Costly Mistakes Made with Your Business Entity

Dec 4, 2017 by

Investing in a powerful tool and not using the tool properly does not make a lot of sense. I know when it comes to running a business it requires multiple hats to wear and very often you are off and running on 10 different projects, calls, appointments, presentations…and perhaps the very foundation of your business may be in jeopardy. Here are the top costly mistakes I have seen made over the past 20 years:

1. Not completing the transition from a sole proprietorship to a separate legal entity. If you started a business in your own name for a few months before you formed an entity odds are part of what you did you completed as an individual and you need to connect the dots to the new entity. If you filed a DBA (doing business as) with yourself as the applicant that needs to be cancelled and re-linked to the entity. That means your entity needs to be the applicant, not you! If you don’t do this you still are exposed to unlimited liability and filing a Schedule C with a
higher audit potential. Next point is to open a bank account in the name of the business, not just keep the account in your personal name. Use a business credit card in the name of the entity, not just your personal credit card and keep track of expenses. You will want to minimize the amount of debt that shows up in your personal name. Update all affiliate programs, vendors with your new entity information so any income is going to your business entity, not to your name personally. Update your websites, business cards, letterhead with the new name of your business. Another important tip make sure your website is in compliance, most are not, I would recommend www.autoweblaw.com simple software that has all the legal agreements you need on your website or blog.

2. Funding concerns. 95% of businesses fail within 5 years and undercapitalization is the #1 reason. The pattern I have seen is that small business owners are hoping for revenue to come in as the primary source of money to grow their business. What happens if your revenues are off or don’t come in at all? You may be working on that great new product and all your e-mails go out and no one converts. That is a real problem. The key is to model success. Almost all successful companies do not use only their own money to grow. I know you know the concept, “OPM”, other people’s money, yet are you doing that? Are you only self funding your business on your personal credit? Did you know that once the entity was filed the business credit bureaus will start creating a file. They scan the Secretary of State’s records to create a file with any new filings. They look for the name of the business, the start date, and name of the officers/managers the address…If you are not paying attention to how you fill out forms with the business address, business license, state forms you can create disconnects in the database. In one business credit bureau, NCP is spelled four different ways. The NCP part is the same, but one way has “Inc.”, one has “,Inc.” other has “, Inc” and the last one is “Inc”.

Did you notice the differences between the comma and period? That created four different files! Don’t make that same mistake. Unlike the personal credit bureaus, the business credit bureaus are very difficult to fix any mistakes. They have their own set of rules and are not set up for changes after mistakes happen. This creates a problem when it comes to developing credit for your entity because you basically have one shot at the apple to get it right the first time. Banks and vendors are very interested in your financial strength of your company. Now joint venture partners can check you out for free to determine who is stable in your operation. You may be losing business and not knowing it. It is really a must to be financially solid in your business and your developing business credit is a must for your long-term success.

3. Safe and risk assets. Mixing asset classes is a major risk to your wealth that is unnecessary. A risk asset is any asset that would cause liability to your entity. That may be a business, real estate, equipment, again, anything that may cause liability to an entity. A safe asset is one that does not cause liability to an entity, like cash, ownership of another company, investments…If your business falters and you need to reply upon your safe assets to recover short term, why unnecessarily put your safe assets at risk? It happens all the time. There are two reasons this may be happening to you, first, you have thought that your amount of safe assets are not large enough to protect. Imagine having $25K in a brokerage account in

4. Not clear on who does what? A partner can help you grow a business quickly and destroy it even faster if you are not on the same page. Very similar to being married. I have been married for 21 years with three girls and it is a lot of work and requires meetings, and discussions to do the best to be on the same page. Business like marriage can be very exciting at first and you really need to be able to communicate well as to what you are looking to accomplish. The fun part of the business is discussing how you will bring in revenue and all the possibilities that can happen with profits. The part that isn’t fun is the expense side of the ledger. First, you must agree upon what is actually considered an expense, does that include things like cell phones, travel, meals…? What happens if revenues are way off and there is not enough money to pay each partner and you need more capital from each partner to keep it going? This can be a very uncomfortable problem. It is best to presuppose the challenges ahead of time and see if you can calmly discuss them and come up with solutions that make sense. If you can’t get to first base on the uncomfortable parts before you get started that is a bad sign and perhaps you should NOT be a partner. In fact, odds are the business is doomed to fail if you can’t get through some of these basic uncomfortable discussions from the start. Now, that does not mean your partner is telling their spouse the same story. That can and often does create more issues. Having as much in writing from the start and a business plan in place makes the most sense. Almost ALL, not all, but close, partnerships that refuse to take the time to put things in writing fail. It is like clockwork. If anyone wants to start a business with you and they refuse to put things in writing, run! Most of the time the only one that makes money in that situation is the attorney’s after the partners sue each other! Take the time to be clear and put it in writing!

