Molly Claire 00:45

Welcome coaches. I'm so excited for this interview with Mark J. Kohler. Welcome Mark to the podcast. 

Mark J Kohler 00:52

Thanks for having me. 

Molly Claire 00:54

You are going to love this interview because not only is Mark a CPA and an attorney and a small business expert and a bestselling author and a podcaster with millions of downloads, but the best part about Mark in my opinion is how easy it is to learn the things that he is talking about. He takes what can seem overwhelming, complex, kind of this, I have no idea where to begin and he makes it simple. So I'm so glad you are here to help us today. 

Mark J Kohler 01:28

You know, it's so funny. I thought you were going to say the best part of Mark is he's married to a master certified life coach. So he gets us, which I am. 

Molly Claire 01:38

That's great too, right? Because Mark's wife Patty trained with me in Master Coach training. So she's fantastic. And I know Mark, you love coaching and you bring it into your business and you use it with your clients. 

Mark J Kohler 01:53

Yes. In fact, we hired a life coach to come in and work on a 12-week program with every one of my lawyers. And then so successful, I had every one of- my key manager, directors and operations. I said, you have to do 12 weeks. And so we believe it to the point that I've hired life coaches for these key people in our organization so that they're more in tune with themselves. You know what I'm saying. I mean, you guys get it. So I'm that much of a believer. It's absolutely been wonderful for our business. And then of course, my personal life to get aligned in the life coaching industry, the concept. It's just so powerful. 

Molly Claire 02:31

And I'm so glad that you brought that up because I think it's really easy for life coaches, coaches who work on kind of these softer subjects, right? Our emotions or our mindset and we're not a business coach per se, but it's so easy for coaches to really minimize or underestimate the ROI, the true return on investment of coaching. And I think this is such a great example, right? You see the benefit for this personal life coaching piece to improve your business, to support your team. 

Mark J Kohler 03:04

Absolutely. And I, a hundred and percent or more, I, for example, I train like you, Molly, you're training, you know, life coaches in your programs. I also, next to my law firm and our trust company and accounting services, I train in a certification program for accountants and CPAs and enrolled agents and lawyers. And I teach them how to be a good tax advisor. A third of that program is now evolved to mindset, making sure they understand why they're doing this, not giving away services, the imposter syndrome, not buffering, the accounting industry is brought with problems and issues. Accountants are overwhelmed, alcoholism and stress and all of this. And so my amazing wife, Patty, and I have from the beginning two years ago launched a life coaching piece to that. And it's not about numbers. Guys, every one of you can coach a business owner in their industry to succeed. You don't have to be a business coach to change someone's fricking life in their business. 

Molly Claire 04:09

That's right. That's right. That's perfect. What better way to kick this off? And I think that, you know, one of the things that we talked about discussing with my audience today is really, we talked about having that business mindset, remembering, right? As a coach, this is a business. Let's make sure we're treating it as that and what all of that means. And, you know, I feel like as you were just sharing your conviction about the power of coaching, it's almost like I see this relationship between these two things. We know as coaches, we know that the work we do is so impactful. And yet sometimes we either forget or we don't truly step into that space of taking ourselves and our work and our business seriously. 

Mark J Kohler 04:58

Yes. Now, do you teach a little bit on the model occasionally? 

Molly Claire 05:03

I sometimes touch on it. Many of my listeners are aware of it. I talk about like a cognitive approach combined with others, but yes, many of my listeners are well aware of the CTFAR or other cognitive coaching models. 

Mark J Kohler 05:15

Okay, so I'm gonna use a model on you guys, all right? So I'll even coach Molly right now. Okay. Let's do it. Okay, so first what Molly's talking- I'm gonna say it a different way. I love how you said that, Molly, is that I'm going out to accounts and business owners and lawyers saying, come over here and understand the power of life coaching. And then I go to my life coaches. And I've done podcasts just for life coaches myself. And I say, understand the importance of business and the business structure and how you've got to take that seriously. And so many of them are like, I don't get it. It's scary. I don't understand it. And meanwhile, on the other side, I've got these business owners that are like, I get the business mark. Life coaching, I don't get that. I don't understand it. So I'm kind of like trying to meld those two. So let's do a model. So here's the circumstance. Molly, she's a new life coach. And someone told her, well, you're gonna make money at this. It's a business. And so Molly has a thought. I don't know business. I'm not good with numbers. I don't feel like this is my strength. This is not what I signed up to be or do. I signed up to be a life coach, not a business owner. So what feeling might you have, Molly? 

Molly Claire 06:32

I remember this feeling, Mark, very well because this is very much what happened. 

Mark J Kohler 06:38

Oh! 

Molly Claire 06:39

Absolutely. And I mean, I think this is, I'm just going to put a plug in. I'm going to come back to it. I'm going to hold on. I got it in my mind, but, but here's the thing. I think this is so common, especially with the coaches that gravitate toward this work, because we understand emotions, we understand people. That's where we feel comfortable.And the business part feels like a foreign language. So this is perfect. And my feeling: overwhelmed. 

