Clay Clark | Selecting The Right Business Legal Structure To Protect Yourself With Wes Carter

Audio Transcription

Get ready to enter the Thrivetime Show! We started from the bottom, now we’re here. We started from the bottom and we’ll show you how to get here. We started from the bottom, now we’re here. We started from the bottom, now we’re here. We started from the bottom, now we’re on the top. Teaching you the systems to get what we got. Cullen Dixon’s on the hooks, I’ve written the books. He’s bringing some wisdom and the good looks. As the father of five, that’s where I’mma dive. So if you see my wife and kids, please tell them hi It’s C and Z up on your radio And now 3, 2, 1, here we go! We started from the bottom, now we in the ground We started from the bottom, and that’s what we’re about to do Thrive15.com and Wes Carter are providing general legal information to provide Thrivers like you with a basic framework of the terms, concepts, and scenarios found within the legal system of the United States If you are a human who is watching this video, you should seek the legal advice of a local attorney before making a legal decision If you are watching these videos from any country outside of the United States or from any planet outside of the planet Earth, you need to seek the wise legal counsel of a local attorney who better understands the legal complexities found within your country, planet, state, or city. For instance, in some states including California, Florida, Nevada, Alaska, and Hawaii, a motorist can be cited for driving too slowly. Other states do not have this law, although Clay has actually been pulled over for driving too slow within the state of Oklahoma, which pretty much never happens. Wes Carter is a great American and a beautiful man, but the R15.com and its partners are in no way legally liable for any fashion statements that he makes verbally or just by emitting fashionable awesomeness simply by entering into a room. Wes Carter is not related in any shape or form to Clarence Carter, recording artist, Sean Carter, entrepreneur and artist, or Joe Carter, MLB baseball great. Wes, thank you for being on the show today, my friend. My pleasure. Hey, Wes Carter, I always have to ask you this because I’m always legally worried about it. Any relationship to Sean Carter? No. Okay. It’s not related to Jay-Z, but we’re going to go ahead and keep the interview going since we have the cameras on. So, now Wes, we’re talking about selecting the right business legal structure to protect yourself. Okay. And, unfortunately, if you’re an aggressive entrepreneur or just a, I guess, business owner, you’re going to get sued at some point. I mean, if you’re in business 10 years or more, it’s going to happen. Most likely. And so, however, before we really get into it, I wanted to showcase some of the statistics that the Small Business Administration tells us about who’s getting sued and why they’re getting sued. So first off, 12.6% of all lawsuits relate to contract disputes. What does that mean? What’s a contract dispute? Anything you have in writing with someone else or even an oral agreement, if you and I agree I’m going to pay you $10, you’re going to mow my yard, that’s a contract. So if you just talk to somebody and you agree you’re going to do something, that’s a verbal contract? It can be, yes. Really? If I give you something, you give me something, that’s a contract. I’m going to be silent from now on. OK, so moving on. Now, 3% of lawsuits relate to real property. First off, what is real property, and what are these lawsuits? Real property is just land and buildings. And so it’s talking about stuff on buildings, land. You’re doing something that annoys your neighbor that interferes with their use of their property those kinds of things. You can get sued for annoying your neighbor? Absolutely. Really? Yes. Okay, let me ask you this though. So if I say I own a business and I have a property where the customers can come in and out of my building, am I potentially, can I be sued? Absolutely. Anytime you invite someone to your building for your benefit, then you actually are subject to a higher level of liability, you’re even more responsible to take care of them. If I live in a house and I irritate my neighbor, I can be sued for that? You can. Okay. Smells, noises. I’m doing everything right now to get sued, I guess is what that means. Okay, so now 15.5% of the lawsuits relate to tort. What is a tort? Where can you buy them? Can you eat them? You cannot eat a tort. Tort is just something that you do that harms someone else and causes them damage. Can you give me an example of maybe a good example of what a good tort would be or a bad tort? Let’s see, like a battery could be a tort if you’re suing them for money. Any kind of action that you take, defamation. What does battery mean? It means someone punched you in the face. Okay, so like a physical thing going on? Yeah, me touching you without your permission. Okay, well, technically I’m going to sue you after this thing. So, now you have the battery thing, but you can also just sue people for saying bad things about you? You can. Defamation, libel, slander, if you’ve heard those words thrown around, it just means saying something that is not true about you and hurts your reputation. Just because I didn’t graduate from college, can you maybe clarify what slander means or what defamation means? They’re all just words that mean mostly the same thing. Slander is usually verbal. I said something about you. Liable is something maybe I put in writing. And defamation is just kind of the word that covers it all up. Okay. Makes sense. Okay. So now we’re moving on to 15.7% of these lawsuits relate to civil rights. Now all this stuff is coming from the Small Business Administration, all this data here, but 15.7% of lawsuits relate to civil rights. What does that mean? Civil rights is a very broad term we’re talking mostly about discrimination. So it can be based on your gender. Pregnancy discrimination is a big one right now. Can you walk me through what that means, pregnancy discrimination? Yes, because you are not fair to the ladies in your employment that are being pregnant, becoming pregnant, or may become pregnant at some time in the future. So you said, I’m not going to hire ladies because they might get pregnant. Exactly. So you’re asking an interview, do you plan on having kids in the next few years? Really? Yes. What if you just write the word pregnant down on a piece of paper and you say, which one do you want to circle? Can you do that kind of thing? Do you like me yes or no? Just curious. Okay. Wes, 7.4% of the lawsuits relate to labor. So is that related to the ladies who are getting pregnant? Not tied together. Labor, that is, and your employees. So labor, so that means that 7.4% of the people who are getting sued this year are getting sued because an employee is upset at them? Yes. They don’t think they got paid what they were supposed to get paid, or they think that you fired them for some reason that’s not legal, something to do with your employees. Knowing all these things, by the way, how do you sleep at night knowing all the ways that someone can get sued? You have a good attorney. Okay. So 1.5% of the lawsuits relate to bankruptcy. Bankruptcy. Lots of bankruptcies every year. They go up and down with the economy, but a lot of people, a lot of businesses file