 

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Doing Business in Multiple States-When Does Your Company Have to Register?

Nov 27, 2017 by

Establishing a separate legal entity is step one in separating your and business assets. The next step is to make sure you are in compliance, which can mean many things including compliance from a Secretary of State level, to compliance from a business credit level to compliance at a state taxation level (and federal). All areas are very important. Let’s discuss an area that is not often discussed until it is too late and that considers the multistate taxation rules which will help determine which states your entity will need to register to do business.

In our industry, where Nevada and Wyoming corporations are promoted this is the reason why benefits such as saving state corporate income taxes or privacy rarely comes into play because if you live and do business in another state, the Nevada entity will need to foreign register to do business in that state. At your state level, there may be state taxes and your name and information is probably going to be more exposed. Two important points, first if you are operating as an LLC taxed as an S corporation for example, it is a flow-through entity with no federal taxes paid and in many states, no state taxes. An informational return is required to be filed at the federal and state level (in most cases) and the tax is paid at the owner’s level. This comes into play when someone says, “I live in Arizona and I want a Nevada LLC taxed as an S corporation to save state corporate taxes here in Arizona.” There is not any state taxes on LLCs taxed as an S corporation in Arizona anyway. This is typically promoted in relation to a C corporation which has state corporate taxes in most states but usually is the wrong entity for the small business owner (because of double taxation and the goals of the small business owner, especially a home-based business owner is to have low overhead and high-profit margins). The second point is that privacy is many times overrated because I find there is a common pattern to strive for so much privacy and the basic asset protection is missing. Most do not think it through with capitalization, issuing ownership interest…

Back to the subject at hand, when does your company have to foreign register or qualify to do business in another state? There are two ways to look at this, what does the state say about this at the Secretary of State level and more specifically what does the multi-state taxation rules say about it?

Each state has some basic rules that may help in determining what is considered doing business in their state and therefore state taxes may be due. Let’s take a look at California and Texas. California is one of the highest taxed states in the country. They have an annual $800 minimal franchise tax fee that applies to all entities (there is an exception in year one for corporations). California has a state tax rate for all entities and that is why they spend more time on the California Franchise Tax Board website to let you know what is considered doing business. On this site, https://www.ftb.ca.gov/businesses/faq/734.shtml, the California Franchise Tax Board defines doing business in California as ‘doing business’ means actively engaging in any transaction for the purpose of financial gain. That is a very wide interpretation of what is considered doing business.

Texas does not have a state corporate income tax but they have a franchise tax. The franchise tax is a privilege tax imposed on corporations, including banking corporations and limited liability companies that are chartered in Texas. The tax is also imposed on non-Texas corporations that do business in Texas. The Texas Franchise Tax fee is just a fancy name for state income taxes. But from a marketing point of view if the state can promote it has no personal income taxes and hit the businesses harder that may help them from a political point of view. If you are doing business in Texas, like owning real estate by itself will trigger the Texas Franchise tax fee which Corporations pay the greater of the tax on net taxable capital or net taxable earned surplus. There are two approaches, one is the taxable capital of a corporation’s stated capital (capital stock) plus surplus. Taxable capital for an annual report is based on the end of the corporation’s last accounting period in the calendar year prior to the calendar year in which the report is due. The tax rate on taxable capital is 0.25 percent per year of privilege period. Earned surplus for an annual report should be reported beginning with the day after the ending date on the previous franchise tax report and ending with the end of the corporation’s last federal accounting period in the calendar year prior to the calendar year in which the report is due. The tax rate on earned surplus is 4.5 percent.

There is an easy way that the California Franchise Tax Board will determine if you are doing business in California, they will subpoena your business credit card and look at where the transactions take place. If they are all in California for example, and you formed a Nevada LLC and did NOT register to do business in California you will be subject to the California franchise tax fee plus penalties and interest. From California’s point of view, if you were doing business in Nevada and lived in California, most of your expenses should be where you are doing business. This is a good rule of thumb for any state. Does this mean anytime you go into another state your LLC or Corporation will have to foreign register? No. But more times than not you may be doing business in another state and not be realizing it and be subject to state taxes. The best way to blow this is to hire employees in another state. If you do that the entity will need to foreign register and pay taxes in that state. You may be thinking is having independent contractors an exception? Yes, that does not constitute doing business in another state. Does that mean the solution is just to have independent contractors only work for your company outside your state? No. You must follow the IRS’s test for employees vs. independent contractors. Don’t wait until it is too late to find out you really have employees working for you! Here are the tests: https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

When I started NCP back in 1997, several times during the first two years went to speak to Deloitte, the big global tax firm and invested $400-$600 per hour to understand these basic concepts because no one in our industry was addressing these issues or concerns.

