welcome back everybody today I'm going to break down how you can use an S corporation to Skyrocket your wealth past $100,000 or more now I'm a registered CPA attorney best-selling author and own multiple companies in the tax and legal industry and I kid you not we help thousands of clients around the country every year squeeze far more at profit out of their company because of the S corporation strategy unfortunately too many people either misuse the S corporation or don't understand the full range of investment opportunities and strategy that they can take advantage of with the
S corporation well today we're going to solve this I'm going to walk you through three ways or reasons why the S corporation should be a part of your business structure now let's dive into it what is an S corporation an S corporation is simply a way of doing business so many people understand the LLC or limited liability company well you can take an LLC and tax it as an S corporation you could have an Inc or a corporation taxed as an S corporation it's a way of doing business now the way I've been explaining this
for years and it just makes so much sense a pitcher says a thousand words let's look at the trifecta this is a way I've used to explain a business owner's overall operations to build wealth and bring it all together on the left we want to put operations on the right we want to put assets and down at the bottom is your trust or your 1040 tax return so when you're doing business or operations you could be just a plain old soulle proprietorship you could be an LLC or you could be be an ES Corporation and
again the es Corp could be an LLC taxed as an es Corp or it could be an INC now if I'm going to be over here on the asset side and buy rental properties or invest in crypto or Investments I might have an LLC over here and this is the trifecta assets on the right operations on the left all flowing downhill however we're not worried about the asset side the S corporation lives over here this is where we want to talk about the S corporation it's a way of doing business so let's use an example
here let's say that you are a landscaper everybody can get their head around that as a kid I would mow Lawns and sometimes get paid for it at least I try to now if I'm a landscaper I really have three different ways I could operate I could just start going out and talking to people and say let me mow your lawn that's called a soul proprietorship or I could form an LLC limited liability company best landscaper in town comma LLC we mow your Lawns comma LLC whatever and then over here I could actually be an
escorp and again it could be an LLC tax as an escort don't worry about that now if I'm a sole proprietorship I'm going to file on a schedule C tax return if I'm an LLC I'm going to file on a schedule C tax return but an S corporation files its own corporate tax return again it's a way of doing business now let's compare these for a moment let's say I'm out there and I bring in 100 Grand I go out and I work my buns off and I bring in $88,000 a month mowing lawns doing
sprinkler systems and I spend $25,000 in expenses marketing auto fuel equipment supply cell phone and I net $75,000 okay that's cool well you're going to pay self-employment tax right out of the gate of 15.3% well if I do an LLC do I get to save on that tax nope you pay the same tax 15.3% I brought in the same 100 Grand I spent 25 in expenses I net 75 and I'm going to pay 10 grand 10 grand then I might pay fed tax state tax so people this is important point llc's do not save tax
let me repeat that llc's do not save tax so I have my first way of doing business is this sole proprietorship my second way of business is just doing an LLC but it really hasn't moved the needle I'm still a landscaper paying way too much in tax so what's this S corporation all about well let's start to unpack it and this unleashes strategy number one okay with an S corporation I make the same 100 Grand I have the same $5 Grand in expenses and I have the same net income you could even have the same
business account and again you could be an LLC but you've made a special election to be an es Corp by the way let me just set this concern aside it is super expensive to become an S corporation we charge $250 that was a joke because I want to let you know how easy it is it is not that hard to become an S corporation so all right so I'm an S corporation I'm making the same 100 Grand the same 25 Grand in expenses I net 75 oh oh oh but check this out no self-employment tax
no corporate tax what and no Obamacare which is called ACA affordable cares Act tax well this is pretty cool so I can avoid all these taxes by becoming a US Corporation well for those of you that have already heard about the strategy there's one catch you've got to take a salary a reasonable salary and then everything else flows out the bottom now in this example I might do a salary of 25 Grand and the rest is flows out the bottom 50 Grand now for you accountants out there that are some of you already freaking out
I get it now by the way I'm a CPA I'm a tax attorney I teach classes on reasonable comp I've read every case on reasonable comp Do Not freak out on this I have a payroll Matrix that helps us Define what this salary needs to be this is just an example for a moment but I'll tell you when I have a client making $5,000 or more I might be in a 50/50 allocation and it's not the end of the world I have never ever ever had a client audited for taking too low of salary in
