operating agreement and minutes. You should have bylaws and shareholder or director's minutes. You need to have a corporate book with membership certificates or stock certificates. These things are good and it makes you legit and it makes you a better business owner and it's exciting and you own the fact that you have a legitimate business. And this is what sets the stage for your next board meeting.

Speaker 2:

Now, some of you, you might have to redo your company books or the setup. It may have been dissolved by the state because you've ignored it for so long, but don't think you have to redo it. If we clean it up and you start doing minutes, moving forward, your company is just as strong as if you started it today. But when you get with the law firm, you can find out where does this stand and they'll do a little audit and make sure that your company is clean and ready to go. Now, if you want to work with our law firm the link is down below they will do an audit, make sure it's clean and organized and ready to go. This does not have to be expensive or painful.

Speaker 2:

Now number two, the fun starts. I need you to choose three to five, maybe seven people it could be more who are going to serve on your board, typically family members or friends that you're going to associate with and talk about your business with. I'd love to see kids on here, especially, maybe once they become teenagers. I don't know about an eight or 10 year oldyear-old helping make decisions in your business. Now, remember, it's also just advice.

Speaker 2:

Whoever these people are, they're not going to own your company. It's not going to be on public record. They can't make decisions without you about your business. They're there to be advisors. They're board of advisors in an LLC or a board of directors in a corporation. They're there to give you advice. You listen. Maybe directors in a corporation. They're there to give you advice. You listen. Maybe you take their advice, Maybe you don't. But choose these people wisely, because if you're going to give them money at any point during the year this is where kids come into play or even college students and family members you might be supporting. If they're on your board, then you can take a tax write-off for the money you pay them throughout the year for other things because they're serving in an important function inside your company. This is a valid tax deduction for involving your family members.

Speaker 2:

Now number three you're going to schedule your board meeting and take into account the tax write-off aspect. I want you to hold this board meeting where you travel anyway. For example, you might be going to grandma's or mom and dad's or your kids are coming home for Christmas, or you're going to go on a family trip in the spring or the fall and we want to hold that meeting where we're going to be paying for some airfare or Airbnbs and Ubers and taxis and whatever, because travel is a deduction, a hundred percent deduction for holding to the board meeting. Now we can't write off 10 days in the Cayman Islands, but we can write off a flight to Vegas, hold our board meeting the next day and then fly back. So you're writing off three days of travel for a board meeting. Now it can be in the Cayman Islands, but it's one day to fly there, one day to hold the meeting and one day to fly back. Now, if you stay longer, that's personal time. We can't write that off. So we want to be using this trip and all the dining while we're there is also going to be a write-off to have a tax deduction.

Speaker 2:

See, there's two tax deductible things going on here. Not only is the meeting itself a tax deduction. But now you're justifying writing off any payments to family members throughout the year. All of my kids know and all my kids are over age 21 now that when they come home for Christmas and I pay for the plane ticket, that is a tax deduction to me because they're not coming home for Christmas, they're coming home for a board meeting. And then if I give them money throughout the year, they're going to get a 1099 and they're stocking for it. Why? Because they served on my board People. This is how the wealthy do it and it's legit, honest and ethical.

Speaker 2:

And I want to just say this last point about scheduling it Make it legit. Don't just say, oh, during the halftime at the Super Bowl we're going to have a board meeting. No, schedule, a specific time, place this meaningful, and let everybody know there's going to be an agenda and that the purpose of this meeting is to talk about business, even their businesses, finance, wealth building, business building. You're there to help train and educate them as much as they are there to help you with your business. Now number four what do you cover in this board meeting? Oh, my gosh, right, mark. What are we going to talk about?

Speaker 2:

Well, at Main Street Business Services, our sister company to the law firm, we give you a 20 point or more checklist of things to go over in the meeting so that you've got your little handbook of how to do this. And it's super expensive, I apologize in advance. We charge $200. I know, I know it's highway robbery, but $200 to give you the list of things to cover. You turn it back into us, we type it up, make it look pretty, it goes into your corporate book and on top of that, we're making sure that your BOI report is done, if required by the feds. We're making sure you're good with the state and any filings that need to be with the state. This is part of a whole service called company compliance for $200 a year, which is a tax write-off too. So we'll give you an honest silver platter of what to do in your board meeting, and this checklist is going to be things like yes, I need an accountable plan with the IRS for having a home office or writing off my auto.

Speaker 2:

Hey, what are our plans for next year? And hey, let's look at our financial statement from last year. And how much is in everybody's Roth IRAs? What are we doing to get out of debt. What are we going to buy with real estate? Oh my gosh, all of this stuff can be talked about in the family board meeting, where you start to talk about legacy and wealth. And again, this is what the rich people do with a family office, and we all can do it on Main Street America with our own little family business.

Speaker 2:

Now, number five so easy it's the record keeping that once you hold this meeting and you take those notes, they actually get filed. Now they don't go to the state, they don't go to the IRS, but they go back into your corporate book and at Main Street Business Services, we'll type them up again and make them look pretty. We're going to keep a copy of everything and help give you back your business again, pretty and pink. I mean, this is going to be awesome, a little 80s reference there. We want to make sure that your corporation is right there for you where it should be legit and ready to protect you in the case of a lawsuit or in the case of an audit. So that's it, my friends, an incredible way to create massive tax deductions and become a better business owner. Now, down below, there's a link to the law firm If you need them to do a cleanup on your entity because it's a little bit of a mess, then they'll hand you off to Main Street Business Services, or you can go straight to Main Street and say my books are pretty tight, let's get my board meeting going and I need to make sure my company is maintained.

Speaker 2:

Every year you can do a discovery call. They'll walk you through it, send you the information to get started Super simple. You're going to love this as you elevate you and your business together. Now, finally, if you're a tax advisor and you're watching this and you're like, oh my gosh, I need to be doing this with my clients, mark, what other tricks do you have up your sleeve? Please check out our Main Street Professional Certification. We've got 12 modules, 70 plus topics, helping you build an advisory practice and taking your compliance clients to the next level as well. This board meeting is one concept of so many that will help you make a difference in Main Street business owners' lives Bottom line. The American dream is alive and well, and my name is Mark J Kohler and I'm on this journey with you.

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