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Strategies to Access More Money for Your Business

Nov 25, 2017 by

With the economic environment and changes in technology, you must look at new strategies and some twists on old strategies to access more money for your business. Cash flow is king and it is a must.

Let’s start with the easiest and fastest way in which is to raise your prices. That by itself is not a new idea but how you go about raising prices, the reasons for such is new. You already know that if you want to bring 10% more to the bottom line raise your prices by 10%, if you do the opposite (which many do in this economy) you will lower your bottom line by 10%. That can be very bad if you are already losing money. One part is to be very clear on your cost of goods sold and your profit margins on different products and which products or services will lead to upsells and more customers.

The key is how you go about raising your prices and how that is presented. Here are some tips to do it effectively:

  • Bundle other services together (especially one with a higher perceived value and low cost) and come up with a new compelling name for that new bundle of services and package. That is a clever way of raising prices.
  • Emphasize a new improvement in your product or service, which could be speed (people will pay a premium for that) or performance or service advantage. Perhaps you are already doing things fast but maybe you create an actual service for “express service” vs. regular service and give your customers an option for speed. I have always suggested this to my CPA to charge an “expedited tax service” especially those who wait the last night to get all their tax information to them. It is a clever way to raise prices.
  • Change the “Who” you are selling to so that the market may be thinking your prices are a bargain. This works well when you start selling to the affluent market. Search Dan Kennedy, “No BS, Marketing to the Affluent”. If you only have “cheap” customers it is most likely because that is who you are marketing to and your marketing materials and sales copy may be leading people to believe that your products and services are lower priced and that may be the reason you are having an issue raising your prices. Just model some of the products or services in your industry that are higher end and look at their copy, websites and marketing materials and see where you can improve.

Master up selling at the point of sale is a must (the key is how you go about it). I would guesstimate 90% of small business still don’t do it. Big businesses get this! You can’t go to a Walgreens to get gum, a birthday card, or some cough drops to go through the checkout counter only to be asked if you would like a candy bar with your cough drops (which makes no sense). An improvement would be a better matched upsell based on what is being purchased, like a vitamin C packet with the cough drops. But at least they are doing it. McDonald’s does it, banks do it, and almost every major company will ask you for a small upsell at the point of sale! That small upsell ad up and you need to figure out that every product you offer what small or large upsell can you offer either on your website or when your clients or customers call you. You must train and MEASURE (otherwise nothing will happen) with your staff and this is now mandatory! You may give rewards for the most upsells in a month (a great way to start the momentum). You may need to actually script this out for your staff, for a couple of reasons, one to be consistent, and second to test what is working or not!

Better bundling will lead to more profits! You can offer one product with another. You have to work on bundling and ways of positioning complimentary products together. I would recommend you come up with a new creative name for the new bundled package that gives an implied greater benefit vs. the standalone product or service. You can also use Amazon’s model of when someone buys a book or product they share the most common other books or products bought by someone who made the first purchase. They are testing to see how often that triggers someone to buy a second or third product. Did you ever buy a domain on GoDaddy®? You are presented with so many upsells and bundle options. This is very similar if you buy a plane ticket on Orbtiz®, there are several packages and bundled options. But are you doing this in your own business? If you are, congrats! Now, what can you do to improve what you already have working? Are you testing names, combinations, copy, graphics? You may be not doing this and this is a must to maximize your results. You must test and see what will work better to make those improvements. We started doing this again on one of our websites and tested three different landing pages and one
out pulled the other by 4x the amount! That is huge over time.

JV creatively. If you are not getting many companies to promote you to their list at no cost to you then look for a smaller win. Perhaps you can trade a banner post on each other’s blog. Perhaps you can trade a “P.S.” in an email blast you are both doing to help cross promote. If you each have a loyal following and valuable list why not cross promote! You have to be the one suggesting new and simpler methods to JV. You may even hire someone to make JV calls on your behalf to set appointments. If you have someone doing that now for new clients or customers why not have them spend 1/5 of their time making calls for JV opportunities for your business. That is what we do at NCP.

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Costly Mistakes to Avoid as an Officer of a Corporation or Manager of an LLC!

Oct 10, 2017 by

Forming a separate legal entity is a huge step in separating your personal and business liability. You obtain liability protection with a separate legal entity the day you file the LLC or Corporation.

What most people do not realize is that after day 1 and beyond you are not protected unless you operate the entity as a separate legal entity.

That involves avoiding commingling of funds, proper capitalization and proper minutes and resolutions as your role as the director, officer, shareholder or manager, member or member of an entity.

Typically as a director of a corporation or a manager of an LLC, your liability is limited personally. As long as you operate within your role as the manager of an LLC or director of a corporation. Nevada will protect you as long as you do not commit fraud. Other states have a minimum fiduciary duty or duty of care.