the last 25 years ever and I've even interviewed prior IRS agents on my show working in the S corporation Chicago office people this is okay so get over it and just hear me out somebody like Man Mark you kind of Unleashed there well that's because I talk to a lot of accountants that get stressed out about this reasonable salary issue and this is how s corporations are misunderstood or misused so what was strategy number one strategy number one is that I don't want to pay all of this F this is a big deal because the
more money you make the more you pay of the f- word f- word f I hate FICA I don't want to pay FICA on every dollar so we convert to an ESC Corp I got to tell you every dentist Doctor engineer landscaper restaurant owner CPA attorney independent Consultants we're all s corporations because once you make $50,000 or more I want to split this income I want to call some of it salary and some of it pass through this is the strategy so one of the best ways to unlock your business potential and make more money
is to use this form of doing business and create a salary that's reasonable and push out all this profit and when you start saving this money we're going to start deploying it in some very powerful ways that my friends is strategy number one now let's unpack that a little bit some people say well Mark that sounds super complicated and I can't take a paycheck my income's up and down I got it I got you don't worry first of all it is not that complicated let me put your concerns aside you're going to hire a payroll
company to do a payroll report for you quarterly you're not going to get a paycheck I'm not going to worry about your cash flow we're going to look at your income in a rearview mirror every 3 months we're going to look back and go hey how much money did you take out how was your profitability let's claim a little bit of salary do the report gone done at the end of the year all those reports add up and we've got your savings calculated it's clean it's easy next some of you may be fighting an uphill
battle with accountants that have already freaked you out on the S corporation they're like oh my gosh the S Corp doesn't work for you because you got to take such a big salary and reasonable comp and blah blah blah blah please get a second opinion I beg of you and I talk to accountants all around the country teaching that reasonable comp is not the scary evil monster many of you have been taught to believe it can be very simple okay now let's move to strategy number two because as I indicated when you save on that
F and that self-employment tax and set up that little salary strategy you're unlocking more profits well I don't want you to go out and get a better lease on a BMW or a Range Rover I want to use those profits to build wealth exponentially super powerful and when my clients catch the vision of this it is unbelievable they're sending me thank you cards and Christmas gifts for years I'll send you my address later now and remember it's easier to save money than make money trust me so let's look at our Trifecta here we go over
on the left side we're now going to have an SC Corporation get again you little LLC taxed as an escorp the sales from your business are going to come in your expenses are going to go out you're going to take a W2 and you're going to get what's called a K1 that's your profit and we're saving taxes and that profit that you're making and those taxes you're saving we're going to fund a solo 401K do you know you can have a 401k at your day job your spouse can have a 401k you can have a
401k but you can also have a solo 401K in your business frankly I want to tell you you can have as many 401ks as you want but we need to fund them so we're going to set up this solo 401k and start to plow money into it and this year it could be as high as $30,000 that can go deferred and come out of your W2 saving you more in taxes and fund your solo 401k and then the company can match that contribution up to a certain amount so this deferral in combination with your match
starts to build a bucket of wealth and this wealth is what entrepreneurs start to build and grow on the side and notice what you're doing is you're diversifying you've got wealth you're building over here with the operations of your business and you're building a bucket of wealth with your 401k and you can invest in what you know best you can invest in crypto you could invest it in real estate you could invest it in notes or even buy your stocks bonds and mutual funds so this 401K you get to drive the car you get to
be the trustee of this and now in Step number two you've taken the savings that you're generating here and you're plowing it into additional deductions and write-offs and tax deferred growth inside a solo one 401K now again some of you may go Mark that sounds super comp complicated guess what it really isn't again it's understanding that your company can design a retirement account for its owner it's employee which is you our fee at our Law Firm is $1,000 that's it $11,000 to meet with a real attorney anywhere in the country and design a 401k tailored
to your business you may have your spouse on the payroll you might have kids on the payroll you might be the only one on the payroll who who knows we're going to tailor it to your situation but when you start to design the payroll portion in combination with the 401K you find a sweet spot and you start Building Wealth with more tax deductions and less tax that Synergy is almost uncalculating and a solo 401K now strategy number three and this is one of my favorites and it's simple and easy and you're going to love it
people remember business is family and family is business so let's take our S corporation and do what all the big companies do build a board of directors we're going to build a board and we're going to put my mom and dad on the board we're going to put my best friend on the board we're going to put my spouse on the board my teenage kids on the board whoever I hang out with whoever I TR travel with I want to collaborate with I want to meet with I want to talk about the business I want