bankruptcy. So that’s where you’re out of money, and you say, I’m out of money, and I owe you people, and so I’m done. I’m just gonna go bankrupt. Exactly, you can do it as an individual, you can do it as a business, and a lot of times the businesses, your creditors are fighting with each other, suing each other, whoever gets that last $10 you had in your checking account. Okay, now the final area is 3.3% of the lawsuits relate to property rights. What does that mean, property rights? Could be leases, you have the right to use a building. It could be mineral rights, so if somebody’s pumping oil or natural gas out of your property, so things like that, easements where someone has the right to drive through your land to get to their land. Now, you know, we live in a time where, based on this list you’re telling me, we can kind of get sued a lot more than maybe I think. Any average business owner doesn’t realize how likely they are to get sued. Very likely. Anybody can sue anybody for just about anything these days. So whether it’s justified or not, you still have to defend it. Well it seems like a lot of people have turned suing people into almost like a profession in and of itself. And it seems like that a lot, I mean we have this court system that’s designed to help people that are seriously injured. So I’ll give you an example. My mom went into a large big box store years ago. And it was back when the big box store allowed people to wear roller skates in the store. And they’re pushing all these carts, and these carts just smashed my mom. True story. Just bam! Well, right away, the company comes in and says, we are so sorry. The manager runs down. Are you okay? We filled out this paperwork. And he says, we want to get you the best chiropractor possible, and in any days you’ve missed, we want to take care of you. He wanted to own up to it right there. And he wrote us a considerable check. And this big, big company, out of my mind, did a very good job of taking care of our small family. I mean, this big company did a great job. But it seems that there’s a lot of people that are running around pretending like they’re injured so they can sue people and that kind of thing. So I just want to ask you, and you kind of alluded to it, can anybody really sue anybody? I mean, right now, honestly, if we had an issue today, could you just sue me and I sue you? Can we all, is that how it works? Pretty much. If we have a disagreement or I just want to give you some headaches and I can find any kind of argument to make, then we can file a lawsuit. So let’s just do a conspiracy. I’m not going to do this, but this is just some examples of what I wouldn’t do but other people might do. So if we were talking tonight and I felt offended because of your bias against not hiring pregnant people. And you touched me earlier, you said, hey man, with a high five, I didn’t want a high five, now I’m a victim of battery, psychological damage. And I decide to sue you. What does it cost me to sue somebody? Do I just want to sue somebody? I mean, is it just like if you have 50 bucks and you’re irritated, you can sue? Or how much does that cost? If you do it by yourself, for as little as a few hundred bucks as far as the filing fees, small claims, which is $10,000, $15,000, depending on the jurisdiction, is even less money than not to file a lawsuit. Somebody watching this right now needs to hear this, but I’m telling you, if you’ve ever wanted to start a business, but you’re afraid to start one because you’re afraid you might get sued, and I don’t mean to be a demotivational speaker, but I just want to speak to you directly, you’re going to get sued. And so examples, one of the guys is a very good friend of mine. He’s a mentor on Thrive. He’s always being sued at least two or three times. And he doesn’t need to borrow money anymore ever for properties and stuff, except when he does his big commercial deals. But they always ask, are you currently involved in litigation? And he and his wife just laugh, because they’re like, we’ve been in litigation for 20 years consecutively. We don’t know what it was like to not be in litigation. Now, on the positive side, the legal system is also what keeps us from going out and fist fights, knives and guns to settle our disputes. So it’s not all bad. I’m kind of offended that you’re discouraging fist fights. Okay. The other question I want to ask you here, it seems like that if we know we’re going to get sued, we’re probably going to need to just protect ourself in the best way possible. And I have found from my years of business that really you can do that through insurance and you can do that through having the right kind of business entity. Do you agree? Or is there maybe some other mythological third step that I’m not thinking of? Those are the two major things, making sure that you plan properly around your business organization and then covering your holes with adequate insurance. So there’s basically six different types of business structures that entrepreneurs can choose to protect themselves, to limit their liability. So I’m going to go over those. Here we go. One, the sole proprietorship. Two, a limited liability company. Three, a cooperative. Sounds like we’re working together. Cooperative. Four, a corporation. Five, a partnership. And six, that’s an S corporation. So these are our six different options. So Wes, let’s go ahead and get a little crazy and take the time needed to really deep dive into these. Okay. And so to keep things interesting, it’s going to be like a game show almost, okay? I’m going to read off the definition of each type of corporation or each type of business entity as defined by the United States Small Business Administration. They’re a very trusted organization of married men and women. And if you can clarify what it means and maybe give us an example of what type of business would want to use this type of corporate setup or business structure setup, that’d be awesome. So here we go. All right. One, sole proprietorship. Here’s the definition. A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities. Wes, what does that mean? Basically, a sole proprietorship is nothing. That’s what a sole proprietorship is. You have yourself out there doing business with just you and Maybe a spouse and that’s it The whole lot of nothing that’s the easiest way to explain it you have no Entity you were using usually your own social security number for taxes and bank accounts, you have you. So what kind of business needs to form a sole proprietorship or needs to form nothing? What kind of business needs to form nothing in your mind? My opinion, those are probably the worst thing to have as an entrepreneur, as a small business is a sole proprietorship because you have none of the benefits of the other options available to you. Somebody watching this is like, yeah, but I don’t want to do all the paperwork with a corporation. How would you respond to that? Well, that’s nice until you get sued. Oh, and you’re going to get sued. So you should not do that. Exactly. Why do they even allow it to happen? Why is it even possible? Is it just kind of the same reason you can, you know, I mean, is it just kind of a bad choice that they allow to be possible? Or is this sort of a default? If you do nothing, are you a sole proprietor? It’s a default. If you have nothing, that’s the word for basically you haven’t created anything