Let me cover for you the biggest mistakes we have seen over the years that have caused unnecessary liability to directors, officers and managers:

Not using your corporate or LLC title
when signing contracts, checks, documents, licenses…followed by the name of the entity. Signing your name without any title or reference to your company may mean that you are representing yourself personally and that brings personal liability to you. You presented yourself as an individual vs. the manager of an LLC. That is a huge mistake.

Continuing to operate as a sole proprietorship even though you have formed a separate legal entity.
This is a big one. This means you are operating a business in your own name, for a month or several months before you formed the LLC or Corporation. Perhaps you filed a DBA name (doing business as) like Marketing Solutions
and the new LLC is Marketing Solutions, LLC and you are still doing business under Marketing Solutions with the bank account in that name under your SSN. That is a huge mistake! Reconnect that DBA name to the new LLC or Corporation. You do that by dissolving the DBA linked to you as the applicant and re-file that same day a new application with the LLC as the applicant. Now the DBA name is connected to the LLC or Corporation for liability and tax purposes.

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Extreme Productivity for Your Business and Life

Oct 10, 2017 by

We are living in a time where our life and business is constantly getting interrupted with thousands of commercial messages every day, from e-mails, texts, instant messages, phone calls, social media, appointments, family, kids, staff….interruptions all over the place!

For many, it is becoming hard to believe what was life like before FaceBook, where so many people are addicted to checking out what all their “friends” are up to, or who liked your post multiple times per day. This was similar to how e-mail was 10 years ago when each new e-mail had a little ding that would tell you that you have mail, and most would stop what they are doing to check that email. That is now happening with texting. With all this happening no wonder it has become more difficult than ever to become productive, much less experience extreme productivity

Let’s go for ideal. I have learned a lot from the marketing guru, Dan Kennedy in this area, who is prolific at cranking out a ton of content, getting a lot of accomplished and still has plenty of time to play (for him it is harness horse racing-he actually rides in the races).

The starting point is to be clear on what your outcome or goal is that you want to achieve. If you are not clear on your outcome for your business and personal life that is the first challenge. That alone would cause you to jump from one thing on your checklist to the next allowing for a lot of interruptions that totally destroy your productivity.

Let’s assume you have your outcome and goals organized. The next step is your belief system as to why you are continuing to allow someone to consistently interrupt your time. Most of you, if you are really honest, may find out that you are your own worst enemy when it comes to interrupting yourself consistently. If, I am being very honest, I will fall into this group from time to time and immediately look to get back on track to being focused and productive.

It is always important to look for a great person to model when it comes to any skill set or goal you want to accomplish. When you do you are in a better position to calibrate what is different from what you are doing vs the person that has what you want. There is where you have to be really honest with yourself.

For example, do you think Donald Trump always answers cell phone calls, IMs, during meetings or other engagements? Do you think you can just call him up and interrupt him and get him on the phone? Or do you think his day is very structured? The reality is that those who are highly productive are extremely structured in their schedule. I know that some of you do not like structure because somehow it means you are giving up flexibility or your creativity. Again, this is a belief system shift. Those who are extremely productive are very structured. If you have a 30-minute consulting call with Dan Kennedy and are 5 minutes late, you will end 5 minutes early. Right at 30 minutes, you will hear the phone hang up. You can be in mid-sentence, but he will not take an extra 2-3 minutes with you. He is very structured and very productive.

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How to Work Backwards to Solve Any Business Problem

Sep 12, 2017 by

Short and long-term success in your business will be the result of your ability to solve business problems which may include everything from legal, tax, management, marketing, lead and client issues. Successful entrepreneurs make decisions quickly and are slow to change their mind and unsuccessful people are slow to make a decision and change their mind quickly and often.

The first step is to look at any problem as an opportunity. If you have a client who complains about a portion of your website that does not work, instead of getting frustrated at the client, look at that as a real opportunity to improve your website. When you think about it, you are not even paying these people to point out your flaws and areas you need to improve. You are receiving free advice on areas that need fixing! Reframing what the problem means is step 1. You are changing the meaning to be that of an opportunity to improve!

One of the main reasons business owners do not solve many problems and it feels and looks like their business is not moving forward, they immediately conclude that is not working so let’s do something else.

A common example if your business is looking for more lead generation and you put more time and energy into social media this past month and you notice you have very little results and you immediately stop that next month and focus on article writing. After that does not work you invest your time in video marketing. You are consistently jumping around from one lead generation strategy to the next vs. digging deeper into “what part” of the first strategy did not work to the level you were hoping it would.