Mark J Kohler 07:06

Oof, wow, boy, overwhelmed. That's such a powerful feeling. So, man, what action or inactions might you take or not take, feeling overwhelmed as a new business owner? 

Molly Claire 07:20

Sometimes it looks like taking a whole bunch of action that seems useful, that actually does not have a clear direction. Sometimes it looks like maybe crying at the computer, telling myself things like, I don't know where to begin. I don't know how to start. This is never going to work, right? So maybe my action is spiraling thoughts, avoidance. 

Mark J Kohler 07:48

What do you do when you buffer? 

Molly Claire 07:50

Absolutely buffering, snacking, it's amazing how you can suddenly feel hungry when you're feeling overwhelmed. Yeah, so I think, you know, and there are different flavors of this, but for me and many of my clients, I know that's what it is. We do a whole bunch of things that aren't really going to move the needle or we avoid, right? We take a backseat, we stall, we just, we do all kinds of things that aren't actually going to help us learn what we need to learn. 

Mark J Kohler 08:16

Oh my gosh. Now, you may not know this, but your results are a manifestation and prove your thoughts, Molly. You may not know that. So I'm going to tell you. 

Molly Claire 08:26

Wait, slow, say this again, say this again. I wanna make sure I'm catching this. 

Mark J Kohler 08:31

Yeah, this is life changing, but your result is you probably still fill what? 

Molly Claire 08:37

Overwhelmed and maybe a few others piled on there. 

Mark J Kohler 08:42

You just proved your thoughts true. Isn't that amazing? You know, I'm available for life coaching, I can help you. 

Molly Claire 08:50

We'll exchange info right after the recording. 

Mark J Kohler 08:54

Yeah, but everybody here, thanks for playing around. But isn't that interesting? It really is true. And so let's get to it. I wanna give you guys some actionable items. We're gonna work on the action line today because with tax and legal, getting on the action line is actually one of the best things to do because you start to have some base hits. You start to go, oh my gosh, I feel a little more confidence now. That wasn't that hard. And oh my word, I'm seeing immediate results with my actions. And so we can start having some bridge thoughts that are like, all right, I can get, do you see me? I dropped a bridge thought. I know. 

Molly Claire 09:29

I know we're getting all these buzzwords, all these things. Yes, love it. 

Mark J Kohler 09:33

So let's get on the action line because here's the bottom line: all of you are a business owner as a life coach. And what a powerful thing because you shouldn't have the thought this is overwhelming, but oh my gosh this is empowering. Because if you can make money at what you love and are passionate about, then you can affect more people and you can go into those calls more confident, not having that thought of okay after I get to this call, what do I do? I'm stressed about the finances. Where do I record this? Do I really need QuickBooks and can I write what is offered and then all of a sudden we're not our best on our calls because we have this underlying nagging anxiety that I don't know what I'm doing as a business owner. Well that stops right now. No more Yeah, I want you to feel like being a business owner is a superpower to help you be a better life coach.

Molly Claire 10:26

It really, it's just not necessary to have that much angst and overwhelm and uncertainty when answers are there. And here's the thing, I speak about this as someone who, it's not like I'm unfamiliar with what you're saying, right? I think that, and this is what I wanted to point out is I know some people here listening, maybe you're new-ish and you're thinking, okay, yes, I've got to get this together, but people who are further along are not exempt from this either. 

Mark J Kohler 10:56

Oh, oh, oh, oh, oh, oh, oh, oh, oh. 

Molly Claire 10:58

And here I am, I mean, I've had my business for 10 years. I love my business. It's provided, you know, my life. It's provided for my kids and retirement. And I'm still just reaching out to Mark the other day saying, hey, I need to clean this piece up right here, right? So no one is exempt from this. And you're the person to give us some specific direction. 

Mark J Kohler 11:19

Well, thank you so much. And on that note, and I'm glad some of your regular listeners are like, oh, I'll listen in, but I've already figured this all out. Guys, I meet with dentists, doctors, engineers, lawyers, and restaurant owners, landscapers, online influencers that have got their structure done and they think it's all good, but they have a bad accountant and they don't even know it. Yeah, yeah, yeah. Let me just rattle this up. I mean, are you taking the home office deduction to the proper level? Could we be writing off your auto better? Well, I can have auto? Yes, you can. Are you writing off your travel properly? Are your kids on your payroll? Or are we paying your children under age 18 and over age 18 for helping in the business? Are we writing off all of our equipment, supplies? Are we using the S corporation? What's our salary level? Could I have a solo program? Am I putting money in my Roth IRA? What am I doing with my profits? See, just those questions alone. I know some of you are like, oh my gosh, he's blowing my brain. My anxiety just went up. No, I want you to know that I go to dentist conferences and they feel the same way. They get out of dental school and they're excited to be a dentist and they realized they just started a business. And so you are not alone. Do not beat yourself up. I don't care if you're male or female, young or old, midlife, 20s. Everybody goes through this process of scaling because they don't teach it in school. They don't teach it in college. I went to a five year degree to get my master's in accounting and law school. And I came out and was like, okay, now how do I run my business? Because academia is great. I love it. I would not trade that, but the street smarts of running a business are where we're going to start today. We might need a part two. We might need a part two.

