The Ultimate Business and Asset Protection Structure to Protect Your Net Worth.

Oct 3, 2018 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!

Make sure your assets are properly protected.

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 known 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) 690-9090.
  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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South Dakota vs Wayfair Supreme Court Decision-What You Need to Know…

Jun 22, 2018 by

As we predicted sales tax compliance is not going away.

The U.S. Supreme Court voted 5-4 on June 21st, to overturn the 1992 Quill Case that required physical nexus (FBA inventory for example) before you had to collect and remit sales tax.

This Supreme Court decision allows the states to collect sales taxes from MOST (not all) online retailers, not just Amazon FBA sellers.

The big reason is that states are losing a fortune in sales tax revenues and both sellers and consumers (with use tax) have been avoiding them!

Amazon.com FBA Seller Use SalesTaxSystem.com

Here is a link to the U.S. Supreme Court Case:

http://www.scotusblog.com/case-files/cases/south-dakota-v-wayfair-inc/

What does this mean to you (if you sell on Amazon FBA)?

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Pricing, the Key to Your Business Success

Mar 10, 2018 by

Profits are the key to any business success. Pricing is one of the major elements to determine your bottom line
profits.

The proper pricing strategies will lead to more cash and profits in your business.

The biggest challenge I see in this economy is the knee-jerk reaction to cut pricing to bring in more sales. That only works if you have a great upsell process or lifetime value of a new customer or client after the initial sale. For example, the well-known story with one of Jay Abraham’s clients. He was consulting with a coin dealer and they wanted to increase sales. Jay asked if they bring on a first-time new client to collecting coins, on average once they make their first purchase how many times do they come back in the year to make another purchase. The coin dealer, said, “about 8-9 times on average. Once they get started they are hooked!” Jay was incredibly excited.

His strategy was to focus on getting new customers with that incredible back end. Let’s offer each new customer an incredible deal they can not refuse. Let’s offer each new customer for a limited time a 50% equity position in the first coin they purchase. Meaning, you will lose 50% on each new coin, not break even, but lose money! If the coin was worth $100, offer them only $50 to give them a win early on. The business owner thought Jay was crazy of course. But Jay explained the math of having 1,000 new customers and if each one invested 8-9 more times at full price in a given year, what the impact would be, it was staggering.

These may not be the exact numbers, but the business went from about $3 million in sales to about $150,000 million in sales in about 3 years! That is a rare exception to cutting prices, and even losing money on the front end to bring in a new client or customer.

Most small business owner may not have a product like this where the consumer is so passionate and addicted to the product or service.

Let me point out one of the most important components of price:

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The Series LLC, a Closer Look

Mar 1, 2018 by

There is a lot of discussion about forming a series LLC instead of multiple LLCs to help save on filing costs. A series LLC is a form of a LLC that provides liability protection across multiple “series” each of which is THEORETICALLY protected from liabilities arising from other series or units. Some have described this structure as a master LLC that has separate divisions (another way to look at it). Series LLCs are now permitted in 8 states, Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas and Utah.

Each series or unit also called a sub-LLC will have to create a separate Series Agreement. Each sub-LLC will have its own asset name, bank account and a separate EIN (Federal Tax ID) number. While the Operating Agreement will be amended as series are added or deleted, the Certificate of Formation (also called Articled of Organization) filed with the state does not require amendment.

The Series LLC members must sign an Addendum to the Operating Agreement and then separate accounts must be established and records maintained for the new cell or unit that is added.

Concerns and Issues with a Series LLC

Currently, governing bodies have not resolved the problems surrounding tax and creditor issues related to the Series LLC.

There is some conflict between the Federal Bankruptcy Code and the State Series LLC law. Some current Series LLC owners have expressed concerns about their inability to file one tax return for all of the sub-LLCs. Many attorneys are reviewing the tax laws to determine the best way to resolve tax issues. The resolution will also determine whether or not they will endorse the Series LLC nationwide. However, a pending IRS regulation may solve at least the federal taxation questions related to Series LLC. It is expected to be enacted in the near future.

CAUTION: We do NOT currently recommend the series LLC if you are planning to invest in real estate in California.

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The Joint Venture Success Formula for Massive Lead Generation

Feb 10, 2018 by

Does your business need more high quality leads at the lowest cost? We are not talking about facebook or Google ads, but leveraging other’s people’s resources. There are companies that have invested millions of dollars on their database to bring in clients and if you can add value to help them do even better, convert more leads, renew more clients at no cost to them; you will look like a hero! Yet, I find 95% of business owners skip this powerful form of marketing. Even at NCP when we have new employees and they are calling our database to find out who may now be ready to incorporate, they also spend time calling on joint ventures opportunities, it is required! I would recommend you finally implement this into your marketing calendar on a weekly and monthly basis.

