Main Street Business

#529 Tax Advisor Playbook: Help Your Clients Establish A Family Board

• Mark J Kohler and Mat Sorensen

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In this episode of the Main Street Business podcast, host Mark J. Kohler focuses on the transformative role of family board meetings in a business context. He discusses how these meetings are crucial for asset protection, tax planning, and promoting family unity, offering a blueprint for implementing these strategies effectively in any business environment.

Here are some of the highlights:

  • Mark introduces the concept of family board meetings and how it can be used for LLCs (board of advisors) or corporations (board of directors).
  • Mark breaks down how to establish a board: document the meeting, discuss business plans.
  • The importance of maintaining corporate veil for asset protection.
  • Mark shares personal experience of organizing a family board meeting in Jackson Hole, Wyoming.
  • Emphasis on teaching clients to build and maintain family board meetings.
  • The significance of creating a professional atmosphere with conference rooms, name tags, and agendas.
  • Positive impact on family relationships and business understanding.
  • Importance of creating the right ambiance for effective meetings.



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:

In today's video, I'm going to teach you how to help your clients establish a family board. This could be a board of advisors for LLCs or a board of directors for a small corporation. These board meetings are a tax write-off. They create better asset protection and even audit protection. You need one of these boards, and when you do this for your clients, they are going to love you. Now I'm a certified public accountant, attorney, best-selling author, podcaster, youtube personality. I've done over 10,000 consultations helping clients all over the country, and I currently train almost a thousand different CPA and enrolled agents around the country to become certified tax advisors. But, most importantly, I'm a business owner myself and I'm a dad, and my family board meetings are precious to me. This is a chance for me to leave a legacy teach my kids financial literacy and teach small business.

Speaker 2:

Now, what is a board? Now, it's actually pretty easy to get our heads around. We just don't apply to ourselves. We can think of Microsoft and their board meetings, or Amazon or Apple. They all have big corporate boards, right? Well, even a small business owner can have a board. In fact, with a corporation in all 50 states, you're required to have officers and a board of directors, and with every LLC we've been setting up in our law firm for at least the last 10 years.

Speaker 2:

We ask our client have you thought about a board of advisors? You can have a board of advisors in your LLC. It's a standard provision in all of our operating agreements. Advisors in your LLC it's a standard provision in all of our operating agreements. So, with a corporation, most likely your clients are going to be making an S election. So even if it's an S corporation, they're going to have the standard corporate book and they're going to have a board of directors. In an LLC, we're going to set up a board of advisors. This would be in the minutes. It'll be in the operating agreement, the bylaws In the formation of these companies. It's very, very easy to implement at the beginning and it's easy to add later. I'll talk about that in a moment.

Speaker 2:

But who's on this board? It's your family, it's your loved ones, it's your close friends. It could be your mom and dad, your brother, sister, your best friend, your kids. One of the best people to have on your board are the people you're going to travel with, the people that you're going to take vacations with. Because we want to take a tax write-off when we're having a board meeting on a Thursday in November. Oh yeah, eating turkey dinner. We can do both. Do you know? Many times we've had a Thanksgiving dinner and then a family board meeting. We used to do that with my mom and dad God rest their souls. And then a family board meeting. We used to do that with my mom and dad God rest their souls.

Speaker 2:

This is an incredible opportunity for you when you're traveling with your friends and family, when your clients are traveling with friends and family, to say, let's turn it into a board meeting. We want to find tax-deductible reasons for every trip. Maybe they're going to attend a conference or check on a rental property, go visit a customer client, whatever, but we can also have a board meeting for one of those days and help create a powerful tax deduction. Now let's say I have a corporation or an LLC and I've never established a board. Well, it's this easy. You're going to take out a piece of paper, you're going to have your board meeting. I call it to order and you're going to say, okay, who's all present? And say, let's talk about the business. Here's what I did last year I sold this, I bought that. We're going to invest in this. We're not going to invest in that Now.

