Main Street Business

#563 Open Forum - HSA's, Picking a CPA, Venmo & More

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business Podcast, Mark J. Kohler and Mat Sorensen answer your top tax and legal questions. From choosing the right tax advisor (without overpaying for empty credentials) to navigating HSAs, S corp taxation, and solo 401(k) limitations—this episode is packed with practical strategies to keep your business and investments in top shape. Plus, they break down how their Crypto IRA can help you leverage cryptocurrency in your retirement portfolio.

Here are some of the highlights:

  • Mark discusses the importance of choosing a good tax advisor and the potential pitfalls of high fees without proper credentials.
  • Mat clarifies the difference between an HSA account and an HSA-qualifying insurance plan, emphasizing that the account can be set up anywhere, including with Direct IRA.
  • Mark and Mat cover the benefits of self-directing an HSA account, including the ability to invest in various assets like crypto, real estate, and private companies.
  • Upcoming changes in 2025 regarding 1099-K forms for payment apps like Cash App and Venmo.
  • A workaround involving picking up FICA wages on a Schedule C and ensuring proper documentation on the 1120-S form.
  • The challenges of setting up an IRA LLC for buying crypto and recommends using the Crypto IRA product instead.
  • The process of transferring funds from a retirement account to a Gemini account for buying and selling crypto.
  • Mark and Mat encourage listeners to invest time in finding the right professional team for their business, including accountants and lawyers.
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:

How much should I be paying for a tax advisor? I think a good tax advisor should save you far exceed what you're paying them.

Speaker 3:

Don't be gun shy with the high fees, but make sure they do have the credentials and the understanding. Worst thing is to pay a lot of money for a service provider that doesn't know the strategies that's going to actually help you save money. Starting out in 2025, Cash App, Venmo, all these payment apps are going to start sending you 1099Ks.

Speaker 2:

And you don't want to cheat on your taxes and then have to answer.

Speaker 3:

What Mark's saying is you don't want to be going to hell for this. The question is what are my options?

Speaker 2:

Am I screwed? Welcome everybody to today's episode of the Main Street Business Podcast. My name is Mark Kohler, here with the illustrious Matt Sorenson and this is the People Show. I love doing the open forum, yeah it's the open forum.

Speaker 3:

This is where we answer your questions. Of course, those are more important than what Mark and I have questions about in life, but this is tax and legal planning guys.

Speaker 2:

So we got Whoa whoa. I thought we were talking about the Super Bowl this weekend and the spread. That's not. We're not answering that question.

Speaker 3:

I barely know who's in the super, let alone have any ideas on what the spread is going to be. And even if I did, you wouldn't want to know what I think.

Speaker 3:

All right, all right All right, but I do got something to say about some of these tax and legal questions wealth, wealth building. So we're going to be diving into that and, uh, if you're like, hey, why don't you guys talk about this? That says why we do this show, go to mainstreetbusinesspodcastcom and you can submit your question there, and that's where we're getting the questions from today.

Speaker 2:

Yeah, we have several categories tax, general, q&a, estate planning, finance so several categories and please submit questions. We love it and it's fun. Dating tips, whatever you need. Yeah, dating tips, we'll go there and uh, and uh. Yeah, if you want to talk tax in bed man, I'll tell you right now. It's the, it's the secret weapon.

Speaker 3:

Yeah, it's a secret weapon. Yeah, I want to put someone to sleep, but whatever, that's right.

Speaker 2:

Okay, I've got one here, or do you want it? You got your first one, I'll go first, okay, okay.

Speaker 3:

Since you're you're yielding, I will. I will take the time. Okay, all right, this is from Lynette. She says how the heck do I put money into an HSA? Seems like a ridiculous question, but I specifically chose insurance that allowed me to open up an HSA. And here I am two weeks, two weeks before the end of the year, trying to figure out where do I put the money in. I I'd like to make it happen for this year. Can you help? Then she says my husband and I are small business owners. We buy our own insurance through the marketplace. I appreciate you guys for all the inspiring podcasts you bring us. All right, excellent question, lynette.

Speaker 1:

So much to unpack.

Speaker 3:

Yeah, you get into so many different great things, which is why I want to do your question, all right. So let's say deadline first, want to make sure you don't miss anything, all right.

Speaker 2:

Okay, I'll back clean up on your question, because I know you're going to blow it. Yeah, no, no pressure. No pressure Okay.

Speaker 3:

Let's work from the deadline here and get that out of the way first.

Speaker 2:

Well, that's a novel idea.

Speaker 3:

I thought we should start there, lynette. Okay, all right. So the good news is, lynette, is you've done right. You've set up the HSA qualifying plan. That's the first thing. You needed the qualifying plan in 2024. We're sitting in February 2025 as we're recording this, but you talked about this back in December, setting up the HSA qualifying high deductible plan. But you're like, but I don't know where to put the contribution. And that's okay. You have until April 15th to make your contribution for the prior year, as long as you had the HSA qualifying plan in the prior year. Okay, that's point number one that I want to make for you, lynette. So don't worry, if you didn't do this yet by year end, you're okay.