Let’s cover a few basics then get right into your JV success formula for massive lead generation. The host-beneficiary relationship is made up of two components, the host (the one with the list of clients and is having a marketing message being sent through email, website, webinar or teleseminar are most popular. The beneficiary is the one benefiting from the back end to the marketing message being sent to the host’s list. You are asking one simple questions. Where do my clients or customers go before they need my product or service? Write that one down and put it on your computer. It should be in front of you all day! Now when you speak to clients, leads, vendors it will always be in your awareness. You will be asking yourself, does this client, lead, vendor market to my ideal clients or customers and how can I add the most value so they will be excited to want to send a marketing message to their list!

Recap, if you are looking for more leads and clients, it is very simple, you are the beneficiary. The company who will send the marketing message is the host. Do not wait for hosts to call you with beneficiary opportunities. At some point when you are a big star that may happen, but in the meantime, I would recommend you proactively go after it and make this part of your weekly marketing!

Now the important part, how you approach a host. This is what separates the men from the boys or the women from the girls. You must approach this in a way that it sounds like you are only interested in helping the host get better results. The minute it smells like you are looking only to promote your product or service, nothing happens.

 

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Behind on Sales Tax as an Amazon.com FBA Seller?

Feb 3, 2018 by

If you have been selling on Amazon FBA and only collecting and remitting sales tax in your home state or not, all you are behind.

Every Day that Goes by WITHOUT being in Sales Tax Compliance, you are Paying Sales Tax + Interest + Penalties out of YOUR OWN Pocket.

This may be as much as 8% sales tax, 10% interest, and 30% penalties or 10% out of every sale you are losing, that is NOT necessary.

Amazon.com FBA Seller Use SalesTaxSystem.com

In order to Get Back on Track and In Compliance with Sales Tax You MUST Figure Out the Following:

  • Where do you have Sales Tax Nexus (which FBA States)
  • How do you Track When you Inventory Moves Around?
  • Obtain Sales Tax Permits Properly, avoid costly mistakes in states like California, Kentucky, and Washington…
  • How do you pay back sales taxes, interest, and penalties OR not?
  • How do you waive penalties and what will that cost?
  • How do you get professional SALT support if your CPA is not clear?
  • Should you form a new entity first or get sales tax numbers as a sole proprietorship then move forward?
  • What is the start date on your application for sales tax permits?
  • What does this trigger?
  • What estimate sales tax amounts do you use in each state?
  • What is remitting service the best overall?
  • How do you properly update your Amazon Seller Central Account
  • Settings to not Under over OVER collect?
  • How do you handle selling on Multiple Channels and Sales Tax?
  • If you are outside the US what is different with the rules?
  • Why do you need a US bank account to help Remit Sales Tax?
  • What Other Risks may you take on for not doing this correctly?

As you see there is a lot involved to get you on track moving forward.  The best news is that salestaxsystem.com covers all these areas in the membership area so you can then focus on your marketing and sales!

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How to Cut Expenses without Killing Your Business!

Feb 2, 2018 by

The purpose of any business is to develop a profit. There are many factors that will affect your business’s ability to generate a profit. Those include the costs of goods sold on your products, your price point on your product and services, your fixed and variable expenses.

In this economy where the sales funnel is typically wider for most businesses, meaning it will take more calls to make a sale, the knee-jerk reaction is to cut your prices to increases sales revenue to help generate overall more profits. That strategy typically will backfire (unless your up-sell process is strong and you know your numbers like clockwork).

One of the biggest issues is knowing the ratio between cutting your prices a certain percentage (like 10%) and now knowing your corresponding COGS (Cost of Goods Sold) percentage. The key question becomes, how many additional sales will you have to do at full price to make up for the one sale you gave a 10% discount? My good friend Spike Humer, has developed a very good chart that tells you the answer based on the price discount and COGS. For example, if your product or service has a 40%COGS and you cut the price by 10% the company would have to do an additional 15 sales to make up the profit lost on that one sale. This brings in revenue, but unless a strong back end exists this can lead to a fast track to being out of business.

There are a few fundamentals that we recommend you have in place before you start cutting expenses to make the best decisions.

First, you must know your numbers. There are important questions to ask yourself about your numbers. How many leads to you have each day? What is the cost per lead? What is your cost per appointment? Cost per new client? What is lifetime value of each new client?

For example, if you have 10 leads per day and you have to spend a total of $2,000 per month for marketing, and that is divided by 30 sales days (counting weekends ) or 20 sales days if you do not. That comes out to 10 leads per day x 30 sales days= 300 leads. Now take $2,000/300 leads=$6.66 per lead.