else besides you as an individual. It’s a default and a lot of people don’t go through the effort to do anything else. We needed a word to describe those people. Can you think of even one benefit of being a sole provider? It’s easy to do nothing. It’s easy to do nothing. It’s cheap. It’s cheap. All right. It’s easy and it’s cheap. That’s the big stack of benefits here. Easy and cheap. Yes. So what are the drawbacks of being a sole proprietor? You just have nothing? Well the big drawbacks are if you get sued all of your own personal stuff is at grabs in the lawsuit. I’ve done this. Just a little confession. I have actually done this before. Don’t tell anyone. I remember the DJ business, I’m like, ah, corporations, ah, ah, ah. I’m not gonna get sued, ah. And I just remember we had a DJ who’s supposed to go out to the Moose Lodge. I don’t know if you’re familiar with this Moose Lodge over at 11th and Garnett. Not. Whatever, you go there all the time. I’m sorry, the Moose Lodge. And we’re there, it’s supposed to be a wedding, 11th and Garnett, and I get a call from the DJ, we’ll call him Not Josh, that was his name, Not Josh. So this guy’s really liable. So this guy, he calls and says, I actually cannot be there because I am lost. And I’m like, how are you lost? It’s 11th and Garnett, I cannot find it. Well, I find out years later, he was at a movie theater. He fesses up, I was like, the girl was hot. I had an opportunity, I took the opportunity. I can’t lie. I’m sorry meanwhile. We missed a girl’s wedding Just good straight up did not show up, so this girl’s wedding She’s gone, and I’m like believing this dude, so she’s calling This is back when the cell phone had like 300 minutes, and you manage those minutes right so my singular phones blowing up DJ connection this is click yeah your DJ supposed to be here two hours ago answer again Yeah, your DJ is supposed to be here like right now. Yeah, and I just keep telling him, like, I, I, I, the DJ has said he’s right in your parking lot. He’s trying to find it. Where are you? She’s like going out waving. I’m at another wedding. I can’t go there. It’s funny now, but I cried at the time. Then the guy ends up, uh, it does not never shown up. I’m at a wedding. I have no backup plan. So I’m a sole proprietor though. So I did nothing. You did nothing. And I got a letter and the letter said due to the, what are the things you can sue somebody for, for ruining their days? Oh, negligence, breach of contract. I had that. Intentional inflection of emotional distress. I think we had that too. That was a good one. All kinds of fun stuff. These are all these things that I did. This is awesome. So I got this, and then I remember that the dad was like, you ruined the whole reception. We’d spent about 10,000 on it. For 15,000 we can settle. That’s what the letter was basically saying. I’m like, well, I have a bank account with like $4,000. How about we do a thousand? And he’s like, no. So like, I’ll call an attorney. Attorney says, well, it’s like 2000 to retain me. And then you’re going to lose because you are a sole proprietor with no contract. And awkward. Long story short, I took all the money that was in my account and I gave it to this man and he forgave me. And that’s how I learned. It’s a tough lesson to learn because everything you have is up for grabs. So if you’re watching this and you paid $50 a month, this right here could be a loan worth at least 10 G’s for you right here. 10 G’s. It’s like death row records. 10 G’s. Okay, moving on. So on to the second type of business entity. The limited liability company. That is an LLC. It’s designed to provide the limited liability features of a corporation, the tax efficiencies and operational flexibility of a partnership. What is a limited liability company? A limited liability company is called an LLC. One of the most common types of entities for an entrepreneur, small business, because it offers a lot of flexibility. It doesn’t have a lot of the formalities of a corporation, but most importantly, you get all the liability protection. So the owners, which are called members in an LLC, if they get sued, LLC, and important, you followed all the formalities, then you have asset protection for all your personal assets. You said follow all of the formalities. What are all of the formalities? Do they wear coats and suits? Well, no. What’s important is anytime we’re talking about protecting your personal stuff, whether it’s an LLC or a corporation, it’s very important to keep up with your minutes, not treat it like your piggy bank. If you respect it, a court will respect it. If you treat it like it doesn’t exist, a court can treat it like it doesn’t exist. Should your attorney update your minutes and kind of be the person who does this for you? Or should you and I be an entrepreneur being like, I need to update my own minutes. No, LLC, one of the reasons it’s easier is because minutes aren’t necessarily required, unless it’s a corporation. But it’s important, like with your bank account, make sure that you’re not taking money out of your LLC bank account to go on vacation or go out to eat with your wife. You have to treat them as separate entities so you can keep that protection. Now, OK, so we’ve got this limited liability company here. We’ve kind of defined what it is. Why is it that a lot of business owners call their business like Jerry’s Plumbing LLC? Do you have to do that? Do you have to put on everything? Why do people do it? Why do some people not do it? Let’s go. It’s a way to put the public on notice. You out there, it’s the general public that this is a limited liability company. So if you do business with me, you can’t get my own stuff. You can only get what’s in the business itself. How come big companies like Best Buy don’t say Best Buy C Corporation or Best Buy LLC? Well if you look at any of the official documents it’ll either usually it’ll be Best Buy comma INC but for branding you have to do it on your contracts your deeds things like that. Branding you don’t have to put your commercial with Jerry’s flower shop comma LLC. If you’re watching this and your company is called right now like Door Services LLC. Take that LLC off that brand. Just from a branding, not a legal perspective, just that branding, I’m just telling you, you know, that’s bizarre to the customer sometimes. And I’m just telling them, a lot of companies I do consulting with, they’re always like, I thought I had to have the LLC on my website and on my logo, like right, prominent on my logo. So you’re saying that puts the public on notice. Right, if you do a contract, you sign an official document, you put the LLC on there. So whoever you’re getting into a business dealing with, they know. What are the mega benefits of an LLC? And what are the mega drawbacks? Just kind of a high level. Now, you hit on some of them, but. Biggest ones, you get the personal asset protection. Your stuff is off the table if you do it right. And it’s easy to take care of an LLC. And it’s a easy way. It’s very flexible about how you run it, who runs it. There’s a lot of ways you can do an LLC, so that’s why it’s attractive to entrepreneurs. Very flexible, like a gymnast in an LLC. That’s how I remember it. I don’t know how that relates. So moving on, now we’re talking about a cooperative. This is the one that scares me. I’ve heard a lot about what went down in various other cults. So we start