Molly Claire 13:00

Yes. And here's something I want to say to all of you, because when you hear all these questions, all these ideas rapid firing, like Mark said, right, you can feel overwhelmed, but there's no need to, because there are answers. You don't have to know everything right now. All you need to do is commit that you're going to figure this out and you take one step at a time, because there are people like Mark and his network that do have answers and can give you that action line. So that's good news. Just one step at a time. 

Mark J Kohler 13:30

I love it. That's a great thought. I am a new business owner and I don't feel overwhelmed because I know there's answers and I know where to get them. That generates a good feeling. Okay, so here's number one that I want to, we've already said this, we all know, is that okay? I want to jump into some, just some progressive. 

Molly Claire 13:48

Let's do it. Let's do it. 

Mark J Kohler 13:49

So this would be kind of like empire building. Number one is we know we're a business and we want to embrace that, not get overwhelmed by that or have anxiety about it. That's what we've signed up for and it's okay. And you could think of yourself as just coming out of medical school or whatever and go ahead, you were gonna-

Molly Claire 14:06

I'm going to interject something because I think this is a great time for all of you to pause and make a note that I want you to take a look at your thoughts and feelings around being a business owner because it's worth looking at and cleaning some of it up. We've got to feel connected to that identity and we've got to build confidence in it. 

Mark J Kohler 14:28

Ooh, that was good. I've got a course idea. I need to talk to you about maybe like a tax advisor. And you know, it's funny. I have accountants come out and they think like an accountant, but they need to now think like an advisor. And that's what Pat and I are working through every day with my community is because yeah, whole or topic. So you guys are all business owners and you're going to work through issues. If you're not feeling that I love that you're like, we need to do some coaching on that term for any of you. Feel that that's creating not the feelings you want. Now, once we get there, we want to treat that business like a business. So here's some basics. And if you don't have this done, we will get there before we get to LLCs or corporations or what the hell I'm going to write off. It all starts with just good banking and moving of money. So I know when you start out as a coach, it's all convoluted. You're getting, you're getting square payments. You're getting Venmo. You're getting Zelle. You're getting Apple pay. I do not care. That's okay. The IRS is not going to throw you in jail. I'd love you to have a spreadsheet over here at the very least where you're like, Oh, here's my first payment as a coach or here's this or that. And you may have been a coach for a couple of years and it's still a disaster and bad word to use, but it's still a little disorganized, but we're going to bring it in. 

Molly Claire 15:42

It's a fine word to use. And I want to interject here because this is really important. If any of you that are listening relate to this, if you are allowing your embarrassment of your disastrous situation to get in the way of fixing it, you've got to get over that. You've got to be willing to be messy and say, I think I've made a mess of this. Can you help me? 

Mark J Kohler 16:05

Yes, and here's another, I love this. So all this is money's coming in and expenses are going out. Here's a thought many of you need to embrace. It's always gonna be a little messy. It always is. When you walk in your house, is it ever perfect? No, there's gonna be a sock on the floor somewhere. We don't flip out. We're like, that's okay. But I'm okay with a 98% a messy level or if 72 or at 68, everybody's gonna be at different levels. But here's the point. Even me, even the most successful business owners I have, they're gonna go to Costco and pay with something with their personal card once in a while. They're gonna use their Amex to pay for a trip that was a business write-off. They're gonna pay for that or this or that or miss a write-off here and there. The sky's not falling. It's okay. Business is family. Family is business. There's always gonna be a little overlap. Just be okay with a little mess. But the more messy we can be, the more we save in taxes, the more organized we are and the better business owner we are. So we wanna lean into as much organization as we can. 

Molly Claire 17:12

Yes, yes, I love it. So pausing here, as you're listening to this, you're probably having the little messes or the things that need to be fixed up, cleaned up, whatever in your mind, let's allow them to be there and think about this with a solution focused mindset and not getting overwhelmed.Okay, keep going. 

Mark J Kohler 17:31

Even my wife Patty, she's always like, I need to do my QuickBooks, or I need to do my QuickBooks. Okay, it's there, it's not going anywhere. It's okay. Unfortunately it's not. 

Molly Claire 17:38

It's not going anywhere. 

Mark J Kohler 17:40

Don't be there. Yeah, and the skies are falling. Okay, so number one, we're a business owner. Number two, we need to start trying to separate personal and business finances as best we can. But like I said, it's gonna be messy, really messy at first, but we're gonna start to clean that up. And there's always gonna be a little mess and it's okay, you're never gonna be perfect at this. We're not shooting for perfection. So some good practices. I want you to open a business account. Now maybe we're setting up an entity, an LLC or an S corp. We'll talk about that in a moment. But at the very least, if you have to just dedicate an account to business, dedicate a credit card or a debit card to business, keep this one for personal, keep this one for business. And if you say, well Mark, I don't have any money in my business account. That's okay, put money in the business account to pay for a business expense. Oh, I need groceries. Take money out of the business account, put it into your personal to pay groceries. That's not co-mingling. Co-mingling is when I use my personal account to pay the expense or use my business account to pay for groceries. Transfers between those two counts is wonderful. I have a Wells Fargo personal account, a Wells Fargo business account. Almost daily, I'm moving money between the two. But that's-

Molly Claire 18:53

That's a great way to distinguish that so that people are, because I think even with that small thing, people will make the smart decision, right, and just transfer it over and use it instead of continuing to be in a bad habit of spending from the wrong account. 

