On the first day of law school, a long
time ago, our professor stood up in front of the class, looked out over everyone
and said, “if you remember one thing it’s this don’t let your clients do dumb
stuff.” That’s what he said. I rolled my eyes. I’m like what kind of
legal advice is that. But 33 years later I can say it was the best advice I got in law school. Here’s the thing you guys. If you’re doing business online as an individual, a sole
proprietor, or as a general partner in a general partnership, guess what you’re
doing- dumb stuff. That’s not the way you want to do online business. My name is
Mitch Jackson. I love helping online business owners start their companies or
run their companies without doing dumb stuff. If you guys want to help support
the show, subscribe and like the show. Then ring the bell after you subscribe. Let’s get started. Taking a step back, in
today’s business world it’s not a matter of if you’re going to have a claim
brought against you or a lawsuit brought against you. Statistically during your
business life, you’re going to have three claims or three lawsuits brought against
you and frankly, that statistic came before social media and the internet. I
think because of the ease of doing business online that number is going to
be substantially higher for most online businesses especially when you look back in five, ten, or twenty years on what you’ve been through as an online
business. So knowing this I’m encouraging you guys to be smart about how you setup
your business in the first place and once set up, how you manage that business
each and every day and each and every year. Being smart planning ahead, not
doing dumb stuff, helps protect you and your personal assets from business
liabilities and that’s what today’s show is all about. If you guys have any
questions, leave them in the comments below. If there’s a topic you’d like me
to cover in one of my episodes, please share that topic or topics below in the
comments. Let me also point out that while I am a California lawyer, and a
pretty good California lawyer, I’m not your lawyer. No legal advice is being
given in this video and in this content. However, I am sharing some ideas some
thoughts and some tips you may want to consider when setting up your online
business. Creating an online business in the form
of a corporation or limited liability company will separate your business
liabilities from your personal assets. If you set up your corporation as a limited
liability company correctly, you can protect your personal assets, your bank
accounts, your cars and the family dog, from your business liabilities. For most small
online businesses you’ll want to look at creating a limited liability company
also known as a LLC or a sub S corporation. Both of those
entities generally speaking allow for major benefits and protections to you. So
what you want to do is check with an expert in your state because the laws
are different in each state with respect to what business entity would be your
best choice. Your professional will also look at what type of products or
services you’re providing and whether or not there are any industry regulations
requiring you to take certain steps with respect to your entity choice. There are numerous advantages to doing business as a corporation or as a
limited liability company. The one that jumps to mind first is the ability to
separate your personal assets from your business liabilities. You can set up a
protective shield between your personal assets and your business liabilities. Both a LLC and a corporation will allow you to do that assuming you set it up
correctly. Once set up correctly, you’ve got to keep your corporation or LLC your
company separate from your personal life… different bank accounts, different credit
cards . OK, everything needs to be separate. You don’t want to co-mingle
your personal life with your business life. You don’t want to use your personal
credit card to pay your business expenses, your personal checks to pay
your business expenses. If you do and you commingle the two, all of the protections
that we’re talking about may not work. So the first primary reason you
want to set yourself up as a sub S corporation or limited liability company. Depending on the feedback from an expert in your state and depending on what
you’re selling and depending on what you do for a living is to protect your
personal assets from business liability. The second reason you want to use business entities is it is that they create certain tax
advantages for you. They allow you to have additional business deductions or
write offs that you may not have as an individual a sole proprietor or a
general partner in a general partnership. Check with your accountant, check with
your CPA to see what additional tax benefits are available to you as a
limited liability company and as a corporation an S corporation. An LLC does
not result in double taxation to you generally speaking any taxable income
flows through the LLC or the S corporation to you as an individual so
you’re taxed as an individual but you’re protected by this business entity
protection. The third thing you need to know about doing business as an LLC or a
corporation or sub S corporation for for smaller online businesses is that all of
these entities give you different levels of flexibility in both management and
control. So depending on if you’re doing business on your own or if you have a
couple of different business partners, that are either investing or they
co-own the business with you, you can select either an LLC a corporation a sub
S corporation or some other type of business entity that works for you, your business, your industry that gives you the most flexibility with
respect to management decisions and anything else that may come up. When it
comes to investments, raising venture capital, when it comes to profit
distributions, having an LLC doing business as a corporation, it gives you
more credibility it gives you more options to raise capital. It gives you
more options to accept investors. It will actually help you stand out when you’re
doing a pitch in front of venture capitalists to have them invest in your
company. It shows that you’re treating your company as an actual business and
not just a side thought as an individual or sole proprietor working out of your
home. It can give you credibility. It’ll give you
the appearance of credibility that you can then use as a foundation and build
upon for many years to come. Now do keep in mind that most people don’t set their
LLC’s or the corporation’s up correctly, and those that do oftentimes drop the
ball when it comes to the annual management and administration of the LLC
or corporation. There are numerous but pretty
straightforward state and federal tax and entity filing requirements and you
want to make sure that you’re filing the paperwork correctly and it’s kind of
like riding a bike once you do it once or once you have your CPA your
accountant or your lawyer do this for you. Once you do it that first year after
you form your your corporation or your LLC, it gets easier to do year after year. Like I mentioned earlier, experienced professional in your city and state can
help you do what you need to do can help you set up what you need to set up to
make sure that after you form your corporation or LLC you are then managing
it the way you’re supposed to year after year so that everything works
for you. Let me circle back to once again the biggest mistake I see people make
when doing business online and that is they’re doing business online as an
individual a sole proprietor or a general partner in a general partnership.
I never let my clients do business in any of those forms. There’s just too much
liability associated with doing business as an individual sole proprietor or
general partner, so rather than doing business that way take the time to
figure out what’s best for you, what type of corporation S corporation limited
liability company would fit you best or will fit you best, to help you either set
up or transition your business that you’ve already got set up into a proper
business entity so that you’re afforded all of the benefits and all of the
protections that these business entities will give you and you can maximize
protecting your personal assets from your business liabilities which do exist
in today’s world. Each week I’ll be sharing new business tips for online
business owners with a slant towards legal/
business. 33 years of experience I’ll be bringing guests to share their ideas,
their thoughts their approaches to setting up and running online businesses.
If you guys like this content once again please SUBSCRIBE to my youtube channel,
hit the bell after you subscribe if you’d like updates, get on my email list.
I respect your privacy. I’ll just be using it to share updates as to who will
be a guest on my show reach out via text message. I’ll send out a text before each
show and all of those links are below in the description. My name is Mitch Jackson, I enjoy what I’m doing and I enjoy sharing this content
with you. If you guys want to reach out and connect with me do so over at
Streaming.Lawyer or connect with me on social media @MitchJackson. Until
next time thanks for stopping by. You guys enjoy the journey and make each day
your masterpiece!

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