Speaker 2:

We actually help our clients hold their annual board meetings and give them a 25 point questionnaire. They fill it out, send it back to us, we type it up, we make it look pretty Boom bada-bang. We only charge $200 to do BOI reports, company maintenance every year and keep their company in good standing Very affordable. Well, as a tax advisor or a professional, a legal professional, financial professional we want to be teaching this to our clients and helping them execute this important task. You can hand them off, have us help them do their minutes, or just tell them to do it, or maybe even help them do it yourself, but the point is they're gonna have this annual meeting and they can have more than one a year. You can do it quarterly, but in this meeting you're gonna have these questions and you're gonna talk about the business and what you're planning to do last year, this year, what you did last year, what you plan to do this coming year. That's the purpose of this meeting. First and foremost, when you document that meeting, you're documenting the tax deduction you're going to take to go wherever to do it and you're also going to be documenting various tax provisions, because in those minutes. I want to have an accountable plan. I want to have all the provisions and elections. I need that if I get audited we've documented those in our annual minutes and for asset protection. This is the beauty. When I hold that meeting, I am now protecting the corporate veil the corporate veil that's there with a corporation or an LLC. Let me tell you a story that'll bring this home.

Speaker 2:

I was in my undergrad, I was pre-law. I was at University of Utah, go Utes, and I was so excited to have my first day in court. Now I had a janitorial business. That's how I got through college. We'd clean buildings and restaurants and all sorts of things. And this one time we'd done a hair studio and this guy we stripped and waxed all the floors, blah, blah, blah. He owed me probably around three or four grand. Well, it wasn't enough for regular court. It was small claims court, but I filed my case and I was going to have my day in court this month or so out. Now I was pre-law, so I'd go to my professors hey, I'm going to go to court and I'm going to sue this guy and I'm going to try to get my money. And they're like oh, here's what you need to do. They're like you need to pierce the corporate veil. You got to sue this guy individually. I'm like, all right, what's the corporate veil? And so I was learning this for the first time in college and I was like, okay, this anyway. And so I'm like, let's do it.

Speaker 2:

So I get into court and I literally remember it. You know those times in life where you can just remember the sounds, the smells, everything. It was that poignant for me. So I remember I go over to my little table and I still can't remember what was it? Left side or right side? Anyway, I go over to my little table and sit down and the judge hasn't come in yet.

Speaker 2:

And this guy storms in with at least two lawyers. Now the fish story grows. Maybe it was three lawyers, I don't know. They come in and I remember when the lawyer put his briefcase on the table, threw it down on the table, and I mean I was like nervous, I was already shaking in my boots. And so the judge comes in. We all stand up, la la la, and the judge was like, all right, what's going on? So I get to go.

Speaker 2:

Your honor, this guy didn't pay me. I did all this work. He owes me three or four grand. La la, la, I mean, I just want to get paid. That's why we're here.

Speaker 2:

So the judge turns to the other party and the lawyer pops up and he's like your honor, case dismissed. This guy doesn't know what he's doing. He sued my, the corporation. This whole thing's got to get thrown out and we can start over another day If that's what he wants to do. This is a joke. My client doesn't know him. It's XYZ Corporation.

Speaker 2:

Judge is like, oh okay, looks over at me and I'm like your honor, this is the first I've heard of this corporation. I've never even seen it on a check. I didn't have a contract with this corporation. All I did is walk in and shake this guy's hand. He told me to do the work and that he was going to pay me. I don't know anything about a corporation.

Speaker 2:

Judge looks at the guy and says well, do you have your corporation here with you? Do you have your corporate book? Do you have your minutes? Have you maintained the corporation? Have you used the corporate name? And he was just drilling down on this lawyer and the lawyer's like oh, we filed with the state and I don't have it here with me. But, your honor, we're a corporation under the state of Utah, and blah, blah, blah, blah, blah and just rambling on and on. But the guy had no paperwork, no minutes, no corporate book, nothing. Then he turned back to me and says Mr Kohler, do you have a comment?

Speaker 2:

Now I had practiced my line, I was so excited for this moment, I had practiced it in the mirror, I was so nervous and I pop up and I go your honor, if he doesn't respect the corporate veil, why should we? And I was like inside, my heart was just like you know, and the judge says you know what, mr Kohler, I like that argument Pay the man. I was like oh, and I jumped up. You know there was news reporters out there, but he was going crazy. No, no, no, that happened. But I got paid out in the hallway he wrote his check and I was like, damn it, I got him and I was so, so excited.