Mark J Kohler 19:08

Yes, yes. And when it comes to debit cards, especially credit cards, of course, debit cards are gonna be tied to those accounts. But like a credit card, you'll say, well, I used my Amex for everything. You're gonna have clothing on there, some business and non-business. Let's get away from that. You say, okay, Amex is now all business. And my Capital One or my Visa or my airline card or whatever's over here is gonna be personal. Now, I know you wanna capture points and point management. I have podcasts just on airline and Amex point strategies. It's pretty cool. 

Molly Claire 19:40

Awesome. 

Mark J Kohler 19:40

We'll graduate to that. Right now it's about getting organized and having separation and letting my business finances as much as possible be captured separate from my personal finances. So, and the business name doesn't need to be on that credit card. It's just, we're gonna use it for business. So when it comes to bookkeeping, it's easier for you to delegate this to someone or for yourself late at night with a drink on the table, you're like, I'm gonna do my books. Okay, well, this credit card is 90% business. I'm just gonna make life easier. I can import it into my QuickBooks or Quicken or whatever I'm using. So number two, we're gonna start moving money properly. And as I start setting up my business entity, I want my payment accounts, the Zelles, the Venmos, the Apple pays, the Square, my merchant, all of that to go into a business account, not my personal account. And it's gonna again, make life so much easier on the backend. Now, number three is your structure. Now I wanna pause here for a moment to introduce you to something because it really is life changing. It's kind of like the model in the life coaching world because the model is just so perceptively and it's simply elegant and elegantly simple. So what I have is called the trifecta. The trifecta is a picture of your tax, legal and personal world. What does that world look like? If we can see it organized, we can feel it organized. If we can see the future of our organization, we can make it happen. And so many accountants and lawyers don't lay it out in a simple way and we get confused and walk away frustrated. So here's what your trifecta is. And when you meet with one of my tax lawyers or accountants, they will do this for you and you will build this. You'll carry it around with you and use it. Some people frame it, do photos, send it to me on social media. But the trifecta is simply this. The foundation is your revocable living trust or your 1040 tax return. You will not ultimately, when I get done with you people, will not own anything. Your trust owns it. And some of you already have an estate plan, a will, a trust, you've been very organized with that. 50% of Americans don't even have a will. So again, don't beat yourself up. But what we wanna do is have a foundation. That's our legacy, that's our estate. And if something happens to us, where does all this hard work go? And does it go to my kids properly? Am I gonna leave a 16 year old, a million dollars of life insurance and equity in a home? Not good. So our estate plan provides a little safety and security emotionally that everything I'm building would go somewhere properly. And then all water runs downhill as money does. All the money you're making from passive investments in crypto and real estate in your stock market or whatever, and your business flows down into your tax return. It's like a blender. Your 1040 is like a blender. We're gonna make a smoothie at the end, and we wanna save as much money as we can with that smoothie. And that's okay. It may look messy, but oh, does it taste good when we're making money? 

Mark J Kohler 22:40

And it's like properly organized. So the foundation is this. And Molly, I know you're gonna ask a question here, but we'll like set the table. On the left side of your trifecta, and all of you do have a piece of paper handy, it's so easy, put a square at the bottom, R-L-T, revocable living trust. Over on the left is gonna be your operations. This is your business. Now some of you or your spouse might have a W-2 day job. That's cool. That's off to the side. But we have a bubble here, a circle, that's gonna be our business. Maybe it's just a sole proprietorship. Maybe it's an LLC. Maybe it is an S corporation. That's where we're gonna go next in step four. But step three is we need to draw this out and go, okay, what does this big picture look like? So the left side is a bubble with a, put a little business in the middle of that bubble. Then over on the right side are our investments, our assets, the wealth we wanna build. We wanna take profit from the left and then inject it into the right-hand side and go, oh, I'm gonna buy a rental property with my significant other or invest for myself in the stock market or crypto or notes. Because we just don't wanna live month to month, hand to mouth over here on the left. Our goal is to let our assets work for us, not on the left side where our assets are doing the work. We want our assets working for us. So over on the right side is going to be maybe a 401k, IRAs, health savings accounts. investments in real estate or whatever. So we put a bubble over there. So on the right hand, you have a circle that would be assets, maybe an LLC to hold some of those, and it'll expand as we build more. And then on the left is our little bubble or circle for our business. Both are owned with a line, take a line from each of those circles down to the square at the bottom of your trust. That is your trifecta. Operations on the left, building assets on the right, all flowing down to your tax return where we make a smoothie and your trust owns it all. Trust owns your home. We're gonna put other assets on the right. But that's the foundation of going, okay, I can keep it organized. I can have a personal account at the bottom, a business account on the left, and an investment account on the right. At the very least, you're gonna have three profit centers or three bank accounts. Personal at the bottom, ops on the left, assets on the right. And when we see that, we're like, oh my gosh, I'm starting to already feel more organized. That's the trifecta. 

