 Then I have my tax account. Okay, this is where I hold all the taxes So when I get the commission check it goes into my holding account and then I calculate What's up guys today? We're gonna get into how much I put back for taxes every single commission check And do I use the LLC and is it an escort? What's up everybody welcome back welcome back. Thanks for tuning in today I'm Ricky Kruth with Remax of Orange Beach and zero to diamond calm the only free real estate coaching program out there where we're Reducing the failure rate in the real estate industry one agent at a time that could be found at zero to diamond calm today I want to talk about what I do with each commission check how much I put back for taxes Do I work everything through LLC? Is that LLC an escort and all that good stuff because I get this question a whole lot So I just want to dive right into it before I dive into it So I'm gonna give you guys just a second to hit that like button for me And also if you guys are in the Miami or Los Angeles area I will be there in LA January 5th Miami January 21st speaking at events So there'll be links in the description for you to get tickets and all that good stuff to those events and just reach out If there's anything I can do for you there. Okay, so taxes for real estate agents get this question a lot Like I said people are asking me how much I put back Do I go through an LLC? Is it an escort and all the typical, you know real estate questions? How you handle your business because at the end of the day, we are running a business This is a real business a lot of people get into real estate never ran a business before they don't realize the the depth of How much of a business this really is you don't just show up sell a property Make money. You actually have to manage the business like it's supposed to be managed So I did it wrong for a long time I finally ran into a CPA that kind of started leading me in the right direction I changed CPAs again The next CPA even led me into a better direction than I was with the one that I thought was even lead me in a Good direction in the first place. So I've made a lot of mistakes. So hopefully I can help you there I'm not a CPA. Nowhere close to a CPA. I Absolutely should not be asked any CPA questions or anything like that because to be honest with you a lot of that is almost like a foreign language to me but the basics of what I do with my commission checks and How I handle everything with the bank accounts and the LLC and all that stuff You know very basic and I can't answer those questions and hopefully that gives you a foundation For what you should be doing and and then you can kind of the more detailed questions You can get with your CPA and kind of figure out a game plan for your specific situation And just kind of go from there and every year is going to be different You know as you make more money as you start to create more business and do more sales You know everything's going to change over time as you make more money You're being higher tax brackets and your game plan will change as you go along So you always have to be you know adjusting and adapting You know then tax laws change. There's all kinds of stuff out there Ride-offs as some years, you know one things are right off the next year. It's not so there's a lot of stuff It's always changing and that's what we have a CPA for to help us through all these changes and and help Us navigate those waters to try to put us in the best You know tax liability situation is possible So the first question I'm going to answer is about the LLC and the and the escort my bank accounts and stuff And then I'm going to tell you how much I put back every single check In a separate account just for taxes. I don't touch it. I just pretend like it's not there and operate everything off What's left? So I do have an LLC. I have three LLC's because I'm running three businesses Okay, I'm running my real estate business Which is an LLC that I get all my commissions through Okay, then I have a property buy and hold sell flip Business, okay, that's where I'm buying properties. I may have rentals that I've that I'll own for the rest of my life I may have properties I'll buy today and flip tomorrow. I may have things I'll hold on to for a year So that's that business and then I have the real estate coaching business the zero diamond calm LLC so I have three LLC's three separate entities three businesses commissions Buy and sell and hold real estate and real estate coaching And so I have different accounts for all three of these LLC's. Let's talk about and all of them are escores Okay, the escort for me the way that I understand it is that it saves you on social security taxes Okay, because if you take that income personally, then you're gonna owe social security on that money Okay, if you can shelter it in the escort to where you don't have to pay that social security taxes Okay, but you still have to pay yourself out of the LLC. So you will get Tax for the social security through whatever income you pay yourself And so your CPA will help you come up with a game plan to figure out how much you need to pay Yourself based on how much you made overall Okay, there's there's calculations and equations to all that stuff to to help you come out the best So I've got three LLC's. They are escores. Okay, so let's talk about the real estate commission LLC when I get a commission check Okay So when I close on a property that I represent the buyer seller it has to go through my real estate company Okay, Remax of Orange Beach. So the title company wants us closed They write a check from the title company to Remax of Orange Beach for the commission Remax of Orange Beach then takes that check of the gross commissions and then they give me my cut Okay, my cuts 95% of that of that commission So they're gonna take 95% and they're gonna write that check to me in the LLC So they're gonna write the commission check out to the LLC I'm then gonna take that check to posit it into the LLC account Okay, so I have a I have several accounts with the one LLC. I Have the holding account, which is where all the money goes into Impiles up. I have the operating account Where I take money out of here as I need it for my business Okay, then I have my personal account and I feed my personal account with with this holding account as well Okay, then I have my tax account. Okay, this is where I hold all the taxes So when I get the commission check it goes into my holding account and then I calculate 30% I put back 30% every check For taxes, okay I used to put 25% back and that was good for a while until I got to the bigger tax bracket and Now 30 for the past couple years has been a pretty safe bet I want to kind of go a little bit, you know higher than what it Probably is that way I have a little cushion in there You know, I don't want to have less and have to come out of my pocket of what I thought was operating money to pay taxes I want all the tax money to be there for sure and if something's left over in that account That's fine We'll just roll that over to the next year and just keep putting back keep paying taxes And just kind of keep playing that game You know until I get to another place of my life where maybe I retire and you know I may do something different there at that point with whatever's in the tax account or whatever's left over Whatever that cushion is at that point But for now it sits in an account. It's an interest bearing account I do draw interest on it and it sits there until I'm ready to pay taxes I pay my taxes quarterly So the year before I get quarterly, you know invoices from my CPA He estimates it's an estimated payment based on last year's income. He gives you an estimate He gives you four vouchers actually eight for for the for the IRS for for the state Alabama has state income taxes So I'm going to write a check four times a year to the IRS and four to the state of Alabama to pay those quarterly taxes So that's kind of a breakdown of of how I handle it every time I get a paycheck I give 30% back, you know, also a side note 1% of all my commissions goes to the children's miracle network I've been doing that for forever for a really long time. So 1% of my gross commissions earns goes to charity and That's about it. That's how I handle, you know, my money when it comes in then I take that 70% It comes it starts in the holding account and then it gets it gets moved over into accounts as I need Money so I may need to feed my coaching business LLC or I may need to feed my my property by selling a whole business, you know Different times if I'm buying properties and and so on and so forth So that's a breakdown of the basics of taxes for real estate agents how I handle my business I hope it helped you kind of give you a little, you know inside look at the basics You know of what I do and maybe that'll help you make a couple decisions or at least bring up a couple questions in your mind For your CPA to help you come up with the best plan for you to manage your taxes So if you made it this far and you want to see more of these videos I'm putting out four videos a week strictly for real estate agents to help build your business So go ahead and click subscribe if you haven't already and visit my free coaching program at zero to diamond calm We'll talk to you guys soon