Speaker 2:

Now that story, that experience stuck with me and has for years, because what I learned that day was that you, as a business owner, your clients, if they don't respect the corporate veil, if they don't maintain their LLC or their corporation, separate checking, no commingling, using the company name on all contracts, having company minutes, having a corporate book. If they don't do those things, that corporation is worth jack squat. And that's what I learned that day. I've written books on asset protection articles and taught for years now trying to help people stay out of court, and if they get there, it's the entity, not me, can't sue me personally, you can go after my entity. That's the beauty of the corporate veil.

Speaker 2:

Well, one of the key parts of maintaining the corporate veil is doing annual minutes and how many of our clients do them and they see it as a burden. We're like, ah man, this is terrible. I see it as a perfect opportunity. I'm going to get on a plane, go to New York for the weekend, maybe go to a show, have a family board meeting. Come back. I can write off my trip the day, travel there, the day of the meeting and the day back. If I couple it over a weekend, maybe find another business purpose for the trip. I could be writing off three or four days. This is super powerful, amazing.

Speaker 2:

That's why we want to help our clients build a board of directors or advisors. Now, if your client doesn't have one, they can amend their documents and maybe the bylaws or the operating agreement. We have a cleanup service at our law firm. We help clients do it all the time, but one of the easiest ways is again just pulling out that piece of paper, having the meeting, having everybody sign it and documenting it, and now you've got your board. That's it. You don't file it with the state, you don't file it with the IRS, you take it and put it in the corporate book. It's that easy. Now, that's just the basics. Let's put it on steroids.

Speaker 2:

What I love about doing the board meeting is it gives you an opportunity and I said this earlier to make an impact on the lives of your closest loved ones, because now you have them captive for this board meeting and you're going to teach them about your business, your passion, financial literacy, about money. How many families don't talk enough about money? We've got to teach our kids the street smarts that you don't learn in school, and the family board is that little incubator to do this. So powerful, so fun. We've done all sorts of trips as a family over the years now, and we just had our last family board meeting over Christmas this last year in Park City and we all sat down and talked about our individual businesses. I showed my trifecta. We talked about everything we were going to be doing this coming year.

Speaker 2:

I wanted to hear from each kid and their business ideas and what's going on with their finances. One year we made a contest. I said, okay for this board meeting. Today I'm going to make a deal. We're going to start Acorns. I love that little app on how to save money. And I say, okay, whoever puts money in Acorns and saves the most until our next board meeting, I'll match them. So we went a whole year and the next that next year the board meeting. I was so excited I didn't say a word all year long.

Speaker 2:

One of my kids totally forgot about it. Another one spends money like water. The other two kind of say, but one of them's a real saver. You know this is the common case and she had saved a ton of money in her acorns. I said pop open your acorns. And one of the kids was like you were serious about that. My daughter held hers up. Those are my acorns. I matched it right there and it was her acorns Roth IRA. Because I want to teach them to stay out of debt. I want to teach them to save and build wealth, and this is a chance to create some fun opportunities to talk about that. So that is what the board is. Now let's talk about executing. So keeping the paperwork during the meeting is the easy part. It's creating the ambiance for a powerful meeting for your family.

Speaker 2:

Now, one of the times I did this with the kids, it was probably oh my gosh, eight, nine years ago now, and it was my chance to finally really prove that I did this myself because I had been teaching it for a couple of years and I'm like I got to have a good board meeting. And so we were living in Idaho at the time and I said, all right, we're going to go have our board meeting in Jackson Hole, wyoming. Now that's just a little drive from where we were at in Idaho. And I told my wife at the time, we're going to go do a board meeting in Jackson Hole and have some fun. She's like, oh, don't ruin a good weekend having a board meeting, and validly so. As any good parent will imagine, going on a weekend trip to have a board meeting with your teenagers meant we're all going to sit in a hotel room and sit around the bed and just argue and fight. You know, that's about it what some of you could probably envision as well. I'm like no, no, no, it's going to be good, trust me. And I tell the kids it's going to be great. We're going to go to Jackson hole in three weeks, we're going to do it on this weekend, jackson hole, and um, I also said it's going to be the Kohler corporation board meeting. And they're like oh, okay. And um, I go, can you put that on the marquee for us? They're like yeah, we got, we got you.