Here is my formula to solve any business problem

1. Clearly, define the problem and avoid generalization. Example, my lead generation is not working vs. my Facebook ads are not working to the level I had estimated. I am only receiving 100 clicks per week but only 10 opt into my list.
2. State your goal specifically and a time frame. My goal is to receive 100 opt-ins to my list per week starting in three weeks.
3. Focus on what part you can change (or test three parts at one time) to determine if that will help solve your problem. If you do have a team or a group to mastermind, allow others to give input to solve the challenge. I would recommend you use the Disney approach and when you brainstorm solutions allow for those ideas to flow without evaluation in the moment. If you start to evaluate ideas while people are still offering solutions you will find that many will shut down because their idea may be “dumb” or of no value.
4. Implement the new ideas to solve your problem.
5. Measure if you are getting closer to solving your problem. Specific measurement is a must. If you have leads you are looking to manage you may want to measure the ratios between a call to approach, approach to presentation, and presentation to close. Measuring ratios will help you isolate what part of your presentation is not working for you and where you need to focus your improvements.
6. Repeat steps 4 and 5 until you solve at least a PART of the problem or the entire problem. Other tips for success:

  • Model someone else who has solved the problem already. Find out what they are doing differently than you.
  • Find a coach or mentor who has experience in the area where you have problems. For me I did not have any management experience so I hired mentors in the area of management.
  • Focus on making small improvements in your business!
  • Allow yourself to win the game!
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The Ultimate Business and Asset Protection Structure to Protect Your Net Worth.

Aug 21, 2017 by

Here is the problem: Lawsuits are at an all-time high. Over 80 million lawsuits per year!  The more that people struggle the more they are concocting ways to extract your wealth from you. Perhaps you may not feel you have a lot of wealth, but to others, you may appear rich. Your insurance policies are like blood in the
water that the sharks can smell from a mile away!

Don’t fall prey to thinking; no one has sued me yet, so why do I need to take these extra steps? My question to you is simple. What is your current risk tolerance given your age and net worth? Can you afford to
start over? I have know many have had to do that since 2008.

Keep in mind, simple vs. asset protection is inversely related. Meaning, those are successful, rarely have all their assets in one legal entity. Why? If that entity were to be sued you could lose all the assets in that one entity! Perhaps you will be protected personally, but your business may be gone.

Let’s assume, you are thinking, “Ok, Scott…I want to protect everything, how do I do that”? Let’s take a look at what that structure would look like.

  1. A separate legal entity for your main operating business. That may be a corporation or LLC.
  2. Another separate legal entity to separate your business into two parts. If you are brand new this is not
    necessary. But if you have been in business for 20 years in one legal entity, that means one lawsuit could cause 20 years of business to go down the tubes. You may want to split up your product lines or services. If you do seminars that may be a different entity from your information product business.
  3. If you have a business with partners and operate through LLCs, each partner should own their
    membership interest in their own LLC, not individually. Why? The LLC has the charging order protection that makes it more difficult for someone to come after the owner of the LLC, which is great. When you have partners, even with the charging order, you do not want any disruptions if the owner is sued for something unrelated to the operating entity. A second layer LLC will prevent that from happening.
  4. A separate legal entity for each piece of real estate you own (your primary residence will be a different
    approach). If you own rentals in Wisconsin where you can buy a house for $40K, you may not need a separate LLC for each piece of real estate. In California, the same house may be $930K. In that case, a separate LLC may make sense. California has an $800 per year franchise tax fee so you may consolidate based upon that fee.
  5. A separate LLC for your safe assets. That includes investments in the market, gold, silver, ownership in other
    companies (like any C corporations). Any entity taxed as an S corporation, there are limits on who may be the
    shareholder, only a single member LLC can be a shareholder. NEVER have your safe asset LLC be the
    owner of a risk asset, like real estate or a business.
  6. A separate LLC for your domain names. Domain names are virtual real estate free and clear. They may become quite valuable over time. If owned by your main operating company and that is sued, you could lose control of your most valuable asset.
  7. A personal residence trust for your home. If you have equity that is not covered by your state homestead laws, this may be the best option to protect your equity and not have the negative consequence that placing your residence in an entity would entail. Attorney Rob Bolick is a great resource and referral partner with NCP and covers more details about the personal residence trust.
  8. A life insurance trust for your life insurance policies. This is part of the estate planning for your estate. Life insurance is not subject to income taxes but is subject to estate taxes and that is why the life insurance trust is a must. Attorney Rob Bolick, an attorney in Las Vegas would be a great resource for this also. His number at his law firm is 702-870-6060.
  9. A Nevada Asset Protection Trust. This is like having an offshore trust onshore. It would be the owner of your LLCs and the living trust would be the beneficiary of the Nevada Asset Protection Trust. Nevada has a two-year statute of limitations and when two years go by you are home free from almost all creditors. Attorney Rob Bolick is the resource for this also.
  10. A living trust. Estate planning is very important and most Americans do not have a living trust established. This will help pass your assets to your heirs and avoid probate when properly funded.
  11. An offshore entity. This is the top asset protection tool because the entity is in another country with different rules than the U.S. There are NO tax benefits to an offshore entity. The U.S. person would need to pay all taxes associated with it. The IRS is all over this type of entity, so again, just to be clear, you must pay all taxes as a U.S. citizen.