Molly Claire 25:07

Yes. And as you were talking, Mark, I was thinking about how having this big picture, just understanding this trifecta and having that view and perspective influences the way we operate within our business, right? Because if we're just thinking about the business as this isolated bubble or any one of the other areas, it's like we're cutting ourselves off from like more of an expanded mindset that will help us to make better decisions. It's like part of the power in seeing it all is saying, okay, like I see it, now I can create what I want. And also it informs your decisions. 

Mark J Kohler 25:48

Yes, and see if some of you might be old enough to remember the Kevin Costner movie, Field of Dreams. It's kind of semi-sci-fi, where he had to build this baseball field in the middle of a cornfield in Kansas before the ghosts of the Yankees would show up. And it's so powerful, that concept, that you can't put new wine in old bottles. I can't build something if I'm not ready to receive. If the divine is gonna help me with my business, where's it gonna go? And we almost self-sabotage, when we deep down, we don't know where it's gonna go. And so by just having this picture, now I've opened up the universe to say, okay, Molly, you're organized. Let me give you another client, because you're ready for it. And so just that simple picture says, all right, business account over here, I'm tying out those items. I know I can build that, and now I can build a future based on that basic framework. 

Molly Claire 26:44

Well, it's true. And one of the things you said is, you know, when you're organized, you can handle more clients, right? And I think this is something that we often do not realize .My clients do not realize they are self-sabotaging. They are not allowing clients to come in because they're actually afraid they're going to be overwhelmed. 

Mark J Kohler 27:05

Yes. What do we do with that success? And it freaks us out. 

Molly Claire 27:07

Yes, that's right. And so when we can know and have that clarity and certainty, I have a handle on what's next. I know I feel empowered and I have the knowledge that I need, then we can allow clients to come in more easily. It removes those subconscious roadblocks immediately. 

Mark J Kohler 27:24

Yes, I love it. So if you guys are taking notes, step three is building your trifecta. You may have the financial wherewithal to get a consultation and have someone, a professional help you from the outset. We'll work towards that, if not, it's okay. And I've got so many videos on YouTube and on my podcast where I help people understand the trifecta. You guys will eat this up. I was at a restaurant last night in Phoenix and I walked by the bar to go to the bathroom and this woman and husband stopped me and they're like, oh my gosh, you're such a superstar. We watch your tax and legal videos every night. I'm like, oh my gosh, you guys are nerds. But they're like just small business owners and like you make it so understandable. And so I have incredible playlists on YouTube and you guys will be able to see me actually on a whiteboard doing this. 

Molly Claire 28:09

Yeah, we'll have all this in the show notes. Everyone will know how to find you, so perfect. 

Mark J Kohler 28:13

You guys will love it. So number one, I believe and think as a business owner, I am a business owner and I own it and I'm excited about it. Number two, I'm gonna start separating my finances slowly but surely and maybe a little faster than others but there's no rush, there's no race and I'm not gonna compare myself to anyone else. Number three, I'm gonna draw out what this ultimate picture is gonna look like and what I'm trying to build and why I'm doing it and how does that make me feel and then I'm gonna take this money I make here and empower and teach my children and other people around me and I have a visual representation of it. Now number four and that left bubble of the operations, I will suggest as soon as possible and you're emotionally ready and your business is ready and for those of you that have already done it, we're gonna tune it up. Trust me, I meet with people- I had a conference with realtors yesterday, 90% of them were jacked up. So you've got lots to learn here but that left bubble, we're gonna at least start it as an LLC, a limited liability company and we're not gonna worry about Wyoming or Nevada or Delaware or some crap on the internet. We're not gonna worry about C corporations. We are gonna stay focused and just do an LLC in the state where I live and the state where I live is where I'm doing business. You're gonna be the manager and the owner. We're not gonna do a member managed LLC, we're gonna do manager managed. Now this is where going and hacking this out on LegalZoom, if that's all the budget you have for it, I get it. We have two paralegals full-time doing fixmylegalzoomentity.com. So you can jack it up but at least get the LLC formed and it's okay, get a tax ID number, get a bank account. If you have the ability to get a console with a professional, it could be maybe a thousand bucks but you get the right entity, you get a plan, you look at your trifecta, that's on the horizon well. I'm just saying these little things so you guys know there's resources there. You can DIY and budgets type or you can say, you know what, I'm gonna pony up and use that next coaching client to spend on getting fully organized here with a little tax and legal professional help. So anyway. 