talking about a cooperative, I get a little scared with these words, so let me read it, let me read it to you. A cooperative is a business or organization owned by and operated for the benefit of those using its services, profits, profits and earnings generated by the cooperative are distributed among the members, also known as user owners. Typically, the elected board of directors and officers run the cooperative with regular members having voting rights to control the direction of the cooperative. Members can become part of the cooperative by purchasing shares though the amount of shares they hold does not affect the weight of their vote. What are we talking about? It sounds like a communist corporation. What is the case? What is a cooperative? A co-op is usually a group of people who get together. They create it’s very similar to a non-profit organization. Let’s say we’re all gonna go grow some fruits and vegetables and we’re all gonna pitch our money in together. And then when the fruits and vegetables grow, we’re gonna split them up evenly. Or you can, that’s a farming type of co-op. You can have electric co-ops if you’re out in a rural city ever. A lot of times you’ll see electrical co-ops where the citizens have gotten together and decided they’re going to share their resources to create an electric company. So it’s… We can all wear white robes, we can all live together. A lot of sharing. A lot of sharing. There’s one wife, there’s like 50, or this is the other way around, there’s 50 wives, one husband. All right, so I got my cooperative mixed up with the cult. Sorry about that. Not very common for an entrepreneur. Usually you’re restricted on what you can do with your profit. It usually has to be distributed back to the members, not the owners. So probably not the best choice. Just for the record, I’m gonna sue myself after I watch this episode. That’s what I’m gonna do. What are the benefits of a cooperative? Is there any benefits you can think of, any drawbacks? It’s a benefit for a very specific set of circumstances. You know, if you want to have an organic market on a corner on Saturday morning, or there’s a non-profit purpose that you wanna get together and sell little bits and pieces after you’ve all made your product. What? That’s, you know, it’s a very, very niche kind of entity. If you’re watching this and you have a cooperative and you feel like I’m mocking you, it’s because I am, but I do respect you, and you can mock me too. We have that mutual win-win, I mock you, you mock me, we sue each other online, that’s what we do. So, what kind of, is there any kind of entrepreneur in your mind? I mean, can you think of one kind of business right now where you’re like, yes, that was someone I told. You can’t tell me specifically, obviously. But is there any situation where you’ve ever met with someone and you say, you should be a cooperative? Does that happen very often? If your motive is profits, then no. OK. And so you should probably subscribe maybe to a different website if your motives are profit. Maybe, I don’t know. So, moving on. So a corporation, a corporation, sometimes referred to as a C-corporation, as an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and the debts of the business that the business incurs. Corporations are more complex than other business structures because they tend to have costly administrative fees and complex legal requirements, tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger, big, lots of employee organizations. The problem is that 90% of the people watching this have 10 employees or less. So in America today, a little over 90% of all the new jobs that are created, according to the Small Business Administration, have 10 employees or less. But the goal is to grow. So at some point you hit like 22 employees or 23. At what point does it become a benefit to open up a corporation in your mind? I think you choose from the very beginning LLC or corporation, most timely or two most popular options. And either entity can handle very small businesses or billion-dollar businesses. It just depends on what kind of structure fits better for how you want to run the organization. If I’m saying, I don’t know right now, and again, we want to encourage everybody watching this, as stated at the beginning of the video, to talk to your local attorney before you make a legal decision. Please. But if you’re thinking about forming an LLC or you’re thinking about forming a corporation. How do you make the decision right there? What are some of the factors that play generally one of the bigger factors is? Investors, okay, if you’re gonna have a lot of investors sometimes It’s easier to do that in a corporation Because you have shareholders who own the company and then a separate group the board of directors the board that actually run the company So sometimes it’s easier to do investors if you’re gonna go public in the future. That’s you know as a small business, that’s kind of hard to envision that far, but if you’re going to go public, a corporation is usually required. I want to make sure that I never assume that anyone knows something because I, until about 10 minutes ago, I probably didn’t know what this was, but the word, when you say go public, can you explain what you mean by that? Well, if you want to have your company, your corporation, traded on the stock exchange, one stock exchange or another, okay, you know, where people, the general public can invest. So, big idea, what are the big benefits of a corporation from a legal perspective and what are the drawbacks of a corporation from a legal perspective? Well, similar to an LLC, a corporation protects your personal assets. So you have that shield that, what’s in the corporation’s fair game, what’s my personal assets I own in my name, those are off the table. Can I, real quick, just show a little diagram to see if I’m getting it. Absolutely. So if this is my stuff, this is all my money I have, and it’s represented by this beautiful pin. If I have a corporation, does it protect it so that you say a shield so that no matter what you can’t take my personal stuff? Is that how that works? Well it is possible, but it’s much more difficult. How is it possible? Well there’s something they call piercing the corporate veil, which is just a big fancy word for ignoring the corporation and going to your personal stuff. And usually that’s because, especially with a corporation, a corporation you need to have minutes at least once a year. You have the shareholder minutes, the people who own it, the board minutes, the people who run it, and that’s one of the downsides of corporation. There’s a lot more formalities, technicalities you have to do. When you say minutes, what are the minutes? Minutes is when you have your meetings. So all the shareholders have to get together, have a meeting once a year. Okay. They elect the people who are going to run the corporation. Yeah. You keep minutes of that. The people who run the corporation, they have meetings at least once a year. They have their own minutes. So even if it’s just you and I are the only shareholders and we elect ourselves directors, we have to get together and have a meeting. Okay. Well, okay. So, okay. So we have a corporation. And in your mind, if a business owner is watching this, what kind of business owner watching this right now would be the kind of person who may want to consider forming a