If it takes 10 leads to develop 3 appointments, that is $22.00 per appointment. If those three appointments turn into 1 sale that means it is costing you $66.66 per client (which is a low number). For many of you, it may be costing you $25 per lead that you receive. That changes the numbers dramatically.

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Patterns that Create Business Failure and Business Success—An NLP Prospective

Jan 29, 2018 by

Business and life do have patterns of success and failure. NLP (neuro-linguistic programming) is the study of the connection between the neurological processes (“neuro”), language (“linguistic”) and behaviour patterns that have been learned through experience (“programming”) and can be organized to achieve specific goals in life and business. I like to use this simple definition: it is a study of patterns or recipes. If you have a great recipe for your favorite meatloaf there are certain ingredients that if are added in the correct amounts and sequence will create a specific result. This is similar to an NLP pattern.

For example, good spellers do one thing differently (or have one more ingredient) than bad spellers. Good spellers will first see a word visually in their mind, sound it out, and then spell it. Bad spellers will skip the step of visually seeing the word and jump right to sounding out a word, then attempting to spell it out. Good spellers have a different “recipe” than bad spellers. They have one ingredient different.

In business, there are patterns of success and failure. One core pattern for business success is the Disney pattern. This was molded after the famous Walt Disney. Walt and his team of Imagineers were able to accomplish amazing results with their meetings. Walt did not run a meeting like most business meetings. He would separate meetings into different meetings. In the first meeting, called “the dreaming room,” you are allowed to come up with ideas and that is it. There is no evaluation or organization of ideas. That is a separate meeting! Why? If you start
allowing your staff or yourself to evaluate ideas in the meeting many times that will stifle the new ideas. People will start to think, “Maybe my idea is not such a good idea”. That is NOT how Walt Disney conducted meetings.

I would recommend you adopt this pattern for your business meetings. Here are the four meetings Walt would run: First is the “in the dreaming room” – all brainstorming. Second is organizing the ideas. The third is to evaluate the ideas. Fourth would be to implement the ideas.

This was his brilliant pattern for business success. This is especially important if you are a solo business owner. You may be sabotaging your own success by coming up with great ideas and immediately thinking how can this NOT work. That will stifle even your own ideas.

Another pattern that seems to prevent a lot of success is lack of time management skills. Most people think they are very good at managing their time and they are really not. You can calibrate in a minute to how well you are doing and perhaps consider a different pattern for success.

The poor time management pattern looks like this:

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Why Completing Your Estate Planning is a Must!

Jan 24, 2018 by

Growing your business can be one of the most rewarding experiences for you and your family. It can provide a stream of income for years to come. Part of being successful in business is planning for the unexpected, anticipating what can go wrong and have contingency plans. On a personal level, you should be taking the same approach. For example, do you have life insurance (especially if you have loved ones) to support your family if something happens to you? I know in my situation with three girls and my wife I want to make sure they are taken care of if something should happen to me (hopefully a lot later than sooner). Having life insurance was something I had in place right after I was married over 16 years ago.

What I have found over the years is the big areas that create the biggest mess; when a business owner does not get around to completing their estate planning and something unexpected happens to them. This creates a financial mess for the family that is left behind. It is hard enough to handle the sudden loss of a loved one but to add on the financial turmoil can be just devastating for your loved ones. Especially when the IRS gets involved with estate taxes that will be due that may cause unnecessarily to liquid assets at a fire sale point of view to pay the
estate taxes.

Here are my top reasons why your estate planning should be a must to complete in the next 30-60 days and for you to take immediate action after reading this article otherwise it may be 12 months from now and you have not started yet.

1.Take care of your family. Your spouse must be prepared financially and emotionally as best as possible to make sure if something happens to you what the steps are financially..

Certainty and financial security are very high needs, especially guys for your wives. Don’t leave your spouse left holding the financial bag and having to work with other family members and in- laws to figure how what should happen next. Especially, if you run the business, provide the revenue to support your family and your wife runs the household, kids’ schedule and school (which is a much harder job by the way, in my opinion). This is even more of a must if you are in a second marriage and there are your kids and your spouse’s kids.

You may inadvertently have your net worth not go to your kids when you thought it would. Even worse, what happens to your kids if something happens to both of you? What directives do you have in place to take care of your kids? Do you have guardians in place? Here are six mistakes that happen in this key area of naming a guardian 1) they name only one person with no back-up; 2) they name a couple without directing what should happen if something happens to one of the partners of the couple; 3) they consider financial resources of their guardians instead of leaving enough behind through insurance or savings; 4) they don’t name anyone to take care of their financial resources for their children; 5) they name only guardians for the long-term and don’t consider what would happen in the immediate moments or hours after an accident until their long-term guardians could arrive; and 6) they fail to exclude anyone they know they would never want to serve as a guardian. If you die without a Will or having named guardians, the decision as to who will take care of your money and your children is left up to a State Court Judge operating in a broken court system who don’t know you or what’s important to you.