Speaker 3:

Now the second question of where the heck do I put this? Make sure you all understand an HSA account is different from your HSA qualifying insurance plan. An HSA account can be set up wherever you want. Your bank probably offers one. Maybe the health insurance company you're with has a referral that they send people to. Or, even better, you could go to our company Directed IRA, where you can have an HSA that could invest in crypto, into real estate, into private companies. It could do stocks or mutual funds, but the health savings account is the place where you put your contribution, where you get a tax deduction. You can invest it and pay no tax on the gains, and it comes out tax-free for your qualifying medical. That's different than your insurance plan and the company you got the policy with on the marketplace. All right, one other thing, and then I'll let you clean up here.

Speaker 2:

Well, there's so much here You're doing fantastic.

Speaker 3:

Thank you. Thank you, you've hit so many good things. I started off where I should. Yeah, I'm working with you, oh my gosh, you're so passive, aggressive Just having fun here. You know all right guys. We're talking about health insurance and health savings accounts.

Speaker 2:

We got to ham this up a little. We got to work with what we got here, okay.

Speaker 3:

So here's what I want you to know, lynette, and this is an awesome concept right now you can put 8,500 bucks approximately for a family you mentioned. You got a spouse, you got a husband, so you guys could be doing 8,500 bucks. I think it's 8,550 a year for what you put in 2024 and 25. It's a little different, but right now you could do both. You could be having $16,000 into the HSA right now. And I want to talk about why 2024 contributions you can still do up until April 15th. 2025 contributions are available right now because we're in 2025.

Speaker 3:

Now there's one thing I want you to know about your scenario, lynette, and this is really important for anyone else that just set up an HSA qualifying plan last year.

Speaker 3:

There's something called the last month rule that says, as long as you had this HSA qualifying plan before in December, before the end of the year, you can make the contribution as if you had it for the whole year, because there's something called the pro rata rule for HSA contributions that says, let's say, for example, in 2025, you close your HSA qualifying plan in June.

Speaker 3:

It says, well, you can only do pro rata six months. You only do half of an HSA contribution for that year. But when it's the first year when you set it up, that pro rata six months you can only do half of an HSA contribution for that year. But when it's the first year when you set it up that pro rata rule doesn't apply and a lot of people misapply that and say, well, I can only do one 12th because I only had it for one month. No, your first year when you're setting it up, as long as you have it by year end, you can do the full year of contribution. So hopefully that's a good little tip for everyone else. But that's some of the cool stuff about an HSA. Hopefully that's helpful.

Speaker 2:

Yeah, and I'll, I'll. I got to add a little cleanup here and this would be insightful, hopefully. Yeah, first, I want to say this too, in a simple way. When you said, how do I fund my HSA? You open up the account. You ACH the money in or send in a check. You can go to directediracom to open up that HSA account there so you can self-direct it. And again, like Matt said, just find a platform that sponsors HSAs. Don't worry about insurance companies. That's where you buy the insurance. This is where this kind of think of it like an IRA for healthcare. So you're just going to open that HSA anywhere. That's the easy part. Now I will throw this out. I'm playing a little investigator here. No, and Lynette's question. She said I just opened my HSA insurance plan two weeks ago and I want to make my deposit before year end. Okay, let's think about this. If she just set up her health insurance plan in the middle of December, I have a feeling it may not be effective until January 1st.

Speaker 2:

If that's the case, Lynette, you've missed out on 2024 contribution because the plan had to be in effect by December 1st, so not sure. I'd say look into that. Make sure if it was effective in December, you're good to go. Everything Matt said awesome. Also, you said oh, I'm a small business owner and we've got all these other things going on. I suspect you probably have an S corporation, an S corporation, and if you do make a contribution for last year, make sure that your S corporation W-2 payroll indicates that, because you can lower your FICA wages on your W-2 and save another 15% on the HSA contribution if you put it on the W-2 properly. Now, that's a little technical, but a good tax advisor can make that happen very simply with no additional cost. Because this is just. This is ABC's 101 for a good tax advisor. They're going to be all over this. So I'm just so proud of you for listening to the show. You're on this, you're taking the initiative and now it's making sure you're aligned with your advisor. So good stuff, great stuff.

Speaker 2:

Now that does lead me into my question from Quality Pool Service. Oh, it said hey guys, let me first take a minute. Thank you for all the videos and you make to help educate us newbies. I don't always understand it all, but you brought my knowledge from zero to a hundred real quick, so thank you. That really does. That's a little payoff for today's. Yeah, matt and I rushed into the studio. I got so much work. But every Wednesday for 10 years, matt and I have been in here at least 10 years, that's a heck of a good time.

Speaker 2:

It's been good, it's the best meeting of the week, it is Okay. So he said I bought a pool route about 1.5 years ago. I spoke to 1-800-ACCOUNTANT and they put together a great plan. Okay, when I told them that you said to file an S corporation, they wanted $5,000 to prepare two years of returns. I don't know why they do two years. I wasn't sure if they would even save me that much and they offered no guarantee. So I ended up going to a CPA that only wanted $500 for my personal return with a Schedule C and $750 for the S corp filing. So they went to the other extreme and they recognize this and says um, who's that CPA? I know, but it seems I'm telling them what to do now instead of them advising me.

