The Legal Tax Moves That Help Rich People Get Richer | Mark J. Kohler

0:00There's nothing like my American Express Platinum card. I love that I can earn hotel credits when I travel. I can also earn resi credits. So you know I'm hitting the restaurants everyone's talking about. Plus, with the digital entertainment credit, I'm even more excited to catch my favorite shows. All in all, I can access over$3 ,500 in annual value with benefits and eligible purchases across travel, entertainment, and more. Learn more at AmericanExpress.com slash explore dash platinum. Enrollment requirements, monthly, and other limits in terms apply. This is hard hitting. People that don't make a lot of money don't want to look in the mirror and own that, whether it's lack of determination, laziness, or just knowledge.

0:38They'd rather blame or put this wealthy person in a box and say, oh, they're unethical and bad. Rather than look in the mirror and go, you know what? I could learn a few things. Maybe I'm not going to watch TV every night for three hours and I'm going to learn how to digitally market online. This weekend, I'm going to drive Uber for seven to eight hours and take that money and go buy a rental property next year. Can we get off our ass and do something rather than blame the rich for being determined. You don't win by following the playbook. You win by rewriting it. 700 episodes deep with the people who actually built something real.

1:13No theory, no fluff, no shortcuts. This is Right About Now with Ryan Alford. What's up, guys? Welcome to Right About Now. We're always It's talking about how to get right and what's working now. I can tell you about what the future is. I can tell you about the past is, but we want to tell you how to get ahead now. We're going deep today in business. We're dealing with a one percenter. I'm telling you, we got both a rare breed and we got the main street coming right to you. It is Mark J. Kohler. He is a tax attorney. He is the main street tax attorney. And he's going to tell us today how to get it all right.

1:50You got to put more money in your pocket, baby. That's what we're here to do. What's up, Mark? Hey, thanks for having me, Ryan. This is awesome. and love that your focus is on this. So important. We want to give actionable advice, ultimately. We have a lot of people on and our focus is how to get ahead in all things. Small business is the fabric of the US. We can talk the high end, we can talk the low. That is what drives America, is small business. How the hell did you get to 1 %? Lawyer and a tax guy, all in one. I was always an entrepreneur. I was the kid with the lemonade stand, had a small business in high school and hiring my brother's friends and screwing things up.

2:24and I mean, it was Tom Sawyer painting white fences, whatever it was, but I just loved entrepreneurship. And when I went on to school, I went into business and then I thought, hey, this accounting thing, no offense to anyone out there, marketing class, finance is tough, sure, but I don't wanna work for Wall Street. I'm gonna go accounting because I can stand out there. If I can just get a C in accounting, all the other, hire all the other A accountants. Sure enough, I stood out in the accounting group as the party planner, it was super fun. And then I had this teacher who was a lawyer and an accountant.

2:51And I was like, holy crap, this guy can take over the world. So you had all the benefits of understanding the numbers sitting at the table in business. And then I could freaking file a lawsuit, fight the IRS, do whatever. I want to be that guy. So I went on to law school, kept a found out of 100 lawyers. One of them has any tax background. And I freaking said, I'm going to Main Street, screw Wall Street. And here I am. You know how many times I've asked a question of my accountant? You'd have to consult your lawyer on that. I like to push the limit. I can admit it. It doesn't take long to figure that out about me.

3:18But I want to do it legally. I want to get all I get out of it. The moment you said that, I have heard that a thousand times. Consult your lawyer. Taxes are law. It's tax law and understanding it. And only the big dogs or big companies have been able to afford tax dollars. So I've worked really hard over the last 25 years building a model based on volume and a boutique where we can help clients around the country and been doing that. But the important thing here is the number one cost in our lives are taxes. And people don't want to talk about it. It's too boring. It's too complex. What the hell do I do?

3:48Well, we're going to freaking demystify that. That's my whole career is to say, it's not that hard. You're the captain of your ship. But looking for an accountant to do it all for you, you can freaking run the ship here. Hire the first mate and you can control your destiny. What's the most common thing you deal with, Mark, working with Main Street, working with small businesses? What are some of those key things that you're always tackling or working with clients on? Since COVID, we've had the great formation. We're pushing up to almost 45 % of working Americans have a side hustle. And that's a small business.