corporation? If you’re not going to own real property, or that’s not one of the major purposes of it, then a corporation could be a viable option. Or if you plan on getting a lot of investors. If you’re getting a lot of investors, or you think you’re going to have to need a lot of venture capital coming in to make your idea work, then a corporation is probably something you can consider. Okay, now we’re moving on to a thing called a partnership. This is number five, a partnership. A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor, or skill. In return, each partner shares in the profits and losses of the business. Because partnerships entail more than one person in the decision-making process, it’s important to discuss a wide variety of issues up front and develop a legal partnership agreement. This agreement should document how future business decisions will be made, including how the partners will divide the profits, resolve disputes, change ownership, how to dissolve the partnership. Although partnership agreements are not legally required, they are strongly recommended and it is considered extremely risky to operate without one. So let’s just kind of break into all that. A partnership. When would I ever want to form a partnership? Partnerships are one of the rarest things for a small business just starting out. It’s basically just two people or two businesses agreeing that they’re going to go into a business together and do something. Now there’s drawbacks because there’s lots of kinds of partnerships. You have general partnerships, limited partnerships, limited liability, limited partnerships. That’s where you probably want to get the attorney involved to get into those details. Right. And they have varying levels of personal asset protection. Usually in just a regular partnership, what they call a general one, you and I just agree here’s what we’re going to do. Then we both still have to put our personal stuff in the pot if we get sued. So, who in your mind needs to get a… I guess, what are in your mind, what are the big drawbacks of forming a partnership, right? And what are the benefits and who should do it? The majority of the time when I counsel people, partnerships aren’t the best option. Okay. And if you’re just starting out and you’re, you know, a run-of-the-mill entrepreneur, even though nobody’s run-of-the-mill, but… I’m a run-of-the-mill entrepreneur. I’ve run right out that mill. Then most of the time the partnership is not going to be the option for you. It’s going to be an LLC or a corporation. Is there any major benefit of why I’d want to be a partner? Can you sell me on it? No. No. Okay. Well, we’re moving on there. It’s fine if you don’t open up. It’s fine. Okay. All right. So now we’re moving on to this S corporation. Yes. That’s corporation. Sometimes referred to as an S corporation. It is a special type of corporation created through the IRS tax election. An eligible domestic corporation can avoid double taxation once to the corporation and again to the shareholders by electing to treat their company as an S corporation. An S corporation is a corporation with the subchapter S designation from the IRS. To be considered an S corp, you must first, wow, you must first charter a business as a corporation in the state where it is headquartered. I don’t know what we’re talking about, so let’s talk about an S corporation. First off, why would I want to form an S corporation? All right, well let’s back up a second. You talked about C corporations. Yeah. C corporations, S corporations are the exact same thing other than taxes. So a corporation is a corporation. What happens with a corporation is that usually if you’re a C corporation, you haven’t taken steps to become an S corporation, then you get taxed twice. C corporations get taxed twice. The corporation makes money, pays taxes on that money. The corporation pays its owners, then the owner pays money on the income to the owners. I’m not a huge math guy, but why would I want to be taxed twice? You usually don’t. What if I’m really patriotic? Well, then you can make a donation to the United States government. Who does want to be a C-corp versus an S-corp? In all sincerity, who would want to do that? Well there are limitations to who can elect to be an S corporation. There’s a limit to the number of shareholders you can have. Ok. And also the type of shareholders you have. They usually have to be individuals or you know certain types of entities can only be shareholders in S corporations. So we call it a sub chapter S. Yes. What does that mean? What’s the sub chapter? That just means when you look at the huge tax law, if you get to the tax code, there’s a little paragraph there that’s paragraph S, right before T after R. Are you serious? Yeah. And that’s where the rule is for how that’s going to be taxed. So it’s an S court because that just happened to be the letter it fell under. How big is this tax code you’re referring to? Is it like seven pages? Giant. Giant. Okay. That’s why CPAs have jobs. Okay. This just in, the root of the whole, if you want to create jobs right now for CPAs, you want to pass more tax law? Exactly. Okay, that’s why CPAs have jobs. Okay, what are the drawbacks of an S-corporation from your perspective and the main benefits there? There are very few drawbacks because of only getting taxed once. The tax comes straight to you as the owner, so that’s a big benefit. You get all of the asset protection that we talked about with the corporation. The only drawback is if you have certain kinds of investors, especially other big corporations that are going to come invest in you as maybe venture capital guys or just benefactors, then it might not be available to you. Now, just to review here, because if you’re watching this, I know it can be overwhelming. The idea here on Thrive is that if you want to watch this again or pause it or take notes, we want you to have a mastery of this. So just to review, there are six different types of business structures that we all can form as entrepreneurs. You have the sole proprietorship. You have the limited liability company. You have the cooperative, my personal favorite. You have the corporation. You have a partnership. And you have an S corporation. If somebody right now is going, you know what? Because there’s a lady who just, her name is Rebecca. And Rebecca emailed us. And Rebecca, if you’re the one watching this, this is for you. She says, I’ve always wanted to start a business for years, but I just don’t know what kind of company to start. What advice would you have to the Rebeccas of the world right now if they don’t know what kind of corporation to form? They have a kind of an idea now. What do you recommend they do? There’s two things. First, I think you probably go online, educate yourself a little bit about each kind of organization. And then you need to go find someone who is in your area or someone who does it in your state that’s knowledgeable, that can help you. Which one’s better for your particular circumstances? When you say somebody do you mean an attorney? An attorney or a CPA can help you with the tax stuff as well. So a CPA or a tax professional. Yes. I guess a CPA or a CPA is a tax professional. A CPA or an attorney is who you want to talk to. Yes. What about a dude? Like I just I know a dude. Only if the dude is a CPA or an attorney. Because a lot of times I meet entrepreneurs