Speaker 2:

So you go with a cheaper person, you're in charge. You go with a super expensive one you get taken advantage of, so it's, they're in a hard spot. So the question is she says one you get taken advantage of, so it's, they're in a hard spot. So the question is she says, or he hears um, how much should I be paying for a tax advisor? My pool route is generating about 100 grand as a bonus question. The expensive advisor I don't know which one, oh, the expensive would want to be the first one said that I should lend the business the amount and charge 50% interest oh good Lord, I know and write it off in the S-corp. The less expensive advisor said that would make no sense because I would have to pay tax on the interest income, because you'd have to pick up the interest income with the business paying you and you get a write-off. It's a vicious cycle. At least the cheap accountant could see that.

Speaker 1:

Yeah.

Speaker 2:

Now here's where quality pool service. I want to just my heart goes out to you and I know there's many, many listeners. You're just so frustrated with the accounting industry and you become apathetic and start saying I'm just going to freaking, knock it out on TurboTax and listen to Mark and Matt and do the best I can. And I can understand why when I hear stories like this. So I want to just tell you yeah, I'm sorry, it's sad. Now, what I've been trying to do, my mission the last two to three years has been and Matt and I've been doing it together is helping accountants around the country level up. So I've been spearheading the Main Street Tax Pro Network where I've now educated a thousand accountants around the country and they speak Mark and Matt now and they're certified on 80 topics and da, da, da, da da. Well, here's the good news for all of you. I'll come back to how much you should pay, but let me just say that network is available to all of you listening or watching today. You can go to markjkohlercom, click under services and go to the Tax Pro Network, can go to markjkohlercom, click under services and go to the TaxPro Network. Taxpro Network it's like a LinkedIn page with almost 400 different accounts around the country, and they can't be on that list unless they have tested out on all the topics Matt and I teach, and they're incredible. I learned from them many, many times. It's an incredible community. So if any of you are looking for a tax advisor this tax season and you're already frustrated that you're going to be going to the same bozo that you did last year, level up, so go to the MainStreetTaxPro network. We should have a link down below, maybe. Okay Now, with that said, what should you expect?

Speaker 2:

First of all, it's sad here, one person's charging way too much and giving bad advice. The other person they're charging way too little and not giving any advice. And it's a very common quandary. If you go to one of the tax pros on our network, they get to charge what they want to charge. We don't tell them and we don't make any money on what they charge. So that's nice. You can do several discovery calls with advisors. I recommend all of you do that.

Speaker 2:

But here's what I would expect. You're going to be probably paying a monthly fee, which is nice for your budget, which will include your tax prep for the year and a quarterly phone call or strategy session throughout the year. We call that tax advisory services. We want our advisors to have a relationship with their clients where they're meeting at least quarterly. Some of you may want them to meet monthly but the price, what you pay monthly, could be $500, a thousand a month, 2000 a month, I don't know. It depends on what you need. Is there bookkeeping involved? Is there payroll involved? How many tax returns are involved? You get to negotiate that and talk with the advisor and find the right price.

Speaker 2:

I think in your situation having an S-corp return, a 1040, some payroll needing some advice, you're going to be between probably $500 to $1,000 a month and I don't know how much bookkeeping support you might need. But that $4,000 or $5,000 during the year is going to not only get your tax work done, some payroll done, some minor support with bookkeeping, depending on what you need there, but it's going to get you advice. A good tax advisor should save you, far exceed what you're paying them and they're going to solve this S-corp issue and all the strategies of paying the kids and board meetings and travel and all that. So any strategy Matt and I teach they're going to bring to bear to help you in that process. So get to the network, do some discovery calls, find someone. The nice thing is you're going to know they have the knowledge. Now you're just looking for the services you need at a price point that works for you. Young or old, east Coast, west Coast, big firm, little firm you get to choose.

Speaker 3:

Love it. I was just looking up what I paid for my own S-corp tax return just to give you an idea, and I paid $2,500 for my S-corp return. So now that's a good accountant. Happy with them. They know what they're doing.

Speaker 1:

They're in our network.

Speaker 3:

They're actually one of the CPAs in our network. They're firm, they got a number of accounts there and so now I would say they even discount mine a little bit. So so you do get what you pay for a little bit. And this is for a lot of professionals. And here's what happens to a good CPA and like any other professional anybody this could be someone that you know paints houses, does build homes, fixes cars, I don't care. Anybody that has you know that's good at what they do. Their clients don't leave because they're great and they get to charge more.