4:17That's a gateway drug. It's not a burden. We should look at it as an opportunity to use those funds to get out of debt, build wealth, create assets. And one in five Americans own a rental property in some form or fashion. If I've got a rental property and a little small business, people, you're not quitting your day job. Let's just tap into that. And so a common, common theme in what we do every day is meet with that community, those people that are the backbone of this country that are starving for simple answers to get their Kids on payroll, save some taxes right off their auto. And I love that bread and butter stuff.

4:48There's no mystery. It's not like there's this secret thing like, Mark, how do I save tax? It's just doing the basics and knowing it, understanding it, owning it. And there's no sexy secret there, except that you really can build wealth that you maybe never imagined with just those simple base hits. It's not about getting rich quick. It's not getting rich slow. I want to get rich slow. Adding them on and saving the most with that extra time. If you're going to moonlight over and above the daytime job, it's keeping as much of that as possible, correct? Oh, yeah. And there's nothing wrong with that W-2 day job, work corporate America.

5:18That's cool. It's great. Let's go do your taxes. Bend over. I can't do anything. You're screwed. But if you've got that small business, now that little 1099 some of you are getting, that's a golden ticket. Now I'm writing off home office, auto, dining, computers, electronics, your cell phone, family members. I'm funding a Roth IRA. You can set up your own damn 401k. Now we're going to take all that money and start deploying it. And we're going to be fishing. We're going to be lean and mean. You can pay 30 % less in taxes on that money than your day job. Your day job, you're screwed. Let's go get this other money that's a lot cheaper to get.

5:48Everybody wants to talk about making money. Why don't we talk about saving money? It's easier to save money than make money. Yeah, that's true. It's not always easy to make it. Running a business means you're always reachable until you're not. And the moment you miss that call, the text, the follow-up, a competitor is the one that picks it up. That's why today's episode is brought to you by Quo, spelled Q-U-O, the business phone system built so you never miss an opportunity. And I know this firsthand. When you're running a company, managing clients, producing content, dealing with leads, and trying to keep momentum, communication is everything.

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8:54For the average small business guy, and even the WTU, because we have people that listen to our show that are small business owners and that maybe are WTU thinking going small business, what's the least you could truly get away with legally, doing it the right way? What kind of tax brackets should the average small business guy be in? There's seven tax brackets out there, and the highest being 37 and a half. No one pays in total 37 and a half percent in federal taxes because it's graduated. When we have brackets, that's our bracket on the next dollar after a certain limit. Once everybody kind of gets that, that this is a graduated bracket, that's point number one.

9:28Then what we want to look at is what is your effective tax rate? After we take all the killer write-offs we can think of, lots of options, what's that effective rate? And for some people, it could be zero. For others, it could be 35%. Now, it is generally true, the more money you make, the more tax rate you're going to pay, a larger percentage of your income in taxes. But then we've got strategies and tools. For example, why Trump was such an anomaly, and he really wasn't, it's just the Wall Street Journal wanted to point this out, is that he is a real estate professional. I've got his tax return here on my laptop.

10:00I got Joe Biden's and his from 2016. He was a real estate professional. Now, you talk about it here on your show all the time. If you want to invest in short-term rentals, long-term rentals, do real estate and deploy money in real estate. It's not for everybody, but we have depreciation strategies and investment strategies that can offset my income over here. Trump had so much in depreciation from his hotels and in real estate investments, he was able to wipe out his income from the apprentice and his retail. His effective rate at the end of the day was very low. Now someone else who just works a day job, has no write-offs, makes 500 grand a year at Verizon as a VP.

10:32Okay, you're going to be paying 30 % or more in an effective rate because you're not using the strategies in the best way. We're talking about, hey, don't hate the player. Just hate the game. If you don't like that Trump paid 6%, don't be pissed at Trump. Just learn the rules. And so when you understand the rules, okay, I could invest in oil and gas. I can invest in a little solar. Oh, I'm going to build a Roth IRA. Peter Thiel's got a$5 billion Roth. It's a tax-free ATM. Oh, I'm going to invest in my health savings account and never pay tax on healthcare again. And these little tools that are out there are amazing and they're not complicated.