that are like I had a dude he helped me do it online. It was just like BAM! How do you know the dude? We worked at Best Buy together. I know a lot of those guys. They said, you know, I know a guy that’s had his own business for 20 years. That’s what he told me to do. And it’s the exact wrong thing to do. Okay. You heard it here. Wes, I appreciate you being here today, more than you know. And I appreciate just everything that I said to you off air that’s resulted in the lawsuit that we’re going to file against each other here in just moments. So until we square off again, thank you for being here. Thank you, Clay. JT, do you know what time it is? 410. It’s TiVo time in Tulsa, Rosalim, baby. Tim TiVo is coming to Tulsa, Oklahoma June 27 and 28. We’ve been doing business conferences here since 2005. I’ve been hosting business conferences since 2005. What year were you born? 1995. Dude, I’ve been hosting business conferences since you were 10 years old, but I’ve never had the two-time Heisman Award winning Tim Tebow come present. And a lot of people have followed Tim Tebow’s football career on the field and off the field. And off the field, the guy’s been just as successful as he has been on the field. Now, the big question is, JT, how does he do it? Well, they’re going to have to come and find out, because I don’t know. Well, I’m just saying, Tim Tebow is going to teach us how he organizes his day, how he organizes his life, how he’s proactive with his faith, his family, his finances. He’s going to walk us through his mindset that he brings into the gym, into business. It is going to be a blasty blast in Tulsa, Russia. Also, this is the first Thrive Time Show event that we’ve had where we’re going to have a man who has built a $100 million net worth. Wow. Who will be presenting. Now we’ve had a couple of presenters that have had a billion dollar net worth in some like a real estate sort of things. Yeah. But this is the first time we’ve had a guy who’s built a service business and he’s built over a $100 million net worth in the service business. It’s the yacht driving, multi-state living guru of franchising. Peter Taunton will be in the house this is the founder of snap fitness the guy behind nine round boxing he’s gonna be here in Tulsa Russel of Tulsa Russel of Oklahoma June 27th and 28th JT why should everybody want to hear what Peter Taunton has to say oh cuz he’s incredible he’s just a fountain of knowledge he is awesome he’s inspired me listening to him talk and not only that he also has he practices what he teaches so he’s a real teacher. He’s not a fake teacher like business school teachers. So you’ve got to come learn from him. Also let me tell you this folks, I don’t want to get this wrong because if I get it wrong, someone’s going to say, you screwed that up buddy. So Michael Levine, this is Michael Levine, he’s going to be coming and he’s going to say, who’s Michael Levine? I don’t want to get this wrong. This is the PR consultant of choice for Michael Jackson, for Prince, for Nike, for Charlton Heston, for Nancy Kerrigan, 34 Grammy Award winners, 43 New York Times best-selling authors he’s represented, including pretty much everybody you know who’s been a super celebrity. This is Michael Levine, a good friend of mine. He’s going to come and talk to you about personal branding and the mindset needed to be super successful. The lineup will continue to grow. We have hit Christian reporting artist Colton Dixon in the house. Now people say, Colton Dixon’s in the house? Yes, Colton Dixon’s in the house. So if you like top 40 Christian music, Colton Dixon’s going to be in the house performing. The lineup will continue to grow each and every day. We’re going to add more and more speakers to this all-star lineup. But I encourage everybody out there today, get those tickets today. Go to thrivetimeshow.com. Again, that’s thrivetimeshow.com. And some people might be saying, well, how do I do it? What do I do? How does it work? You just go to thrivetimeshow.com. Let’s go there now. We’re feeling the flow. We’re going to thrive And you just go to thrive timeshow.com you click on the business conferences button and you click on the request tickets button right there The way I do our conferences is we tell people it’s $250 to get a ticket Yep, or whatever price that you could afford and the reason why I do that is I grew up without money JT you’re in the bank account? No, I did not. Nope, did not get any loans, nothing like that. Did not get an inheritance from parents or anything like that. I had to work for it, and I’m super grateful I came to a business conference. That’s actually how I met you, met Peter Taunton, I met all these people. So if you’re out there today and you want to come to our workshop, again, you just got to go to thrivetimeshow.com. You might say, well, when’s it going to be? June 27th and 28th. You might say, well, who’s speaking? We already covered that. You might say, where is it going to be? It’s going to be in Tulsa, Russell Oklahoma. It says Tulsa, Russell. I’m really trying to rebrand Tulsa as Tulsa, Russell, sort of like the Jerusalem of America. But if you type in Thrive Time Show and Jinx, you can get a sneak peek or a look at our office facility. This is what it looks like. This is where you’re headed. It’s going to be a blasty blast. You can look inside, see the facility. We’re going to have hundreds of entrepreneurs here. It is going to be packed. Now, for this particular event, folks, the seating is always limited because my facility isn’t a limitless convention center. You’re coming to my actual home office. And so it’s going to be packed. So when? June 27th and 28th. Who? You. You’re going to come. Who? I’m talking to you. You can get your tickets right now at thrivetimeshow.com. And again, you can name your price. We tell people it’s $250 or whatever price you can afford. And we do have some select VIP tickets which give you an access to meet some of the speakers and those sorts of things. And those tickets are $500. It’s a two-day interactive business workshop, over 20 hours of business training. We’re going to give you a copy of my newest book, The Millionaire’s Guide to Becoming Sustainably Rich. You’re going to leave with a workbook. You’re going to leave with everything you need to know to start and grow a super successful company. It’s practical, it’s actionable, and it’s TiVo time right here in Tulsa, Russia. Get those tickets today at Thrivetimeshow.com. Again, that’s Thrivetimeshow.com. Hello, I’m Michael Levine, and I’m talking to you right now from the center of Hollywood, California, where I have represented over the last 35 years 58 Academy Award winners, 43 New York Times bestsellers. I’ve represented a lot of major stars, and I’ve worked with a lot of major companies. And I think I’ve learned a few things about what makes them work and what makes them not work. Now, why would a man living in Hollywood, California, in the beautiful, sunny weather of LA, come to Tulsa because last year I did it and it was damn exciting. Clay Clark has put together an exceptional presentation, really life-changing, and I’m looking forward to seeing you then. I’m Michael Levine, I’ll see you in Tulsa. James, did I tell you my good friend John Lee Dumas is also joining us at the in-person, two-day interactive Thrive Time Show business workshop. That Tim Tebow and that Michael Levine will be at the… have