Speaker 3:

Now sometimes you do get the people who are great at marketing but shitty at what they do and they so they get a lot of people in and they burn them and they don't keep them and so they just keep charging high fees. So get good referrals. Make sure they understand the strategies. The number one solution to that is the tax advisor network Mark just mentioned. Don't be gun shy with the high fees, but make sure they do have the credentials and the understanding, and I like your diligence where you started talking about the strategies you want to do. If they don't understand that run, the worst thing is to pay a lot of money for a service provider that doesn't know the strategies that's going to actually help you save money. It's one thing if they get the strategies and you're getting all the tax savings and the cost of them helping you is minimal to the tax savings you realize.

Speaker 2:

So, oh, I want to say one just one last thing too. Matt's book, the Directed IRA Handbook incredible. My book, the Tax and Legal Playbook love it. I think those are two mainstays that should be on your business desk, and you and we've written them so they're very understandable for the average business owner. They're not made for the professional, they're made for you.

Speaker 2:

And but here's the point when you go out, some of you are like, well, I've got this great accountant. Kinda, I'm not ready to quit on my accountant. Ask them to level up. Say, hey, I've been reading Mark's book. It's a bestseller. Matt's book bestseller. Take him a copy as a gift. Say, please read these. I want to be on the same page with you. If you don't like what they're saying, let's talk. But they've got credentials, they're not out there crazy talking. And then if they're like, wow, thank you. Say, go, level up. Go to the Main Street Tax Pro Certification, I'll bring you more friends. Because if I have more confidence in you, mark and Matt are going to send you clients too and you might be able to help them level up. This could be your brother-in-law, whatever. Okay, next question let's keep moving. Send you more friends.

Speaker 3:

All right, okay, cp Gator asks. He says great show, I have a single member LLC for my rental house and my tenant pays me through my personal cash app account. When I get a payment, I deposit it over to my business account. Would these be considered commingling, since it's originally coming into a personal account? I'm going to come back to that. Actually, let me answer that because you got a second question. It's a great question too, cp Gator. Okay, actually, let me answer that because you got a second question. It's a great question too, cp Gator.

Speaker 3:

Okay, I don't love that, cp Gator, for a number of reasons. Yes, you do have this issue of someone being able to pierce the corporate veil when you have an LLC. One of the reasons you set up an LLC for your rental property is if the tenant slips and falls or there's any liability or something happens, they can't sue you, they have to sue the LLC. So all your personal assets, your job, your business, your paycheck, your retirement accounts, all your home, all those personal assets are untouchable to anything that happens in the LLC, unless a plaintiff's lawyer can pierce the corporate veil. The corporate veil is this protection an LLC has that says you can't go after the owner. You can just get to the LLC.

Speaker 3:

Well, how can a lawyer pierce the corporate veil if you didn't respect the corporate veil? If you treated the LLC like it was your personal bank account, how can a lawyer show that you've done that? Well, if you're using personal bank accounts for the LLC's business, whether it's a CashApp account or an actual bank account so stop doing that. You can still use CashApp. I'm okay with that. They have business accounts and I know it's like well, my tenant, it's an easy way for them to pay rent. Okay, fine, you can get a Cash App account in your business. All right, that was question number one here. Anything you want to add on that?

Speaker 1:

one Nope, filled it. Okay, I'm filling it. Okay, all right.

Speaker 3:

Yeah, good, good, okay, question. Let me add one other little tip here actually on that Cash. Another little tip here actually on that Cash app. Venmo all these payment apps, by the way are going to start sending you 1099 Ks. They're going to start sending those start now, in 2025. If it's a personal account, they don't send it to you. If it's a business account, they do send it to you. Now I know what a lot of people are thinking. I'll just collect all this money in my business, whether it's a rental property or main business side hustle, I don't care what it is. That way, I'm not going to get a 1099K from the cash app. That's wrong. You're jacking up the corporate veil here and the protections of the LLC, which is the whole reason. You have an LLC for your rental property and even if you got paid the money, you still have to claim it on your taxes. The fact of you getting a 1099 K is just a piece of paper that you're getting in. The IRS gets too, but you still owe the tax anyways.

Speaker 2:

Yeah. And when the real problem is is when you go up the escalator, that fateful day comes and, you know, peter, james or John asked you hey, did you cheat on your taxes? They can be showing you the way down to the other escalator that's going down and you don't want to cheat on your taxes and then have to answer, you know, to the big guy.

Speaker 3:

What Mark's saying is you don't want to be going to hell for this. Be honest, you know, in your dealings with your fellow men.

Speaker 1:

Okay, All right.

Speaker 3:

Second question here from CP Gator, which is a great one too. It says second question on this LLC for my rental house. It's a single member LLC. How do I tell if I signed for an S Corp? How do I tell if I signed for an S-corp? Where would I check to make sure I did that? It's been a few years. I'm not sure if I filed that form. Don't. Hopefully you didn't. I hope you didn't file that form.

Speaker 3:

Okay, an LLC for a rental property. You do not want an S-selection on it. Do not have that taxed as an S-corp. Why do we do an S-selection or turn an LLC into an S-corporation for tax purposes? To save on self-employment tax.

