#11: How To Save Time, Money & Hassle With Smart Business Setup Decisions

This is Episode 11, where today we're talking about business setup considerations, things that you might want to consider as you're setting up a business or as you're growing a business, and that could be for any project at all.

Now, I do have a special guest on the call with me, someone who I've worked with for a few years now who can help us navigate this minefield. I really do think it is a minefield, but it's an important one that you need to get right.

That's why it's just so important that you either understand this for yourself or have good advisers you can call on who can give you advice around things that you can do to stay more protected as you move forward, building a business or things that you can do to pay less fees, to pay less taxes, to reduce what can be a crapload of admin and also to reduce pretty painful headaches as well.

I know these things are painful because I've been through them first hand, so believe me when I say that working with the likes of Tommy, who I've got on the call here today, is an absolute no-brainer. You have to have someone in your corner looking out for you.

Now, one thing I will say, just to make clear upfront, is we are talking mainly about building businesses in the United States today. However, if you're listening to this and you're not in the United States, you can still absolutely use this. Me, for example, I'm not in the United States, but I still work with advisers. I still work with Tommy and his team who are in the United States.

Tommy is from a company called Prime Corporate Services, and they have helped thousands of my subscribers, thousands of my customers over the past few years to get set up with business entities to do tax filings and just to get general advice around this topic. He's also done a lot of the heavy lifting for over 50,000 different business entities. Fair to say that they've been around the block a few times. They've helped a lot of people, and they can absolutely help you, too.

Taxes, a business entity set up protection, these are pretty big topics. What I thought we could do today was to try to nail down four different areas and give you some advice around four different areas. That's what we'll do here.

As always, at thegrowthbooth.com, if you head over to Episode 11, you will be able to find show notes and you will be able to find a special link to where you can go to book a free personal consultation with Tommy and his team to talk about your individual situation and how Tommy and his team may be able to help you and if nothing else in you and get some free advice anyway.

You can do that at thegrowthbooth.com/prime.

That link will be with the show notes over on thegrowthbooth.com, Episode number 11.

AIDAN

With all of that said, Tommy, thank you so much for being here with us on the show today. I would like us to dive straight in. I think the first thing that we could talk a little bit about and help people with is talking about the different types of entities that people should potentially consider is that they're looking to get their entity and they're set up right from the get-go. 

TOMMY

Awesome. I love it. Yeah. Thank you so much for having me. I'm excited to be here. I like the way you explained it as a minefield because I think that's a perfect way of putting it. Asset protection, tax benefits, the legal and the financial side of any business is obviously never the most exciting, but oftentimes it can be the most important.

So, starting with the business entities, I think that's a perfect place to start. It creates a little analysis-paralysis oftentimes for people of what is the best entity and when should I set it up. Let's talk through it and let's kind of see where's best to start and what to look for of when to change those entities for sure.

AIDAN

Sounds good.

TOMMY

I think when people are first getting started, we oftentimes are going to recommend setting up a US LLC, a limited liability company. The reason for that is it keeps things simple and easy, not only from an admin standpoint but from a tax filing standpoint.

An LLC is still going to give you protection by separating your personal and your business. It's still going to give you tax benefits to where you can write off business expenses, marketing, different deductions that we'll talk more about, I'm sure. It'll also get you an EIN number, Employer Identification Number, that will allow you to show yourself as a legitimate business.

An LLC is oftentimes a great place to start, and once you start generating income, if you're in the US, there are times when it makes sense to change it to an S Corporation. If you're international, there are times where it makes sense to change it to a C Corporation. Understanding your situation and your business are crucial in setting up the proper business entity.

AIDAN

Just to jump in there for 1 second, Tommy, I know that when I started down this path and even today, some of these things, they all sound like gobbledygook to me. I can't remember what's the difference between S Corp and a C Corp and all these other things.

The advice that I would give anyone if you're feeling the same, is not to freak out about that kind of a thing. That's the whole reason, one of the whole reasons why you would want to work with an advisor in the first place. You've got two options, really. You can either learn this stuff or you can get some support.

Again, I think if you've got specific questions like that, then that's when it makes sense to book a personalized call with the guys here. Anyway, Tommy, sorry to break your flow a little bit there. I just wanted to nip that one in the bud because I know some people listening to this would perhaps start to feel overwhelmed as we're talking about some of the different terminologies here.

TOMMY

No, thank you for that. These are things I talk about all day, so it could feel like a foreign language to some of you. We will give everyone a special offer that's listening to this, I'll let Aidan roll that out.