Other keys point to consider:

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How to Increase Your Odds of Success at Any Business System.

Jul 20, 2017 by

Have you invested in a business system that was supposed to deliver great results to you and your business but the results were far less than what was promised? I know I have over the years, probably over $100K worth or more. You saw the great testimonials by people that did not look half as intelligent as yourself. You may have been thinking…”If they can do, so can I”! Many times the great system only leads to a great disappointment. Another system that didn’t turn your business around and didn’t bring in all those new customers or clients. Why is that? Was it the system, or was it you (or both)? In some situations, the marketer was just overpromising and the system could no way produce the results promised or the system was just crap, to begin with. I am sure we have all invested in a few of those. I do believe that most systems are really good and will help you produce amazing results. If that is true, then what is the challenge? It is you. Before you get upset, this is a good thing.

Being accountable and learning a new distinction or shifting a belief can make a major difference in your future results. Let me break down the steps why the system is not producing results for you and what you must do differently in the future (even if you go back to your bookshelf and dust off some of those CD, DVDs and other systems you have already invested in and now go back with a new attitude and mindset to get a better ROI.

Three Reasons Why the System Did Not Work for You and How to Turn that Around

  1. You were sold on simple steps to get the results in your business or life. Unfortunately, that is what sells, but it rarely ever works that way. Dan Kennedy has over 100 steps for every live event he conducts. These are complex marketing funnels to get attendees to sign up, to get them to actually come to the event after paying, and the following funnel after the event. He actually tracks revenue PER HOUR at his four-day events. It is a business and he runs it like one. Now if you want to put on events and have 700 people in the audience and have a $4 million event with ticket sales, upsells, speaker splits…it is a massive undertaking. You may go to or invest in training on how to run high ticket events and the headline will not be…”100 Simple Steps to Run a Profitable Event”. It may be 7 steps, 3 steps…That is what people want, the simple solution. Rarely is that the case. Now, the 7 steps might be an overview and very accurate but each step may have 10 other sub-steps to get the result. No one can tell you that up front because you would never invest in the program.The solution is to realize that it isn’t that simple. You invested in an outline, blueprint or pathway to get the result (which was worth the investment). Just realize that each step may be very involved with many other steps and when you have the mindset this is going to be twice as much work, take twice as long to get the results. This is the first step to realize, there is more work involved in this system. No different than the long hours you have put into your business or your skill set. You may have been up late nights, early in the morning and working long hours to find that most still do not appreciate or want to pay top dollar for your trial and error and resulting expertise. Even my title, three reasons… really tells you there may be 40, but I am going to give you the top 3.
  2. Your mindset is not focused on small incremental improvements. I have found when interviewing people over the years, especially in the direct sales industry and I ask them how is business going for them, many times it is not going well and usually their reason is that they are doing everything that the guru or top leader is doing but they are not getting the same results. They incorrectly conclude that the “system” does not work. The harsh reality is that if you were doing EXACTLY as the top leader you would get EXACTLY the same results. It should be quite clear you are NOT taking the EXACT same approach to the system. If you start with that new belief, that is half the battle. The solution is to get really excited about modeling EXACTLY how the top leader or guru is using the system to get results. If it is a direct sale opportunity where everyone has a similar website or opt-in page (and usually on an opt-in page to capture leads there may be 20 different distinctions from headlines, to the color of headlines, the video used, pictures, language to opt in…). Even if you have molded that in the detail usually the process to bring in a new member is to speak to them on the phone. Now, this is where the big differences show up immediately. You have to measure your call, approach, presentation and close ratios to better determine what part of your call process is not working so you can improve it. If you can record the top leader and record yourself and compare, the differences may be subtle or massive. They all will make a huge difference in your results
  3. You did not implement all the steps. Most people I find quit on step 3 of a 10 part system then conclude it did not work. You never even poorly implemented all the steps. At least if you would have done that you would have gotten some results. I have done this over the years and that is a big part of my success. At least I poorly implemented all the steps as a minimum. That is ahead of 90% of the group right there. The solution is to not only implement all the steps but then go back to improve the implemented steps. As you know you will get better with improved repetition. If you are doing all the steps incorrectly and you repeat that process all you end up with is more incorrect repetitions or no results. No wonder you are so frustrated. If you are not frustrated and you are one of the few who is getting results with the system, congrats to you! That is a model of success for you and others you may influence!  It boils down to the psychology, your mindset that will determine your success with the system in most cases. When you realize more work will be involved, and you focus on small incremental improvements, implement all the steps and improve them with repetition you are on your way to getting a much higher ROI on your investment in any system you have invested in the past or future!
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Advanced LLC Tax Issues