Molly Claire 30:22

I'm gonna say this, you either have to spend more time or more money to move these things forward. It's a choice, right? It's a choice. And I don't think one is better than the other, but I do think it's important to keep that in mind. 

Mark J Kohler 30:37

Yep, absolutely. So why are we doing an LLC? An LLC, if I was in a crowd of you guys, I'd make you all say this, but an LLC does not save taxes. Just repeat that. An LLC, limited liability company, they're not called limited liability corporations, a limited liability company does not save you taxes. It's a platform. It's a platform to give you some protection, yes, but we're not doing a bungee jumping school, so we'll be okay. But it also gives you a structure. It gives you a tax ID number. It's gonna give you a bank packet to go to the bank with your articles and your operating agreement and your minutes, and you're gonna get legit. And you're gonna be able to come up with a name for that LLC. And that LLC doesn't have to have the word life coaching in it. It could just be Mark Kohler Enterprises LLC. I might be doing Etsy sales on it, consulting, life coaching, selling bakery, doing catering. I only have one S Corp in my life. I have one parent company. It may partner with Molly on a deal in my corporation, partners with her corporation, but the LLC is a platform to start with. And the cool part is the LLC can be converted to an S corporation status with one form. It's actually two forms. It's super expensive. Buckle up. We charge $250. I know, it's highway robbery. But when the time comes, people that LLC will morph into an S Corp. And before this section is over, maybe this is part one, we'll get to this, we'll finish this point and beat this up a little bit. And then we'll talk about write-offs and some other things you can be doing. But we wanna have that LLC as a jumping off point with its own bank account, tax ID number, and we're gonna start collecting our money there, paying our bills from there, and owning that cool little LLC, whatever we name it, as our company. The entity is separate from your business. It's another concept. You're a business owner already. The LLC is just an envelope for you to do your business in and maybe multiple businesses. 

Molly Claire 32:42

Yeah. And I think that, and I, I don't know if you'll speak to this now or maybe in a part two, we have so much to say that we could obviously go on. We can probably talk all day long about this stuff and everything. But I think that you don't want to jump to that S-Corp too soon, right? That's one thing that you want to make sure of. I think people think, Oh, this is a good idea. I heard this is a good idea. I heard this is going to help me with taxes, but you also want to make sure that it's the right time before you do that. 

Mark J Kohler 33:08

Yep, and before we wrap up this section, because I know you don't want your podcast to go too long as well, is so once you start collecting that money and operating as that LLC, it might be one month, it might be one year, it could be two years. There's no rush again, no comparisons with anyone else. That LLC is the entity managing your business. And when you make profit in it, and this is, I'm just gonna summarize this, why we go to an S-Corp and when the change is to be made. With an LLC, let's say you bring in a hundred grand. You do coaching of 8,000 a month, couple clients onboarding every month. Making a hundred grand as a life coach gross is not hard. You're with the right person, Molly, she's gonna get you there right away. So you're grossing a hundred grand. Then we go right off everything we can. We write off cell phone and home office, computers, laptops, a little travel, conferences, trainings, blah, blah, blah. And let's say you net 75 grand. So theoretically you're taking home five or six grand a month, okay, cool. Brought in eight or nine, take home five or six. We don't need the exact numbers. Well, you're gonna pay self-employment tax on that entire net amount, that's 15.3%. Doesn't matter what state you're in, you're gonna pay 15%. So on 75 grand, we're looking at 10 grand in tax. Then we pay state, then we pay federal. So we could be at 30 or 40% in taxes, and all sudden business owners are like, holy crap, Mark was right, the number one cost in my life is taxes. How do I deal with it? Well, we're gonna chip away at it. And the first way is once you're making 50,000 or more, so this is the break point. If you're taking home four or 5,000 a month, and that's what you expect this year, we wanna make that designation and say, oh, I'm an S-corp, I'm still an LLC, my name didn't change, EIN didn't change, bank account did not change. But in the eyes of the IRS, I'm now taxed as an S-corp. So I make this special election, I can backdate it to the first of the year if your LLC was in effect. Now we're gonna take that 75 grand and split it. I'm gonna call half of it payroll, and half of it take home draw or K-1. It's an easy form to do. I have advisors all over the country, even ADP and Paychex knows how to do this. So we're gonna take half of it as payroll, half of it as a dividend, one might say, and I just cut that 10 grand in half. So now I just saved $5,000. Do you know what? Your chances of an audit go down by 1,500%. You are 15 times more likely not to get audited when you do an S-election. The IRS just doesn't have as many agents in this department. I interview prior IRS agents on my podcast and talk about this all the time. Every dentist, doctor, lawyer, accountant, online influencer, restaurant owner, landscaper, we're all S-corps when we make more than 50 grand a year. And so we split that payroll, we split it in two pieces, part of it being payroll, and the more money you make, the more you save. And that's the S-corporation. So we can transition whenever the time's right, middle of the year, beginning of the year, don't stress about it. When you're having regular meetings with an advisor, they'll help you make that transition and it's just money in the bank. 