Another challenge is having your estate go to the probate courts because you have no estate plan in place. Here is how this works. In any jurisdiction in the U.S. that recognize a married couple’s property as tenancy by the entireties, if a person dies intestate (owning property without a will), the portion of his/her estate so titled passes to
a surviving spouse without a probate. This part seems to be ok at this point. If the estate is not automatically devised to the surviving spouse in this manner or through a joint tenancy and is not held within a trust, it is necessary to “probate the estate”, whether or not the decedent had a valid will. A court having jurisdiction of the decedent’s estate (a probate court) supervises probate, to administer the disposition of the decedent’s property according to the law of the jurisdiction and the decedent’s intent as manifested in his testamentary instrument.

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Where Did My New Years’ Resolution Go? 9 Strategies To Rescue Those Resolutions!

Jan 20, 2018 by

Resolve comes easily on December 31st.

By March of the new year, the resolutions made are in disarray, compromised, abandoned. And the resolute determination to make this year, finally, the year you stick to ‘em, forgotten altogether.

This is not about guilt over this abandonment. Instead, it is about the real reasons resolutions and the determination to achieve them are lost, year after year after year, and how to change – yet this year – and get on track to systematically set and achieve new goals.

Big Idea #1: you can’t achieve new goals or make desired changes without allocating time to do so. Check out page 63 of my NO B.S. TIME MANAGEMENT FOR ENTREPRENEURS BOOK* for ‘time-blocking’ strategy instructions. A big reason that resolutions never become reality is no room made for them in the daily schedule! If your days are already full, and you resolve to get in a 1/2 hour a day on the treadmill or on your laptop, writing that book, that 1/2 hour has to come from somewhere. Something’s gotta give! You have to find something or things currently consuming time you can cut 5 or 10 or 15 minutes from.

Big Idea #2: priorities should govern schedule, the schedule shouldn’t govern priorities. On pages 69-74 and 103-111 of the same book, I talk about the mistake made by the vast majority of business owners and entrepreneurs – they operate like workers instead of bosses and leaders. They report to a workplace, then they let people and events ad interruptions come at them all day, take control of their day. You have to est control away from others’ priorities and govern by your priorities. President Bush cited Social Security reform and tax reform as top priorities of his second term, presumably accompanied by a resolution of the mess in Iraq. Then along came the tsunami. Still, he organized his tax reform panel. It’s hard to judge from outside looking in, but my belief about W. is that he’s determined to govern by his priorities. Are you?

Big Idea #3: resolutions aren’t resolutions without resolve. Only you can decide what really matters to you. You shouldn’t bother with ‘lip service’ faux resolutions, made to appease or satisfy others. Honesty with self is a pre-requisite for success.

Big Idea #4: resolutions require resources. Almost anything you decide to do, any change you decide to make,
any goal you set out to achieve requires new or different resources. That might be a piece of home exercise equipment or different food in the cupboard, a private work environment outside the office, information, people. You aren’t really serious about a resolution unless you invest in and gather the required resources.

Sometimes investment motivates follow-through, too.

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Doing Business in Multiple States -When Does Your Company have to Register? Part II

Jan 17, 2018 by

Division of Tax Base
Now, that you understand nexus and the difference between soliciting business and promoting it, it is critical to understand the background of how the states divide up the tax base. The Commerce Clause requires that a state may tax only that part of a corporation’s income that is fairly attributable to its income-producing activities in the state. There are three general approaches in handling this division of tax base. There are:

  • Separate accounting
  • Specific allocation
  • Formulary apportionment

Separate accounting is based on the premise that it is both possible and practical to isolate the taxable income of portions of a business that a corporation carries on within a state. Based on practical and theoretical flaws, separate accounting is rarely used.

Specific allocation assigns certain types of income to particular states using nonformulary rules. It is generally applied to income not related to the operational or unitary business of the taxpayer.

Formulary apportionment divides a taxpayer’s business income among the states in which it does business. A formula is used to generate an apportionment percentage that is based on the relative amount of a taxpayer’s in-state activities.

So Which Approach do the States Use?
There is an act called the Uniform Division of Income for Tax Purposes Act (UDITPA). UDITPA is a state tax model for allocating and apportioning income among states. Nearly half of the states with a corporate income tax have adopted UDITPA.

UDITPA has created three tests for determining the allocation and apportionment of income among states. They are:

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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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