Jun 6, 2017 by

An LLC is a hybrid between a corporation and a partnership. An LLC can be taxed as a partnership, S or C corporation or a disregarded entity. The IRS established federal default rules in 1997 to simply how an LLC is taxed. One member is a disregarded entity and two members are tax as a partnership. In either situation, you can file form 8832 to have an LLC taxed as a Corporation or form 2553 to be taxed as an S corporation.

One of the subjects that 90% the people who have an LLC do not properly handle the transfer of an LLC interest to another.

As personal property, an LLC interest may be transferred by a bill of sale, assignment, or comparable document. If the interest are documented certificates, like stock certificates, it should be possible to transfer an interest by endorsing the certificate, by granting the power of attorney to the transferee, or by granting a type of power like a stock power. To be effective the transferee must also cause the transfer of the interest to be reflected on the LLC’s books. The transfer must first be approved under the LLC’s requirements (e.g., approval of at least a majority in interest of members). It is recommended that an LLC record the transfer of membership interests in the same fashion as a corporation uses a stock transfer ledger.

This is a key point…the transfer of an interest to a person does not by itself grant the status of a member in the LLC. Rather, the transferee is merely an assignee of certain economic rights unless the other members by a vote approve the transfer of the interest.

The various state acts generally provide that unless the members have otherwise agreed, a membership interest is assignable in whole or in part. Although some statutes may refer to the free assignability of a membership interest, what is actually meant is the free assignability of the financial rights, not governance rights.

Typically, members will want to impose restrictions on assignability, and the operating agreement would provide this language. An operating agreement also should define if the transfer restrictions did not apply to transfers to members, non-members, or both of the LLC.

This may surprise you, but an LLC member can assign his or her interest without anyone’s consent. Although the transferee will be an assignee and NOT a member. Only members can vote and exercise other rights of members, but not an assignee, like a member, may receive distributions of cash or property.

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Ask Better Quality Questions and You Will Get Better Quality Answers

May 25, 2017 by

If things are not working in your business it comes down to asking better quality questions. If you want to pay less in taxes and protect your assets better…better quality questions are the answer. I learned from Tony Robbins years ago, if you ask a lousy question, you will get a lousy answer. Here are some examples of lousy questions that I have heard from business owners over the years: “Why does this always happen to me? Why doesn’t this work for me? How come I always get killed in taxes every year? How come I never have enough time? Will it work out this time? Why are all my prospects broke or cheap? Why doesn’t my marketing ever seem to work?

Here is what I know for sure, you and you only are in charge of the quality of the questions you ask yourself. If you want to improve the quality of your business and your life, you must ask better quality questions. Here are some examples:

1. What specifically can I do today to bring in more quality leads from Facebook?
2. What specifically can I improve today on my landing page to improve opt-ins?
3. What specifically can I change now in my approach to bring in more joint venture partners?

Do you see a pattern already? The first part is to ask specifically, not generally. When you ask specifically your brain has to search for a more specific way to get a result. This is a must. The second part is about accountability, something you have control over. It does not say what specifically does everyone else have to do ….it says, what specifically can “I do” today. That is a huge difference. The third part is a time frame that you want the result. If you don’t say today or now, you may be just putting your goals, improvements or results in the future. Every day, week and month go by and your results are STILL in the future! That is a PART (not the only reason) why you may not be achieving them! These are very specific tips from my NLP (neuro-linguistic training) over the years. You may find that you may be still not getting your goals. Another step to add that will help is to ask another empowering question called an “ecology question”. An “ecology question” is one where you check into the future to determine if you achieving this goal will it harm or hurt anyone? You may be thinking why would making more money hurt anyone? What if you are away from your family 70 hours per week and your spouse has to do twice as much work? What will the effects be on your relationship?

Here are some other empowering questions that you may want to write down and put in front of you each day to help with your results and energy level:

1. What am I most excited about today in my business?
2. What was the best part of my day today?
3. What am I looking forward to today in my business?
4. How specifically can I generate more joint ventures today with more quality target leads?
5. What can I do today to be more productive with my time and work 2 hours less and be just as or more effective than previously?
6. How can I delegate more work to free up my schedule to spend more quality time with my family?