Molly Claire 36:19

Mm hmm. This is awesome. This is awesome. Okay, so we have a little less than 10 minutes left here .Let's figure out, Mark, what are the last things we're going to talk about with our audience? Because don't worry, everyone, we are going to have Mark back. We're going to have more. And of course, they can go to your podcast. But what are the last few things we want to hit on here today? 

Mark J Kohler 36:40

Now, what I want to do is now help you feel empowered that you've now opened a whole new door. You've unlocked a whole new world as a business owner. And I want you to kind of get mad at accountants and lawyers because they really do overcomplicate this. And I don't know if it's their fault either. The education system and the old school mentality of tax and legal is almost built as a self-protectionism where they make it complicated. So you have to use them. Now we do need to use them to some degree but it should be collaborative on the same side of the table. And you shouldn't be made to feel stupid when you go to meet your accountant. And I've got-

Molly Claire 37:20

Exactly right. I just, I have to just jump in here because whoever you are working with to help you with your tax, your legal, your finance, I think that you have to feel empowered when you're working with them. You have to have a sense that they have your back and you should feel totally comfortable talking with them about everything. I think that relationship piece has to be there. 

Mark J Kohler 37:44

Yeah, and if your accountant is already like, you go in with an idea, oh, I listened to this podcast with Mark Kohler and Molly Claire, and they were talking about being an S corp. Now hear me out. If they say, oh my gosh, that is wonderful. We should, yes, that's gonna be a perfect transition for you and you may go, well, I'm already making 50 to 100 grand. Why am I not one now? So very rarely is your accountant gonna go, oh, Jane, John, come on in, let's talk about this. This is great. I'm so glad you found Mark Kohler and a lot of accountants know who I am, but they're not gonna, what they might do is, oh yeah, that's too aggressive. You don't need to do that right now. And we'll go there when the time's right. I know some of you have heard this. Yeah, the S corp, you're just not big enough yet. That's not a good fit for you because here's the problem. If it wasn't their idea, it means they may have screwed up. That's what they're thinking in their mind because they have to say it's now time because if you do it and save money and it wasn't their idea, they literally almost feel like they have legal exposure and they feel dumb and they are going to diss and make Mark Kohler look aggressive and make me sound crazy because it wasn't their idea. It was mine. Now, if any of you run into this, and I know many of you will because I'm gonna go to the next step here is, you've got to feel empowered to go, you know what? It's time for me to graduate. I'm gonna move on to a better tax advisor that understands me as a small business owner, wants to collaborate and empower me and work from the same side of the table because this old accountant, and they may be your dad's accountant, your mom's accountant, or I inherit him. It's my brother-in-law. I can't fire him. I go golfing with him and oh my gosh, they're my family. And oh, well, you know what? They're costing you. This is your future. This is your freaking American dream and it's their way, not yours. I'm sorry. This is your ship. You are the captain. And if the first mate is screwing it up and they won't even have a conversation without demeaning you, you're gonna throw him overboard. 

Molly Claire 39:46

100%. Don't let people-pleasing or a sense of obligation or not knowing how to advocate for yourself. Do not let that get in the way of you taking care of your future self. I always say I'm here to take care of me today. And 80 year old Molly, because 80 year old Molly needs me right now to make good decisions. 

Mark J Kohler 40:06

I mean this, I could look at 90% of your guys' tax returns one-on-one for a half hour and find 10 grand in savings, 10,000. Let's just say 10 grand, whether you're an S-corp and I'm going to come to the S-corp payroll because for those of you that are S-corps already, I bet you 70% of them are doing it wrong. So we're going to get there in two seconds. But here's the thing, if I found you 10 grand in savings, you put that in the bank at even 8% interest, in the next 10 years, you're going to have half a million dollars. That may be strong, 12%, we can do the rules of seven, la, la, la. But we're talking about hundreds of thousands of dollars down the road that you are missing out on in your future because your accountant missed five or 10 grand in savings because they made you feel stupid or made you feel obligated. So we've got to be careful there, sorry, small digression. But you guys are in control of this. You are in control. Okay, so step five is to start operating your business with this new mindset. So you've set up your entity, step four. We may become an S-corp right away. Some of you should have been an S-corp six months ago, some of you already are, but we're going to start operating it. Now I won't pick on Molly, but let's say you have your S-corp and you were an S-corporation in 2024 and you made 150 grand. So you brought in 200 grand. You're like, man, I'm out killing it. I've been in practice a couple of years now. Things are going. I brought in 300 grand and I had 50,000 in write-offs. I netted 250. I'll even say you netted 200. You netted 200 grand last year. What was your payroll? I would look at your 1120S tax return and in two seconds, I'd look at your payroll. A conservative and probably an accountant over age 40 would have had your payroll at $100,000, maybe $140,000, two-thirds of it, they would have made payroll. 

Molly Claire 42:03

Wow. I mean, even I know that's not a good idea! 