I told you this? You have not told me that. He’s coming all the way from Puerto Rico. This is John Lee Dumas, the host of the chart-topping EOFire.com podcast. He’s absolutely a living legend. This guy started a podcast after wrapping up his service in the United States military and he started recording this podcast daily in his home to the point where he started interviewing big-time folks like Gary Vaynerchuk, like Tony Robbins, and he just kept interviewing bigger and bigger names, putting out shows day after day, and now he is the legendary host of the EO Fire podcast, and he’s traveling all the way from Puerto Rico to Tulsa, Oklahoma to attend the in-person June 27th and 28th live time show, two-day interactive business workshop. If you’re out there today folks, you’ve ever wanted to grow a podcast, a broadcast, you want to get in you want to improve your marketing, if you’ve ever wanted to improve your marketing, your branding, if you’ve ever wanted to increase your sales, you want to come to the two-day interactive June 27th and 28th Thrive Time Show business workshop featuring Tim Tebow, Michael Levine, Jodly Dumas, and countless big-time super successful entrepreneurs. It’s going to be life changing. Get your tickets right now at ThriveTimeShow.com. James, what website is that? ThriveTimeShow.com. James, one more time for the four enthusiasts. ThriveTimeShow.com. I’m going to shine. Everything rides on tonight. Even if I got three stripes, I’m not to be played with Because it could get dangerous See, these people I ride with This moment, we own it Thrivetime Show 2-Day Interactive Business Workshops are the world’s highest rated and most reviewed business workshops because we teach you what you need to know to grow You can learn the proven 13 point business system that Dr. Zellner and I have used over and over to start and grow successful companies. When we get into the specifics, the specific steps on what you need to do to optimize your website. We’re gonna teach you how to fix your conversion rate. We’re gonna teach you how to do a social media marketing campaign that works. How do you raise capital? How do you get small business loan? We teach you everything you need to know here during a two day, 15 hour workshop. It’s all here for you. You work every day in your business, but for two days you can escape and work on your business and build these proven systems so now you can have a successful company that will produce both the time freedom and the financial freedom that you deserve. You’re going to leave energized, motivated, but you’re also going to leave empowered. The reason why I built these workshops is because as an entrepreneur, I always wish that I had this. And because there wasn’t anything like this, I would go to these motivational seminars, no money down, real estate, Ponzi scheme, get motivated seminars, and they would never teach me anything. It was like you went there and you paid for the big chocolate Easter bunny, but inside of it, it was a hollow nothingness. And I wanted the knowledge, and they’re like, oh, but we’ll teach you the knowledge after our next workshop. And the great thing is we have nothing to upsell. At every workshop, we teach you what you need to know. There’s no one in the back of the room trying to sell you some next big get-rich-quick, walk-on-hot-coals product. It’s literally, we teach you the brass tacks, the specific stuff that you need to know to learn how to start and grow a business. And I encourage you to not believe what I’m saying, and I want you to Google the Z66 auto auction. I want you to Google elephant in the room. Look at Robert, Zellner & Associates. Look them up and say, are they successful because they’re geniuses? Or are they successful because they have a proven system? When you do that research, you will discover that the same systems that we use in our own business can be used in your business. Come to Tulsa, book a ticket, and I guarantee you it’s going to be the best business workshop ever and we’re going to give you your money back if you don’t love it. We’ve built this facility for you and we’re excited to see it. And now you may be thinking, what does it actually cost to attend an in-person two-day interactive Thrive Time Show business workshop? Well, good news, the tickets are $250 or whatever price that you can afford. What? Yes, they’re $250 or whatever price you can afford. I grew up without money and I know what it’s like to live without money. So if you’re out there today and you want to attend our in-person two-day interactive business workshop, all you got to do is go to Thrivetimeshow.com to request those tickets. And if you can’t afford $250, we have scholarship pricing available to make it affordable for you. I learned at the Academy at Kings Point in New York, acta non verba. Watch what a person does, not what they say. Good morning, good morning, good morning. Harvard Kiyosaki, The Rich Dad Radio Show. Today I’m broadcasting from Phoenix, Arizona, not Scottsdale, Arizona. They’re close, but they’re completely different worlds. And we have a special guest today. Definition of intelligence is if you agree with me, you’re intelligent. And so this gentleman is very intelligent. I’ve done this show before also, but very seldom do you find somebody who lines up on all counts as a Mr. Clay Clark is a friend of a good friend, Eric, Eric Trump. But we’re also talking about money bricks and how screwed up the world can get in a few and a half hour. So Clay Clark is a very intelligent man, and there’s so many ways we could take this thing. But I thought, since you and Eric are close, Trump, what were you saying about what Trump can’t, what Donald, who’s my age, and I can say or cannot say? First off, I have to honor you, sir. I wanna show you what I did to one of your books here. There’s a guy named Jeremy Thorn, who was my boss at the time. I was 19 years old, working at Faith Highway, I had a job at Applebee’s, Target, and DirecTV, and he said, have you read this book, Rich Dad, Poor Dad? And I said, no. And my father, may he rest in peace, he didn’t know these financial principles. So I started reading all of your books and really devouring your books, and I went from being an employee to self-employed to the business owner to the investor, and I owe a lot of that to you. And I just wanted to take a moment to tell you, thank you so much for allowing me to achieve success. And I’ll tell you all about Eric Trump. I just want to tell you, thank you, sir, for changing my life. Well, not only that, Clay, thank you, but you’ve become an influencer. You know, more than anything else, you’ve evolved into an influencer where your word has more and more power. So that’s why I congratulate you on becoming. Because as you know, there’s a lot of fake influencers out there, or bad influencers. Anyway, I’m glad you and I agree so much, and thanks for reading my books. That’s the greatest thrill for me today. Not a thrill, but recognition is when people, young men especially, come up and say, I read your book, changed my life, I’m doing this, I’m doing this, I’m doing this. I learned at the Academy, at King’s Point in New York. Acta non verba. Watch what a person does, not what they say. Hey, I’m Ryan Wimpey. I’m originally from Tulsa, born and raised here. I went to a small private liberal arts college and got a degree in business, and I didn’t learn anything