But everyone's situation is different, so to what Aidan just said, I fully and completely support that and agree. Talk to a professional, make sure you understand, based off of where you're located and what your situation is, that you are setting up the best entity for you as a business owner. I think that's very important.

AIDAN

You mentioned a moment ago that there are some different potential deductions, like if someone is starting a business or has a business running, what are the kind of deductions that they can be enjoying when they set up the right kind of entity and structure here? 

TOMMY

Sure. I know that we're focusing a lot on e-commerce, the online space. For home-based e-commerce, online entrepreneurs, there are actually over 250 different deductible expenses that these investors or these entrepreneurs are able to take advantage of. Now, not everyone is going to qualify for all of them, but just to list a few, some of them are what most people consider bills. Right? Phone bills, Internet bills, power bills. It's got a drag to it when you really say it, but those are ultimately business investments.

Try running an online business without the Internet. It's difficult, right? You can't do it. We want to be able to write off maybe portions of the phone bill or the internet bill. For those of you that have designated home offices writing off portions of your rent or your mortgage, there are a lot of different deductions based on your business model. Coaching, education, software – what platform are you listening to this on and how much are you paying for that a month? Are there ways that we can make that a deductible expense? The list goes on and on.

But if it's ordinary or necessary for your business, oftentimes there are ways to make those deductible against either your personal income or your business income. 

AIDAN

I would assume things like travel and so forth as well. If someone's got a business partner and they've got to go and fly to see them or if someone's going to get education at a conference or something, I assume there are cases where these things might be deductible as well?

TOMMY

Sure. Yeah. As long as you're documenting what it's for. Going on a vacation, going on a holiday with my family to Hawaii where I'm not doing any business, obviously, that's tough to justify. But if it is a conference, if it's an education, if it's a mastermind, if it's something that you're learning how to grow and scale your business and you're documenting that there are business-related expenses involved, then absolutely, there are ways that those can be tax-deductible.

AIDAN

In terms of that documentation, is it enough to simply have a debit card or a credit card and just run all of your expenses through that and then sort of use that as your documentation? 

TOMMY

Yeah. Oftentimes that is what I recommend from a tax-saving standpoint. If I was to give two recommendations to anybody, the first recommendation would be to have a process that helps you keep track of your expenses. I don't care if it's QuickBooks, I don't care if it's an Excel spreadsheet. I don't care if it's one designated debit or credit card like you mentioned, that all your business-related expenses are going on. Do something that keeps you organized and that you are actually going to do because proving that they are business-related is one of the most difficult parts of writing off expenses.

The second thing I would recommend, hire a professional. There are a lot of accountants and CPAs that don't even file their own taxes. A lot of times it's just to get an outside perspective and to have that audit protection. If something were to happen, track your expenses and hire a professional, make sure you're not leaving that money on the table.

AIDAN

From my point of view, I always like to be working on the things that excite me and the things that allow my business to grow. I look at a lot of the filings and the expenses and so forth and all the taxes, they're kind of like necessary administrative tasks. But there's no way in hell that I want to be doing those. If I can pay a relatively small fee to have experts do it, who are going to not make this mistake that I'm probably going to make, then that's time that I've saved that I can be reinvesting into my business elsewhere.

One thing that I found, Tommy, in working with you guys as well is the savings that I get, at least for me, they far outweigh the cost of going with an advisor. In your case, you do offer advisory services and so forth. It's just something that I found every single time is that some tiny little tweaks or decisions that I make in the setup of my business that I wouldn't have done if I was doing it on my own, but I did do it because I was working with an advisor. I mean, those things can be absolutely golden and really add up to huge amounts of money over a period of time. 

TOMMY

Yeah, well said. I mean, there are over 70,000 pages of a US tax code. It's a game, ultimately, and the more that you understand how to play that game, the easier it is to win. That's just the rude reality.

Have someone that helps you understand how to play the game because it could result in hundreds or thousands or tens of thousands of dollars, depending on your income level. 

AIDAN

What if someone is listening to this and they're thinking, "Well, I started my online business a while ago, but I've been a little bit lazy. I haven't done any of the stuff." For those people, assuming again that they kept track of what their expenses are or can find out what their expenses are related to their business, can they sort of go back in time and make a list of them? I guess the point is it's not too late to start doing this today if you've already had your business running for a few months or something.

TOMMY

I see what you're saying. Yeah, that's a phenomenal question. This is one that we oftentimes get asked. People will come to us and they'll say, "Last year, I invested money into education for myself. Last year, I invested a bunch of money into product or marketing." Have an excellent CPA that understands how to go back and help you capture those deductions. 