11:04There's a last point. Rich people geek out on tax strategies. If you want to be rich, start geeking out on some of the stuff and it'll blow your mind because this is where the rich get richer. Here's what I don't like. And it's why I really love your energy and your passion on this because it's so real and raw and true. The rich geek out on it and everyone else almost criminalizes write-offs. You'll be talking into someone unethical. And why the hell does that proliferate? This is hard hitting. People that don't make a lot of money don't want to look in the mirror and own that, whether it's lack of determination, laziness, or just knowledge.

11:37They'd rather blame or put this wealthy person in a box and say, oh, they're unethical and bad. Rather than look in the mirror and go, you know what? I could learn a few things. Maybe I'm not going to watch TV every night for three hours and I'm going to learn how to digitally market online. Or I'm going to this weekend, I'm going to drive Uber for seven to eight hours and take that money and go buy a rental property next year. Can we get off our ass and do something rather than blame the rich for being determined? I tend to do that. You went right where I wanted you to go because it's the truth.

12:03The truth hurts sometimes. I talk about these things and I know that a lawyer is going to tell me what's legal, what's not legal is cheating the system and using the system. Yes, you just hit the word I wanted to say. I got to dive in here because this is exactly the word you say. The tax code, this is so important. You want to get theoretical. The tax code is built to motivate people to do things. Get married, pay less tax. A married couple will pay less tax than a single or married filing separate. Go put handicap access in your business, get a tax credit. Go buy a solar water heater or efficient water heater at Home Depot, get a tax credit.

12:39Go buy an electric vehicle, get a tax credit. Go buy real estate and help others have affordable housing, take depreciation. Go do this, go do that. The tax code, all you're doing is using it to help America get better and we'll give you a tax break. You get a tax break for doing good things to help the economy. And that's the mind shift. The rich are figuring out, hold on, I can make money doing this, save tax and make Main Street America better. Holy shit, sign me up. It's not what we've been conditioned by media or whatever else, which is win for me, lose for the government, breaking law, pushing the limit.

13:14No, like you said, it's set up because people smarter than me knew that we needed actions to make this country run. Everything that you named, Mark, actually drives an action that keeps the economy and everything else moving, doesn't it? Yeah, there's another classic one right now. It's the oil and gas tax credit, and there's depletion credits and all this. If you want to go drop at any income level, you don't have to be materially participating. You don't have to quit your day job. There's funds you can invest in for oil and gas royalties, depletion, exploration, and invest$100 ,000 and probably get a$90 ,000 tax write-off.

13:51Make cash flow and resell it for$150 ,000 four years from now. The government needs drillers to go get natural gas and oil in the United States on U.S. soil, and we'll give you a tax credit. And all of a sudden, your effective tax rate goes from 25 % down to 10%. You're making money. You're helping America be self-reliant on natural resources and everybody wins. And you're the bad guy because you found this kick-ass tax strategy, you know? That's right. I'm not crazy. The proliferation of the wealthy getting ahead, that's a real thing. And that drives me crazy. You're a lion. You're not a sheep.

14:25You're a lion. That's it. I love it. I'm going to ask you two questions, small business owners. One thing they should stop doing the most. Stop thinking you're going to find an accountant to do all of this for you. Stop thinking that, oh yeah, as soon as I find that accountant, I don't have to worry about this anymore. I'm going to find that perfect account that speaks Mark Kohler. You're not going to find someone that's going to care as much about your finances and future than you. Now you need a good accountant. They're your first mate. But where are you steering the ship? You do understand what strategies they're doing.

14:56Are you understanding what structure you are and why? You don't have to know how to do an effing tax return, people. You need to know what numbers are on it and how to read it. A rich person knows their tax return. So you just start doing what rich people do. It's super easy. And they work with their advisor. They don't have an account that just plugs all that crap in and you pick it up two months later. They have meetings with their accountant throughout the year, at least quarterly and going, Hey, I'm going to do this. I'm going to do that. I'm going to start that. I'm going to sell this. And you're there's it's synergistic.

