Hello, my friends and welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. Well I wanted to do another Ask Marco episode cause I keep getting some great investor questions and I handpicked about four or five and I'm going to go through those today. And they're actually quite diverse so some of them might not be applicable to you, but some of them probably help you out. So, let's just see what we have here.

FREE copy of The Ultimate Guide to Passive Real Estate Investing.

If you missed our last episode, be sure to listen to Baby Money Soldiers (MUST LISTEN) with Gino Barbaro

The first one was kind of interesting, it, I just felt that it was all over the place, but it, it is a question from Luke. And Luke writes in and says, Hey Marco, I have an LLC that files as an SS Corp. I heard that it is wise to have three bank accounts for your LLC one for taxes, which the IRS has access to one for payroll and one for operations.

What are your thoughts on this and is it necessary for proper asset allocation and diversification of funds? If so, how much should be in the bank account for a business at a given time? Luke, wow, this is really just all over the place because we don't know what you're using your LLC for. Is it an operating business? Is it a title holding business? Meaning that it just holds title to assets and it doesn't actually have operations like a real business, meaning it doesn't have a product or service that it sells. It's just holding assets for you. And as I read your question, it made me think of a book called Profit First. In fact, I don't remember if I had the author on the show. I believe I did Mike Michalowicz. He is either the author of the Profit First book or the sequel to it, which is Profit First for Real Estate.

But you made me think about that because when you mentioned three bank accounts for your LLC or your company, that's one of the things that they talk about is creating multiple accounts for your business. So you separate everything into its own bucket. And the way the Profit First model works is you could literally have up to 20 bank accounts for your company, but generally speaking you're gonna have a profit account, another checking account for owners pay another checking account for taxes and another account for operating expenses, which is where you draw expenses from to pay for the operations of the business. And what you're doing is you're essentially bringing in revenue or income taking your profit out first, hence the name profit first, putting it into your profit checking account and then what's left over is what you use for paying taxes and your operating expenses and whatnot.



So it's kind of like flipping the model upside down. If you wanna learn more about it, you can go and get the book on Amazon or wherever, which is called Profit First. And then there's a sequel again, like I said, for Profit First for real estate. I never adopted that model just for the record, I found it to be not so much that it was non-traditional, but a little confusing having to look at and track multiple accounts. Now granted, they all show up on your financial statements so they're really in the same sheet, in the same reports and financial statements, but I just found it to be a little confusing. But you know what, A lot of people use it and they love the system and that's great. And to be honest, I've never tried it so it's hard for me to actually have an opinion on it based on real world experience.

But regarding your question about an LLC having separate accounts, I just don't see the need for it. Especially you know, when you are trying to separate payroll from operations, I assume what you mean is your separating your pay because an SS Corp just pays its owner, it doesn't really have employees, it pays you the owner, I can see an the operating account and then it's not a bad idea to have a separate account for taxes if you know you're ...