Mark J Kohler 42:08

Oh my gosh, it happens all, and I run into people that are 200 grand with an LLC and the accountant didn't even recommend an S corp. And then the ones that are so scared of their own shadow that they take payroll more than they should have in a 200,000 net payroll, I would allocate about 30% of payroll. So for all of you doing rule of thumb here, we want to be between 30 to 50, maybe even 25% to 50% at most in payroll. The less you make, the higher your payroll percentage.The more you make, the lower your payroll percentage. And the more you say, Joe Biden had an S corp in 2016 when he did his book deal running for president the first time he had a book deal. He made $14 million. I've got Trump's tax return that year and Biden's tax return on my laptop right here. Biden had ran it through an S corp and in his S corporation, he took about 800 grand in payroll on 14 million. His tax savings was around $400,000 because he took this crushed down payroll. You guys can do the same thing. So when you make more money, we're actually going to reduce your payroll percentage. We want to nail it. And it's an estimate. Guys, you're not getting a paycheck every two weeks. You're just going to take money whenever you want. You're going to start to operate your business. I'll teach you this on my podcasts and YouTube channels. Our consultants will help you if you build your trifecta and do it. And I like, don't, don't worry. You will get this content. But the point is your payroll is an after the fact report. You don't have to worry about your cashflow, take money when you want, but every quarter we're going to nail your payroll. And if your payroll is supposed to be 80 grand at the end of the year, we're going to take 20 grand and payroll every quarter, send in our deposit. And on 200 grand, you just save, we probably just saved $17,000 in tax. And for example, I had a client and it's four months ago with over 900,000 in profit and their self-employment tax was $43,000. And I got them down to 8,000 in one swoop. And their accountant was like, uh, yeah, Mark Kohler, uh, what? They're deer and headlights people. Anyway, so we want to operate properly, nail the right payroll. We've got plenty of time for 2025 to do this. If you have an S corp already, let's adjust it for this year. I haven't even started talking about your health insurance, health insurance expenses, health care, kids, all these wonderful write-offs we'll do in a part two, but by step five, you're getting used to this. You're operating, you're getting familiar with it. You're not beating yourself up. You know, there's a learning curve, same speech to anesthesiologists, lawyers, desk, doctors, you're no different. Don't beat yourself up. This is foreign for people that go specialize in a practice or a restaurant or a landscaping or whatever. And they're like, I best, I better learn this. And the rich love to talk about this. People that make money at a dinner party and you start bringing, hey, are you an S corp? What are you doing for your payroll? Hey, have you been writing off your trip on your family board meeting? Yeah, I had a family board. Wealthy people geek out on this because they realize it's easier to save money than make money. 

Molly Claire 45:27

Mm. Okay. That is BAM. That's perfect. The best way to end. Listen, we are definitely going to have Mark back. And of course, Mark, in just a minute, tell everyone where they can find you. But you know, as we wrap up this episode, I hope that all of you are feeling excited, a little more empowered, a little more confident that you can do this. You obviously do not have to know all of the answers and you certainly don't have to know them all at once. There are people that are qualified to help you with this. Just decide today that you will take better ownership of your finances and your financial future and you will continue to take whatever steps you need to learn whatever you need to make it better and better. Okay, Mark, how do they find you? 

Mark J Kohler 46:17

All right, I'm gonna give two calls to action. The first one is just do some learning. Just start drinking a little of my Kool-Aid. You don't have to hire me. You don't have to hire any of our firms. It's free, I mean, I'm gonna say if you're a book reader, I've got four books on Amazon, best-selling books on tax and legal simplified. If you're a listener, I've got a podcast called the Main Street Business Podcasts, millions of downloads. If you're a watcher on YouTube, I have 500,000 subscribers and 15 million downloads just last year alone. So you can go read, listen, or watch, and just start soaking this up a little bit. That'll make it easy to understand.Step two, call to action. It would be, at some point, some of you can afford it and do it right now. Some of you, it may be a little further out. Get a consult with one of my tax lawyers, and it's KKOSlawyers.com. KKOS, as in Sam, lawyers.com. And you may think, ooh, a tax lawyer, they're expensive. No, for setting up an entity and having a one-on-one on a Zoom call with a real lawyer, not some promoter, a grand, 1200 bucks, and they will talk about the trifecta, we have a comprehensive structure where we look at your last year's return and give you an entity around two grand. So you're getting a plan, you're getting a diagram, you're having a conversation. I have 12 lawyers, young and old, male and female. They're wonderful, we get on a call. You now have a tax advisor. They'll give you that plan. You can talk to your accountant, see how it goes, and they'll give you a whole network of accounts that speak Mark Kohler. I don't make money off of your relationship with them. You can shop around, do discovery calls, but do a consult when the time's right. Some of you could start tomorrow. KKOSlawyers.com. And I'm just grateful to be a part of your life. This is such an opportunity. 

Molly Claire 48:05

Awesome. Awesome. Thank you so, so much, Mark. We will definitely have you back. Thanks everyone for being here and listening. Check out all of the links in the show notes. Find Mark. You're going to love his podcasts. I just eat up everything I learned from you. So thanks so much, Mark. 

Mark J Kohler 48:22

Thank you, Molly, see you around.