Speaker 2:

So when we roll up to the hotel, all the kids grab their bags out of the car, valet up and they start walking in and on the marquee it's like welcome, kohler board members. And they're like what's going on? Man, this is crazy. And then I had at the reception desk I had little folders and name tags for all the kids. I was like, oh, that's going to be sweet. So they all walk up to the little you know, get the room key and they get a folder for the conference and a name tag. I'm like why do I need a name tag? I'm like everybody has a name tag at a conference. They're like all right, whatever. And so everybody gets their folder and there's an agenda. It says at 9 am tomorrow 9 am tomorrow you've got to be in the Alpine room. Breakfast will be served. We're not going to meet at the restaurant and start fighting or arguing about what we're going to do for the day. At 9 am, at noon we're going to go to Bubba's Barbecue Anybody been to Jackson, you know Bubba's and then at 1 o'clock we're going to run the river. We're going to go run the Snake River and then that night we're going to do the Jackson Hole Rodeo. So it's going to be a great day but I go whatever.

Speaker 2:

So I get up at like 6 am and this is part of having a good board meeting. I had the table all set up with a projector and screen whiteboard. I had all the little handouts, I had books for everybody I wanted to take home. I had four kids, I think Molly, my youngest, was like 12. And we're all get situated and I said, okay, here's our agenda. You can't talk unless you have the talking mug, cause you know again as family, you're going to start talking over each other and turn into mayhem. So you have to have the talking mug. I get the mug. So I started by teaching a Dave Ramsey principle of how to save. So we watched a little Dave Ramsey video, watch a little Mark Kohler video, we watched a little this, watch a little that, do a little workbook. We're talking about small business and one of my kids already had a little small business brewing and so we were talking about that. It was so powerful.

Speaker 2:

My wife's time caught the vision. She's like oh my gosh, this is great, la, la, la. Well, it started to get close to noon and it was just blew my mind. My daughter, sydney. She says Dad, can we skip running the river? This is better, this is more fun. You travel all over the country and you teach people all this kind of stuff. But when do we get to have you? When can we learn this? Now? I take him everywhere all the time but it was like, oh, I was like, oh my gosh. Again, I thought I'd been teaching her all along, dragging her to all my conferences. But to hear her say that and know that I was dedicated to her and the rest of the kids to talk about business, it was life-changing for them, it was life-changing for me and we took notes. We talked business, we laughed.

Speaker 2:

Then we went to Boz and ran the river, but it was such a powerful experience. We had taken the family board and turned it into what it was meant to be A collaborative learning experience for everybody, documented, creating great asset protection. So if I got in a lawsuit, I had my book, I was documenting it for tax purposes, wrote off the whole weekend, and then I even threw in some tax provisions, some accountable plan verbiage. We put that in all of our clients' minutes. It was so, so powerful. This is the strategy that will change your clients' lives, and when you teach them this and you make them do it, they will be your client for life.

Speaker 2:

So where do you do it? Anywhere you travel, anywhere you go for, hopefully, other business. If you go to a conference, you go check on a rental property. We did this in Vegas about a year and a half ago at a conference, and I rented a nicer room with a conference table and all the kids came up and we had a board meeting during the conference, and so I wanted to make sure that I would, and in that meeting I remember it now too I said, okay, each one of you kids share something you've learned at the conference, and everybody went around the room talking about a business principle. It was just so good.

Speaker 2:

So and it's really good for you too for your business to get organized be prepared, have your trifecta, map out everything you're going to do in your business, moving forward in a plan, and then show it to the family. Now I've said it several times and I want to show you what this trifecta is all about. This is a key part of your meeting. The reason why is a picture says a thousand words. It's good for you and it's good for those attending Mom, dad, brother, sister, best friend, kids.

Speaker 2:

So this trifecta is something that we do for all of our clients to do a comprehensive consultation with one of our tax lawyers. I teach it to all my tax advisors in our Main Street Tax Pro program. Again, this is something you're going to probably do for your clients. It's a great service, a great billable service, and as you become a tax advisor, you've got to check out my program. As you become a tax advisor, you're going to be implementing a trifecta for every one of your clients. So this is what it is, all right.