Another key to getting results in this area is to fully associate to the question and feeling, not just ask it, get an answer for a moment and move on. What I mean by fully associate is to discover what would it sound like to be fully excited about the day, what does it look like, what does that really feel like when you are excited about the day and allow yourself a couple of minutes to step into that amazing feeling! If you are not looking forward to some part of your day ask, “What part could I be excited about during this part of my day?” The key language is “what part” which means one part your brain immediately searches for, there is nothing I am excited about I have a lot of work. Your goal is to find a part of that work that you could be excited about. Maybe you are going to have a new breakthrough and it will help with another project to move it along. That may be the part that is beneficial. This is not always easy,
especially when things are not going well in your business, but this alone will help change your state and get you back on the right track to results faster than anything else you can do. Changing your physiology is key also and to do that you will have to ask a better quality question up front.

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Distributions from an LLC

May 5, 2017 by

After your LLC is formed and your business is up and running and revenue is flowing in it will come to that important point where you will distribute money to the partners. That may be just you, your spouse or other outside partners.

Most simply think about writing a check from the LLC to themselves as the owner and really do not consider the tax ramifications of their actions. This is especially important any time you have a partner, whether that is a spouse, outside partner, separate legal entity.

Let’s address some basic fundamentals first then get into more details:

The first step is to be aware of how your LLC is taxed. Are you a single member LLC taxed as an S corporation, or disregarded for tax purposes? If you have earned income and a single member LLC that will flow through to schedule C (basically you are operating as a sole proprietorship, but have the liability protection of an LLC). Test question: Is there any payroll for a single member LLC? The answer: depends. If the LLC is disregarded for tax purposes there is NO payroll to the owner. Is it possible for a single member LLC to have employees? Yes. If the single member LLC is taxed as an S corporation, the active member (owner) would have payroll and distributions. If you have a single member LLC taxed as an S corporation, of course, the only member is active. If you have a two-member LLC taxed as an S corporation, it is possible that the second member could be passive (this could be a spouse or silent partner). Would the passive member be the manager of an LLC managed by managers? No. By definition, if passive they would not be running day to day operations. Keep that in mind.

A single member LLC taxed as a C Corporation; there would be at some point some type of payroll to the owner of the C Corporation. Is it possible that there was only enough revenue in the LLC taxed as a Corporation to pay business expenses only and not enough profits left over for any type of payroll? That is possible. You may take dividends out of the LLC taxed as a C Corporation, but keep in mind dividends are NOT deductible to the LLC taxed as a C Corporation’s profits.

An LLC taxed as a partnership is a very common structure. The big mistake you want to avoid is doing payroll for partners. There is NO payroll to partners in an LLC taxed as a partnership. There is something called, “guaranteed payments” to the manager of the LLC for their role in the day to day operations of the LLC which is subject to employment taxes, but it is not payroll. The members (or partners) of the LLC will receive distributions in profits. If the member or partner is actively involved in operating the business those distributions will be subject to employment taxes.

Let’s get into more detail about when an LLC can make distributions to members. Absent any agreements with third parties restricting distributions, LLCs generally can distribute cash or property. Here is an important point (a reason to have great accounting records from the beginning); most LLC acts prohibit to members if, following a distribution, the LLC’s liabilities (other than liabilities to members) would exceed the value of the LLC’s assets. Most LLC statutes hold members liable to creditors for wrongful distributions under their fraudulent conveyance statute.

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Multi-Tiered Structuring Strategies for Maximum Asset Protection

Apr 13, 2017 by

One of the biggest mistakes I have found over the past 20 years is clients who sometimes have that false sense of security thinking they are totally protected with one legal entity.

Unfortunately, I have seen clients lose control of their companies, their personal assets, and even control of their operating business. The goal is to give you the strategies to plug up any gaping holes you may have in your shield of protection to your current and future assets.

Let’s review the basic’s. The first step is to separate your personal and business assets. That means not operating as a sole proprietorship and forming a separate legal entity like an LLC. Nevada offers an extra layer of protection when it comes to protecting the entity veil and making it harder for someone to come through to your personal assets (assuming you were the owner of the entity).

The next step is to separate your “Safe” from “Risk” assets. Most take the first step to separate their “risk” assets by forming a separate legal entity. Shortly we will cover how to add more separation for your business.

Many forget to form a separate legal entity to protect their “safe” assets, like gold, silver, stock in the stock market (even your cryptocurrency)…where there is no direct liability to you. I believe the reason for this is most think they do not have enough safe assets to protect.

There is no magic number, like once you achieve $100K in safe assets (outside your retirement plan) you need to form a separate LLC. The key question to ask is, “How would you feel if you lost all safe assets to a lawsuit, or action by your creditors?”

If you had $40K of investments unprotected, that may be very important to you, if that is all your safe assets. Also, if you have ownership interest in a business, you may be worth millions, but if you own it personally or by your living trust (which is protected from probate, not liability) you may lose control of that safe asset also!

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