Speaker 3:

If you have a rental property, you get two types of income on a rental. Rental income is you're owning it and cash flowing it, and capital gain income when you sell it. Neither of those types of income are subject to self-employment tax at all, so you don't need an S-corporation for your LLCs that hold rentals. Now if you're selling goods or services, products, whatever it is, that's ordinary business income. You do pay self-employment tax on that. That's where, for small business owners, side hustle, main hustle. We love the S selection on an LLC, so hopefully you didn't file that CP gator Never, and this is for everybody here. This is why we do left side, right side when we talk about our trifecta. Your right side is assets like rental properties. We don't want you to have S elections over there. We want you to have LLCs that are flowing through directly to you or down to your trust.

Speaker 2:

The one thing I'm concerned about is CP Gator might be using the same LLC for his business and the rental property and that's why they're thinking I made an S election. If that's the case, again make an appointment with one of the lawyers at our law office. It's very affordable and definitely in the big scheme of things and we're a boutique firm for the small business owner we're very affordable. We're not a big city firm that's going to take advantage. We want a relationship. You may have to restructure this LLC, so get a call doing a review and getting your trifecta would be great anyway.

Speaker 2:

Okay, kt Bagels, I use a license plate frame that has my. Now I'm going to try. I've got to go faster because he goes on for a paragraph, but here's the gist of it. He has a license plate frame with his business phone number. I've got a front license plate with the QR code of my business and I and I'm writing off miles when I go to my appointments and all that. But every time I drive I've got this QR code on my license plate and I've got this cool license personalized plate, so can I ride off my entire car Because I'm technically advertising everywhere I go. Well, kt Bagels is a very, very common question and I think it's a very valid question. It's common to valid question. It's common to think that You're like hey, I use this car to drive around town and advertise. Of course we see clients that use vinyl wrapping and go much more extensive than just a license plate.

Speaker 2:

The problem is no. The IRS has been very, very clear on this. Congress courts that you can only write off the mileage or your vehicle based on where you drive it. And commuting to your day job does not count. Going to the grocery store does not count, even if you're advertising along the way. So it's errands for your business meeting with customers, meeting with vendors, going to different work locations or conferences or whatever. But just because your license plate is an advertisement or you wrap your car, it is not going to allow you to write your vehicle off more aggressively. So be careful there, continue to track your miles and I love the auto deduction.

Speaker 2:

I want to be very aggressive with the auto deduction, but whenever you put down, I'm writing off this auto 100%. Just know that the IRS's computer system is going whoa, whoa, whoa, is this a delivery vehicle? Because who in the hell drives their car? 100% for business? They just don't. They're going to pick up a gallon of milk. They're going to go to a movie theater. They're going to go up to the lake on the weekend movie theater, they're going to go up to the lake on the weekend. You're hosed. So be very, very careful. If you say it's a hundred percent business, because I don't even do that, I may go 90, but I'm not going to go a hundy. So be careful, all right.

Speaker 3:

All right, alec Bradley asked if I'm a small business owner and do not offer a safe Harbor 401k to employees, but I have a separate small business where I do consulting work without any other employees. Would I be eligible to set up a solo K in my consulting small business? What is the best option to help employees with retirement? If so, okay, let's ask your first question. All right, alec, you have a business with employees. You have another business that just does consulting, that has no employees. Can you set up a solo 401k? No, you cannot. Sadly.

Speaker 3:

What the IRS has said is and Congress is they created the retirement account rules. If you're a business owner and in general the rules get a little there's a couple shifts here, brother, sister, affiliated group rules and everything but in general if you own 50% or more of any business and you basically can that has employees, you cannot do a solo k and now matt says sadly, but I want to say, the flip side of that is this there's a purpose here and it's it's so that employees are going to be allowed to have a, a place to do retirement planning and a 401k safe harbor.

Speaker 2:

And it's not the worst thing in the world the safe Harbor plans either. But but yeah, so there's two ways to look at it. Business owners are like but you know, in the big scheme of things, the 401k is amazing. We all should be participating in 401ks, whether we're a business owners or not?

Speaker 3:

Yeah, and let me just give an example. Like Mark and I, we own 50% or more of businesses that have employees. We cannot do a solo 401k. Okay, I'm in your same boat, Alec. Okay, Another way to think about this is when Congress came out with 401ks. They basically were, like this is for employees, whether you own the business or you don't. But then they said you know what? We're not going to just let the business owner be like well, I'm just going to do it for me. And then later on they came out and said, hey, we're just self-employed people, we don't have employees. And like, well, we'll let you do solo 401ks.

Speaker 2:

Yeah, solos came in later.

Speaker 3:

There's no other employees here, so let's just let you do a solo 401k just for you. But the problem is now people are saying the business owners over here with employees are I want to do that. No, no, no, no. This is only the solo key is only for you that have no other employees. Now let me give another variation, though. Let's say you have a business with four partners and you own 25% of it, but you also have a separate consulting business and the other 75% of that business with employees, with other partners, um has no other family, it's just other some business partners. You got another separate business that you don't have any employees in. Well, you could do a solo K over here, likely All right. So it just kind of depends on your ownership where your employees sit, and is that business truly separate or not? So hopefully that helps.