to explain what I'm doing and grow the business with their advice and support and insights so with an S corporation I'll even just diagram it cuz I love a picture is here's my S corporation and I'm going to adopt a board of directors and this board of directors is going to support the operations to increase sales increase profitability and help me design a system to build wealth now the beauty of the board is that whenever you travel you get a tax deduction together whenever you have meals together CU you're going to be talking business you
may be providing laptops you might be providing iPads you might be providing cell phones because this board is supporting the operations of your business the S corporation unlocks that strategy and unlocks number three and that is bringing together the people of your life into your business and those tax deductions need to be justified I want to write off your travel your cell phones your travel I mean this is I want to create these write-offs let me give you a fun example every one of my kids now are 18 or older every one of them is
on my board well we're going to have an annual company Retreat each one of them has a little Duty they help me out through the throughout the year it might be marketing it might be administrative well guess what I got to be able to get a hold of them and so if I'm helping them out with a laptop or a computer or a cell phone I'm going to take a tax deduction for that I'm going to take a write off for that I may even give them a $10.99 at the end of the year in
their Christmas stocking for some money I may have helped them out throughout the year so now I'm generating more writeoffs inside my S corporation legitimately audit protected to create more profit to to fund more wealth and to save more taxes it's like it it's like an equation it's like a recipe for Success it's so powerful now is it complicated no not really you can hold a board meeting tomorrow for those of you that already have an LLC or a corporation you can say this weekend we're going to go on a weekend retreat and we're going
to go to this hotel or we're going to go to this Resort or we're going to just go somewhere and sit down and talk about the business and you're going to pull out a sheet of paper and go here's the minutes of our meeting and here's what we're doing and I love you guys and I need you on the board and oh by the way this trip was tax deductible because you're all a part of the business now and you slide those minutes into your corporate book because your corporate book is your asset protection you've
maybe heard it in my other videos asset protection is maintaining that company doing the minutes maintaining the records and the structure this is the beauty of the corporation is that it unlocks all these other strategies and you know what's interesting your chances of an audit with the IRS by using an es Corp go down by 1,500% statistics every year show that over 15 times less chance of an audit with an S corporation compared to an LLC I'm giving you a strategy that saves you more in taxes and it's less chance of getting audited that's how
crazy it is but people don't understand it they don't take the time to apply them and that's why I want to say thank you for watching this video You're it's like I'm preaching to the choir you're you're there already learning the principles of being a smart business owner and I want to say thank thank you for being here these three strategies may have caught you a little off guard you're like oh my gosh I better get a second opinion I got to do that well that's the beauty of being a business owner is that when
you take time to work on your business the exponential growth on the back end it's we can't even measure it it's so so exciting now one last suggestion for some of you that are busy in your business and you're like oh my gosh I need to take care of this I need to get on top of this several things first of all if you're not an S corporation yet if you know that there could be some savings here and I'm already maybe making some sense please schedule a consultation with one of my tax lawers you
can just pay hourly or our cost again to set up an entire new entity maybe less than $1,200 and you can meet with an attorney on a zoom call anywhere in the country now for those of you that already have an entity and you need to do your company maintenance you haven't done those minutes in a few years your books are maybe a little Dusty or there's one sheet of paper in a drawer somewhere our annual company maintenance program is 200 bucks $200 we send you a list of 25 questions to take to your board
meeting that you used to fill out and you send them back to us we file your company with finson that new Boi report and also if there's a form that needs to be filed with your state we send that in for you $200 now if there's a fee with the state we'll pass that on to you but it's that simple that affordable so you can delegate that process if you want or you can pull out that sheet of paper at the next Resort and do it yourself but the point is we've got to do it
we've got to take advantage of these strategies because it really really will bless your life now that you know how to set up your escort properly you can begin to take action to scale your we wealth quickly however if you're still unsure you're not doing enough to manage your taxes please take a look at this next video where I walk you through a tax and legal Playbook to beat the IRS