15:22So stop thinking you're going to hire someone to take all of this off your plate. You're taking the number one thing you should be doing and thinking you're going to delegate it. It doesn't work. You need to be the CEO of your tax team that you start building today. So your accountant is on the team, but you're the CEO of the team. And you have to think about it that way because just like your own business, I'm on five companies now. I've gone down this road. I tried to delegate the business away. Doesn't work. Good luck. It doesn't. Yeah, right? That's when you get in trouble. Yeah. Got all the scars.

15:56I've done it too. You cannot delegate. And the taxes, you need to be the CEO of your own tax team. And it might be a two-person team, three-person team, but that's what I just heard you say. And I think we try to delegate the taxes away. And you lead right into my second point. And it's so easy, people, this mind shift change. Number one, you're not going to delegate away this tax and legal topic, although you're going to build a team. So I love the way you said that, CEO of that team. What you are going to do, that's a little different though, is I need you to treat your side hustle, your business, like a business.

16:27We've got to start knowing there's a set of books. There's a methodology here. I've got to put in tax deposits. I've got to be engaged in the process. So many people that have a side hustle, they get this mysterious 1099 from selling something on, got a 1099 from Etsy or eBay or whatever. They're getting a little 1099 for side hustle somewhere and they see it as a burden. No, no, no, no. That's a business. Treat it like that. Treat your rental property like a business. When you start to treat your operation like a business, it now starts to work for you. And the profit from it can be redeployed into assets that work for you while you're asleep.

17:00And that money can be used to expand and scale. If you don't treat your business like a business, it does you no good. It's just a noose around your neck. When you're building a business, the idea is only the starting point. The real work is turning that idea into something customers can actually find, trust, and buy from. We use Shopify for our card shop. And from a business standpoint, that matters. It gives us one place to manage the storefront, products, inventory, payments, checkout, analytics, and customer orders. When you're trying to grow, you do not want your system slowing you down. For us, Shopify helps make the buying experience feel professional.

17:40Whether someone is purchasing cards, sealed product, or merch, and when a customer is ready to check out, that process needs to be smooth. Less friction means fewer missed opportunities. And when that order comes through and you hear the Shopify, it's a reminder that the business is moving. Shopify powers millions of businesses around the world, from major brands to entrepreneurs just getting started. It gives you the tools to launch, sell, market, and grow in one place. Sign up for your trial today at Shopify.com slash Ryan. Go to Shopify.com slash Ryan, R-Y-A-N. That's Shopify.com slash R-Y-A-N If you're like me, you probably spend a lot of time paying attention to what's happening in the world.

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20:00The opportunities for the write-offs and other things, there's just things that the accountant's not going to know. They're not in your business every day. They don't know how this was used or that was used and a receipt's not going to tell them that. You have to be involved. All of you at the very least should have a spreadsheet where you track all of your expenses. Number two, use a credit card or debit card exclusively for your business. If you've got an Amex, use it for business. Use your visa for personal. Try to start separating your accounting. If you're using QuickBooks online or some of the easy software platforms, great, but just start tracking your expenses.

20:33You don't know if they're a write-off or not, but if you don't track them, you can't meet with your accountant at the end of the process. and carve out the ones that are really work for you. Bad bookkeeping loses money. So start with some decent bookkeeping. Stop delegating. Start documenting. I got to write that down. Stop delegating. Start documenting. That's good. The interplay. Can you hear me now? This is what I do. Just write things. I like it. What else should we be doing, Mark? A lot of people, obviously documenting, taking control. What are things we need to start doing? Here's the number one thing I've been talking about this last year and a half.

21:09It's just really evolved to something very special. And this is for you too, Ryan. Everyone listening should be doing this. And that is integrating your family into this business. So let's assume you're stopped delegating. You're starting tracking. You're treating your business like a business. Understand your card table moment. When was that moment when I had that great idea? Every big business started out as a small business. And there's no such thing as a small business. It's big ideas. and you've got this idea and you want to make it big and you've got this dream, that little nucleus, share it with your family.

21:38And how to do that is called the family board. I want you to have a family board and a family office. You don't have to be a billionaire to have a family office. Your family office is that third bedroom down the hall with a couch in it. That's your family office. Let's start writing off a retreat with our family at least once a year. We could be writing off dining as we go out as a family and talk about business. We can be paying for our kids' cell phones, whether at college or even in high school. Our kids are going to be helping with the business and social media or stuffing envelopes or cleaning rental properties.