Speaker 2:

So here's what it looks like. The foundation is a revocable living trust. We split your life in half. We put operations on the left, we put assets on the right. This, down here, is your legacy. This is your family, revocable living trust. Now, operations you might have a day job or whatever, but you or your spouse partner might have an operational entity. Could be a Inc or an LLC, typically going to be an S-corp. It could be a side hustle, a main hustle, whatever it is. And then over here is going to be your LLC for a rental property. That would be the most simple format Boom, boom Ops over here for ordinary income and then a holding company over here for your assets. This is just the basics. Everything flows downhill the K1, you could have a W2, another K1, it could be a Schedule E, this could be a Schedule C, but it's all going to flow down here to your 1040. And when you build this for your clients, you're going to put yourself on the same side of the table with them. You're going to be planning together. You're going to be showing them what the current situation looks like and what the future could look like.

Speaker 2:

Let me do one other example here that might resonate, because I don't want to overwhelm you is I like to divide the asset side into two pieces. This would be the pre-tax or tax-free section, and then over here would be the after-tax section. So, for example, you might own a rental property, an Airbnb, short-term rental, you can even own a building that you lease back to your operational business. But on the op side you have that S-corp, or maybe you have an LLC that's going to graduate into an S-corp, and over here you have your LLCs for holding. And then here becomes our IRAs, our 401k, our HSA, our Roths, all of this stuff. So what you're doing is helping your client build their tax-free bucket, their after-tax bucket, build their tax-free bucket, their after-tax bucket, and save taxes with their operational income. And it all flows down to the revocable living trust and the 1040, and a river runs through it. That's the beauty of this. Now check out that slide I'm going to pop up now. Pretty crazy, right. That's a little more intense. That color bubble chart. That's a client that might have a lot of things going on, but it actually grows much quicker than you think and you don't have to have a lot of money to have a very robust trifecta.

Speaker 2:

So what does this kind of feel like for some of you? Have you ever heard of the term family office? A lot of people throw that term around that are trying to be glitzy and glammy. And oh, family office, family office. You know what? You don't have to be rich to have a family office. You could be a mom and dad, day job, part-time, small business couple, kids, rental property, little investments and you're going to have a board meeting. You're going to have a family office. You're going to talk about investments together and building wealth together and staying out of debt together. That's a family office. You don't have to be worth $100 million to have a family office and a family office is going to have a family board and the board's going to have regular meetings and they're going to pass around paperwork and look at a trifecta. And they're going to pass around paperwork and look at a trifecta and they're going to look at what the future could hold for each one of them as they start to build that wealth and start to expand and grow.

Speaker 2:

My friends, this is the beauty of Main Street America. This is the beauty of being a tax advisor is that you get to be a part of your clients' lives. This is what they're starving for. Clients need you to help them take their business and leave that legacy to their family and teach them about it. This is the way they do it. Now.

Speaker 2:

For the last two years, I've been building the Main Street Tax Pro program, a program where we all get on training calls twice a week, a couple times a month, just to build our business and have better mindset. 12 modules, 80 classes, a thousand quiz questions, a legitimate certification, learning tax strategies that you never learn in a master's program or law school. Been there, done that? A CPA exam, done that? Bar exam, done that. We don't learn the street smart strategies in those exams. They're important, school's important, but we need to be in a community and a tribe to learn the strategies that actually move the needle, that are legitimate and honest. And why not get some continuing education along the way? Almost every one of my classes in my entire program is CE certified. I have two full workshops a year called Tax and Legal 360, where everybody comes together business owners, cpas, enrolled agents, attorneys, financial advisors and we learn together and we're changing America. We're making the tax industry alive and well again.

Speaker 2:

No more TurboTax. Be a tax advisor Really advise your clients, learn the strategies to build a practice, how to bill for advisory and how to share strategies that actually are pretty cool. Well, that's my Main Street Tax Pro program, and the business board meeting is a key part of that whole structure. I need you to implement it yourself. I need you to teach your clients this. You will change the community and where you live and all the lives of your clients by teaching the family board meeting and becoming a true tax advisor. You'll make more money, you'll be happier at work, you'll work less hours and you're gonna impact more lives when you get involved in the Main Street Tax Pro program. Thanks for watching this. I'm going to share more and more strategy. I'm constantly on the airwaves. Please like, follow, click whatever it takes to get a part of this program. I appreciate you watching and I'll see you for another video soon.

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Mark J. Kohler

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