Speaker 2:

And any of the tax lawyers at our office could guide you through this. So another important phone call, because we can set up that solo 401k for you and allow you to self-direct it and invest in real estate and all those goodies, and they can guide you through the pitfalls of trying to do it and then having to unwind it if you're not allowed. Okay, so BizGeek27 says so. I elected an S Corp status for my single member LLC just before Christmas. Love it, assuming you had the income to justify that. So that's a great move and everybody, what we're hoping. Bizgeek27 doesn't say this, but hopefully he or she backdated that S election to 1-1-24. So they made the S election right before Christmas, but on that form, they hopefully elected it back to 1-1-24, which you can do.

Speaker 2:

Some of you accountants might be freaking out. The 75-day rule doesn't apply when you refer to Rev Proc. 2013-9, I think, or 2019-13, whatever. Anyway, there's a way to round that so we can easily go back and elect S-Corp status 1-1-24. Next sentence but there was no time to have my accountant do payroll before year end. By the way, your accountant could do payroll before January 31st and you'd be okay, but I'm assuming that's what you mean. So anyway, hopefully your accountant didn't say sorry, can't do this, because they could have done it in January. So the question is what are my options? Am I screwed? The answer is no, you are not screwed.

Speaker 2:

There is a workaround. The first year you claim that S election. Now, assuming you made it backdated to 1-1-24, assuming you have the income to justify this and assuming your accountant knows what the hell they're doing, you might have to upgrade your accountant. Go back to the second question of the show regarding the network. But what your accountant can do is drive some FICA wages through a Schedule C and make sure that this is indicated on the proper line of 1120S and make sure that this is indicated on the proper line of 1120S. Pick up the FICA wages on a Schedule C and pay your FICA. Do not double dip with the QBI deduction and be careful with the process. But it is audit proof. You will be okay if the IRS comes asking what the hell happened. And then this year you're going to do it right, you're going to get on top of quarterly payroll, your accountant's going to do it correctly and not overcharge you and you're going to be just fine. So there is a workaround this first time. If your accountant listens to this show, send them the show if they give you a hard time. And I will say this to any accountants out there that don't like this workaround we have never had a client fail in, rarely ever get audited or fail in an audit in 25 years.

Speaker 2:

Because you pick up the FICA wages. As long as you pay the FICA, what's the damage? The IRS can't complain. Now they may have questions why is it not on box seven of the 1120S? When, or is it or was there payroll withholding? You know there's some questions there, but you're okay. Now we teach this strategy and how to do it. In the Main Street Tax Pro program I have a whole module just on S corporations where you're going to test out 15 to 20 questions. You work in the community. We're on the cutting edge of issues like this and many, many others, so make sure your accountant's up to speed on that. If you accountants out there want to level up right now, even during tax season, please go to markjkohlercom and sign up for a discovery call and we'll get you certified and help get you more clients, charging more, helping more clients, and your clients will love you. It's a win, win, win, love it.

Speaker 3:

Let's put an amen to that. All right, I'm going to do my last question. I don't know if you had to do your last one here.

Speaker 3:

All right. This is from RJ growth 48 and says is an IRA LLC able to buy Bitcoin? If so, how? Great question. Let me say a couple of things just for everybody who are like well, how does a retirement account buy crypto? Well, we have a couple options on the ways to do it. The easiest way RJGrowth48, to do this is to use our crypto IRA product. It's Directed IRA. Go to DirectedIRAcom.

Speaker 3:

We have a crypto IRA product. What happens is you can transfer over money from any IRA that you might have somewhere else. Roth IRAs could be even an HSA, traditional IRA, sep IRA, solo K, whatever it is, and we it's specific for crypto. We then open up a Gemini account. We have a special relationship with Gemini, one of the major exchanges out there, and we fund it. But who's the owner of that Gemini account? Not you. Your IRA, or it's going to be, can get Roth IRA, traditional IRA, doesn't matter. Now you're right on the Gemini exchange and you can buy and sell crypto right there. That's our crypto IRA product. It's easy, we handle it. We link your retirement account tax favored account to your Gemini trading account, which is where you have access to 60 plus cryptocurrencies. This could be Bitcoin, this could be XRP Solana, whatever you want to buy and sell. Mark and I have both done this, by the way, ourselves.

Speaker 3:

Well, what if I want to use an IRA LLC, as RJ Gross said? Well, that's the old school way to do it. The reason that structure that I say is the old school way to do it is it's much harder to execute on now. When I first shot my video talking about how you can buy crypto with a, how you can buy Bitcoin and crypto with an IRA in 2017. And I showed how I bought Bitcoin was 2,500 bucks per BTC back then. This is an old, terrible video quality, but you know I was. I was showing you how to do this. We used an IRA LLC to do it. That's what I used in that structure.