like they’re teaching here. I didn’t learn linear workflows. I learned stuff that I’m not using and I haven’t been using for the last nine years. So what they’re teaching here is actually way better than what I got at business school. And I went what was actually ranked as a very good business school. The linear workflow, the linear workflow for us and getting everything out on paper and documented is really important. We have workflows that are kind of all over the place. Having linear workflow and seeing that mapped out on multiple different boards. It’s pretty awesome. That’s really helpful for me. The atmosphere here is awesome. I definitely just stared at the walls, figuring out how to make my facility look like this place. This place rocks. It’s invigorating. The walls are super, it’s just very cool. The atmosphere is cool. The people are nice. It’s a pretty cool place to be. Very good learning atmosphere. I literally want to model it and steal everything that’s here at this facility and basically create it just on our business side. Once I saw what they were doing, I knew I had to get here at the conference. This is probably the best conference or seminar I’ve ever been to in over 30 years of business. You’re not bored. You’re waiting live the whole time. It’s not pushy. They don’t try to sell you a bunch of things. I was looking to learn how to just get control of my life, my schedule, and just get control of the business. Planning your time, breaking it all down, making time for the F6 in your life, and just really implementing it and sticking with the program. It’s really lively, they’re pretty friendly, helpful, and very welcoming. I attended a conference a couple months back, and it was really the best business conference I’ve ever attended. In the workshop I learned a lot about time management, really prioritizing what’s the most important. The biggest takeaways are you want to take a step-by-step approach to your business. Whether it’s marketing, what are those three marketing tools that you want to use, to human resources. Some of the most successful people and successful businesses in this town, their owners were here today because they wanted to know more from Clay and I found that to be kind of fascinating. The most valuable thing that I’ve learned is diligence. That businesses don’t change overnight. It takes time and effort and you’ve got to go through the ups and downs of getting it to where you want to go. He actually gives you the road map out. I was stuck, didn’t know what to do and he gave me the road map out step by step. We’ve set up systems in the business that make my life much easier, allow me some time freedom. Here you can ask any question you want, they guarantee it will be answered. This conference motivates me and also gives me a lot of knowledge and tools. It’s up to you to do it. Everybody can do these things. There’s stuff that everybody knows, but if you don’t do it, nobody else is going to do it for you. I can see the marketing working. And it’s just an approach that makes sense. Probably the most notable thing is just the income increase that we’ve had. Everyone’s super fun and super motivating. I’ve been here before, but I’m back again because it motivated me. Your competition is going to come eventually or try to pick up these tactics. So you better, if you don’t, somebody else will. I’m Rachel with Tip Top Key Night, and we just want to give a huge thank you to Clay and Vanessa Clark. Hey guys I’m Ryan with Tip Top K9. Just want to say a big thank you to Thrive 15. Thank you to Make Your Life Epic. We love you guys, we appreciate you and really just appreciate how far you’ve taken us. See? It’s nice, right? So this is my old van and our old school marketing. And this is our old team. And by team, I mean it’s me and another guy. This is our new house with our new neighborhood. This is our new van with our new marketing. And this is our new team. We went from four to fourteen. And I took this beautiful photo. We worked with several different business coaches in the past, and they were all about helping Ryan sell better and just teaching sales, which is awesome, but Ryan is a really great salesman. So we didn’t need that. We needed somebody to help us get everything that was in his head out into systems, into manuals and scripts, and actually build a team. So now that we have systems in place, we’ve gone from one to 10 locations in only a year. In October 2016, we grossed 13 grand for the whole month. Right now it’s 2018, the month of October. It’s only the 22nd, we’ve already grossed a little over 50 grand for the whole month, and we still have time to go. We’re just thankful for you, thankful for Thrive and your mentorship, and we’re really thankful that you guys have helped us to grow a business that we run now instead of the business running us. Just thank you, thank you, thank you, times a thousand. So we really just want to thank you, Clay, and thank you, Vanessa, for everything you’ve done, everything you’ve helped us with. We love you guys. If you decide to not attend the Thrive Time Workshop, you’re missing out on a great opportunity. The atmosphere at Clay’s office is very lively. You can feel the energy as soon as you walk through the door. And it really got me and my team very excited. If you decide not to come, you’re missing out on an opportunity to grow your business. Bottom line. Love the environment. I love the way that Clay presents and teaches. It’s a way that not only allows me to comprehend what’s going on, but he explains it in a way to where it just makes sense. The SEO optimization, branding, marketing. I’ve learned, marketing is key, marketing is everything. Making sure that you’re branded accurately and clearly. How to grow a business using Google reviews and then just how to optimize our name through our website also. Helpful with a lot of marketing, search engine optimization, helping us really rank high in Google. The biggest thing I needed to learn was how to build my foundation, how to systemize everything and optimize everything, build my SEO. How to become more organized, more efficient. How to make sure the business is really there to serve me, as opposed to me constantly being there for the business. New ways of advertising my business, as well as recruiting new employees. Group interviews, number one. Before, we felt like we were held hostage by our employees. Group interviews has completely eliminated that because you’re able to really find the people that would really be the best fit. Hands-on, how to hire people, how to deal with human resources, a lot about marketing, and overall just how to structure the business, how it works for me, and also then how that can translate into working better for my clients. The most valuable thing I’ve learned here is time management. I like the one hour of doing your business. It’s real critical if I’m gonna grow and change. Play really teaches you how to navigate through those things, and not only find freedom, but find your purpose in your business, and find the purposes for all those other people that directly affect your business as well. Everybody. Everybody. Everyone. Everyone needs to attend the conference because you get an opportunity to see that it’s real. because you get an opportunity to see that it’s real. Everyone needs to attend the conference because you get an opportunity to see that it’s real.