Speaker 3:

When you have an IRA LLC and I'm assuming you know what that is already where you're here, where your IRA owns an LLC typically 100% you're the manager of the LLC. The LLC has a business checking account. What I did back then and what you can still do today is I linked that LLC business checking account to an exchange wallet. I used Coinbase back then when I did it. I've since linked it to other providers and we typically will use Kraken right now if you're trying to do this.

Speaker 3:

But here's the problem If you go to any reputable place that offers an exchange because here's your issue you have US dollars in a bank account owned by the IRLC that you need to get on an exchange somewhere to go buy crypto, right? Well, how do I do that? Well, I got a link to some reputable crypto provider, whether it's a Coinbase, a Gemini, a Kraken or whoever it may be. Well, guess what they're busy doing right now Opening up business institutional accounts for people trying to buy tens and hundreds of millions of dollars of crypto. So if you're a small business owner with $100,000 or someone with an IRA LLC and you're trying to open up a business or institutional account with a crypto provider, it's freaking complicated. They treat you like you're a hedge fund that has hundreds of millions of dollars to ignore you or ignore you, which they do right now.

Speaker 3:

Now, if you were trying to do this a year or two ago, you would have been okay. Why? Because they're not freaking busy. It's like you went, got into the restaurant at busy time asking for a special request and order and to get seated in a special spot, and they're like who are you Okay? It's not a good time to do it right now. I'm just telling you the reality of it because I get clients calling me Now. It doesn't mean you still don't try.

Speaker 3:

It doesn't mean you still don't be like well, matt, you said I could do this, you can, but now we do that. Like I said, kraken is probably the best at it right now. Gemini has been okay, but they don't have a special product for this, so they treat you like you're an institution. Okay, just know that you're going to be filling out a questionnaire that's like how much money under management do you have, what licenses and insurance do you have? And how much money under management do you have, what licenses and insurance do you have?

Speaker 2:

And you're going to be like what the hell? This is my LLC, but answer questions because you are an institution.

Speaker 3:

Yes, you are a business, You're going through the institution application.

Speaker 2:

Don't lie on it but just answer it oh, under a million or whatever. So don't get frustrated, just tell them what they need to hear to get the damn account open.

Speaker 3:

Yeah, but here's why I'm saying it in this way, and maybe you can see my frustration in this is way too many people think I could set up my crypto wallet right here in 30 seconds to do crypto personally. Yeah, you can. Good luck doing that with an LLC. It's just not the same. So if you want the easy route, that's why we have the crypto IRA product, we open it, we have access to Gemini to link that specifically to our accounts and we do a lot of regulatory and stuff in that process to make sure it happens right. So that's why we've done the quick and easy route, which is what I do. Now. I don't use the IRA LLC anymore for my crypto. I use the crypto IRA product, even though I have an.

Speaker 3:

IRA LLC.

Speaker 2:

All right, love it, love it, love it Okay, that was a little ranty, huh, no, no, no, it was good, it was a wake-up call, wake-up call, all right, boy, usually Mark Kohler's the one ranting.

Speaker 3:

I need a rock star, maybe All right.

Speaker 2:

Last question on this end. This is from Whelmed in Texas. He says, or she says S Corp, two shareholders, husband and wife, made. Husband and wife made 200K in passive income via trading but minus 20 grand in gross receipts. C Corp same two shareholders carrying losses, minus 20. We'll come back to that.

Speaker 2:

Requests number one and I'll run through this quickly and then I'm going to and I think this is a good wake-up call for a lot of people listening this is going to be good. Number one is there any way to minimize tax on the S-corp before the K-1 flow-through, as the personal itemized deduction option does not seem to help for 2024? Sub-point I appreciate an email response. Exclamation point please do not punt to any MJK affiliates in Houston. That's a non-starter. Oh well, okay, we'll come back to that.

Speaker 2:

Number two I've also seen enough MJK videos to know in bold and italicized we need help restructuring everything for the future. So this is cool. They're saying don't beat us up. We get it. We know we're jacked up as our kids are adults now. Don't know why that matters, because other issues have nothing to do with kids. And then finally request Info for an in-person meet with MJK man. My wife's trying to get one of those, so get behind her. Good luck. Do include if an in-person meet in Vegas or Houston is an option. Yeah, I'm trying to go to Vegas for Valentine's, you know, maybe squeeze you in All right. Okay, all right. Now I'm surprised you took this question.

Speaker 3:

I mean I.

Speaker 2:

I'm not trying to mock this person. I'm really not. It's, it's funny and I appreciate the request. I mean you don't if you don't ask it's not going to happen.

Speaker 3:

Yeah, shoot a shot. You know, you know. People have been trying to meet with Mark J Kohler for a decade now.

Speaker 2:

Just please, know like he's yeah, no, and I'm flattered by that and I appreciate it and I appreciate the question. Now, the reason why I took this question is because some of you may have the same desire or interest or issues and I want to respond because we do have solutions for this and I want you to feel confident in those. So, number one, s corp, two shareholders, 200 grand in passive income that's not good. You cannot, you shouldn't have passive, that much passive income in the S corp, so you don't need an S corp. So we'd start and you said this earlier. Later you're like we need, we know, we need restructuring, how you have minus 20 in gross receipts. That's like you had 20 grand in returns but no sales. It's kind of weird. Like what you made me meaning is we have minus 20 grand in profit because gross receipts is a positive, then you have law expenses, then you're going to end up with negative, but anyway, that's okay. Now is there any way to minimize expenses? Dah, dah, dah and says we need an email response. Don't punch to an affiliate. Well, first thing is I apologize.

Speaker 2:

This is an open forum show to help people in general nature and guide you. If you need an email response hire one of the lawyers, and I think that's what you're implying here. I want an email response. Well, you're not going to get one for free. It gets to be personal advice that we're liable for at that juncture, you know. I mean, we got it. You need some help here and you say I need Mark. I want to pay Mark. Okay, but and then please don't punt to an MJK affiliate in Houston. That's fine, we do have our network. I don't even care if they're in Houston or not. I just want you to have a good person.

Speaker 3:

Yeah, I'm in Phoenix, my CPA is in Dallas.

Speaker 2:

Yeah, I mean like our law firm we all work seamlessly between California, utah, arizona, idaho. It's so yeah. So now, yeah, I do want to give you some options. The first one is just schedule with one of our tax lawyers. That's not an affiliate. That is an attorney that works under my and Matt's direction that we meet with almost daily in ongoing support and training. That's not an affiliate.

Speaker 2:

I apologize, I'm not taking personal consultations, but our 13 lawyers are freaking amazing. Some have been with us over 10 years. They're smarter than Matt and I on a number of topics, for sure. So please meet with one of those tax lawyers. It's not an affiliate. Now you may need a good accountant I don't care if they're in Houston or not. So get to the network there. But in conjunction with the lawyer, they're going to help you overcome this restructuring that you need.

Speaker 2:

And thank you for the request for a meet, but I apologize, it's just not on my. It's not just. My schedule is too demanding. We're really trying to train administratively, our team internally and then our network to impact more people's lives, and me being on a one-off call is actually not good for you, because then you're going to be like okay, when are you going to follow up? In three months, so you're like well, that sucked. So when you work with one of our team members, they're going to have the time and ability to follow up and cause. It's not just one meeting. The meeting is the beginning of a journey and you don't want me on this journey because I will be um coming and going and that's not fair to you.

Speaker 2:

It's not it's not you, it's me.

Speaker 3:

Mark just did the classic breakup there and I don't want this for you. I'm going to be terrible. I don't want this for you.

Speaker 2:

How'd I do I?

Speaker 3:

thought it went well until you marked the end. That was really good, dude, that was really good. I was like all in on it, so that was so good. I want to just say just to tag into that for just a second is I get the frustration of where that person is coming from and even some of the other questions People are trying to figure these strategies out.

Speaker 2:

And their professional is not there for them.

Speaker 3:

Yeah, and their professional is not like on it and like, oh yeah, it's just like anybody building a business and many of you that are asking these questions. You have a business and many of you that are asking these questions, you have a business and some of you have big businesses. Think of your CPA, your accountant, your lawyer. This is your team and just like you've got to work hard at recruiting great people to help run your business and work side by side you in your business day to day, you have to go recruit a good team too, and I think so many times people just think, well, I'll just call. You should invest some time in who this professional is going to be.

Speaker 3:

Are you out there networking? Are you going to events? Have you talked to your friend that's another business owner, or maybe someone that you've aspired to be, like to see who they use? Are you getting referrals from these people? Like, start networking a little bit, listen to the stuff. Like we're putting out this podcast, of course, to give you all the strategies and ideas that you need, but maybe come to one of these conferences. Maybe come to Tax and Legal 360. Maybe come to our Self-Tricted IRA Summit, because who's there? Other people doing what you're doing and trying to learn these strategies and their professionals are there too.

Speaker 2:

Yep, and I want to just add to that too, like there's another problem out there. Or mindset oh, as soon as I find the perfect accountant, I don't have to worry about it anymore. You know I'll find the best lawyer and then I can just forget about it. No, once you find them, you want an incredible relationship with them. They're going to be your best friend, with the biggest cost in your life and the biggest risk in building the American dream the tax and legal and so you're not just looking for that perfect solution so you can check out.

Speaker 2:

It was interesting my wife's dad when he passed away the last week, he had cancer, so everybody had their visits and it was just very, very emotional, and one of his key phone calls and meetings was with his accountant. Yeah, and he said come on over, I want to talk you through everything. I want you to be a good there transition for my wife, my soon to be widow, and they had a relationship. I mean, if you were going to die next week, would you call up your accountant and have a meeting with him? If you're, if you wouldn't, you don't have the right accountant. Yeah, I mean they should be that glue for your legacy and your family, and so let's get the right person on the team.

Speaker 3:

So love it All right. Well, thanks everybody for these amazing questions. Again, if you want to get your questions answered on the mainstream business podcast, get over to the website, make sure business podcastcom and submit your question there, and if you love the show, please share it with your friends.

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Mark J. Kohler

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