Depending on your personal income, depending on your business income, there are ways to go back and capture those expenses to make sure that you are not leaving money on the table. You need to have a professional that knows what they're doing to itemize those the proper way.

AIDAN

Yeah. Okay. We spoke a little bit about deductions and hopefully, we've given people a few ideas about the types of things that they can deduct. We've spoken briefly about different types of entities. 

Another thing that I think is really important about just the general overall setup is asset protection and generational wealth. I wonder if we could dive into those topics a little bit here.

TOMMY

Yes, absolutely. I love that. The portion of the generational wealth, I really like the way that you mentioned that, because most times when people are self-employed, there are sacrifices that are being made time from the beginning financial commitments, whatever that looks like. But oftentimes, that's for the greater good, whether it's freedom, time, freedom, financial freedom, children, grandkids. Everyone's got a different driving force, a different why.

You don't want to work hard to not make sure that you're protecting that long term. For those of you that are in the US, protecting your personal assets with trust and wills, those are obviously necessary evils. But from an entity standpoint, when you have an LLC, when you have an S Corp or a C Corp, if you have the proper business entity in place, you're separating your personal and your business.

It is such a litigious society, such a sue-happy world that we're living in. If you're setting yourself up properly from the very beginning, worst-case scenario, if something were to happen, if you were to get sued, separate it from your personal assets like your homes, your bank accounts, vehicles, things that you've worked hard for in the past. 

AIDAN

Sometimes the scary thing is as well, with things like intellectual property, if you sort of accidentally start using words that are trademarked or something, it doesn't matter if you intended to do any damage. It's just like you have done something that you shouldn't have done, and you may not have known that you shouldn't have done it or not, but that's sort of irrelevant. You've done something that you shouldn't have done, and you can get in trouble with that.

I remember many years ago with affiliate websites, I had an affiliate website that was recommending the Carnival cruises, the big ships, and the big cruises. I got a pretty nasty letter one day saying, "Hey, you can't use that domain name because that's trademarked and you must cease and desist immediately or we're going to sue your ass." That was pretty scary to get as I was starting my online journey.

But there was a good lesson in that, and that is you need to get good advice every step of the way. You can do a lot to protect yourself, not just from the threats that you are aware of, but the threats that you are unaware of as well. I think that's one of the reasons why I like to have good counsel in this area is because other people can fill in the blanks. Other people that study this and do this all day, every day, can put my business in a glass jar, look at it from all different angles, and say, "Well, you're a little bit weak over here, or you should have done something else here." 

I think asset protection is absolutely key. It's not the most exciting thing in the world. Everyone wants to make more money or save money, but it's kind of like the insurance, I guess, for the car crash. You don't expect to have a car crash, but if that were to happen, you want to make sure that you've got the right sort of setup in place. I think that's a big one and something that, unfortunately, most people don't really think all that much about. 

Now the fourth thing that I had on my list here, Tommy, was just to talk a little bit about credit, because I think people don't realize that regardless of where you are in the world, you can get some pretty amazing credit on a personal level or on a business level for an online business that you may be creating. Could we touch on those points a little bit, Tommy?

TOMMY

Sure. Yeah, absolutely. The number one reason why businesses fail is oftentimes money. Lack of capital for reinvestment is what that comes down to oftentimes. It takes money to make money. We've all heard it, we all hate it, but there are ways that you can build a separate credit profile with your business to allow yourself the ability to build business lines of credit.

Invest into your business with business credit as you generate income, let the business pay itself back, and then pay yourself from there. Building business credit is something that doesn't happen overnight. It does take a little bit of time regardless of where you are in the world. But in the beginning, if you feel like you can't get started, there are 0% credit offers for personal if it's just you as an individual. If you have decent credit, a lot of times you can get 0% credit for the first twelve months, 18 months, 24 months. The offers are always changing.

If you have to start with personal credit and then eventually work up and build up business credit and corporate funding, the more that you understand what your options are and the quicker that you build it, especially from the very beginning, the easier it is to grow and scale as you find your niche with products, marketing, whatever that may be for your business.

AIDAN

Yeah, I think it's just a huge, huge opportunity, and it's one of those things that until you speak to someone who shares how you on an individual level, on a personal level, can potentially tap into it, you just don't know what's available and what's out there.

Again, if people want to get in contact with Prime Corporate Services, you can go to thegrowthbooth.com/prime and you can set up a free, no-strings-attached consultation where you can get on a call with an expert. You can explain what you're doing or what you've done up until now.

That expert can guide you on some potential next steps, things that you can be doing to save money, to save headaches, or just to make sure that your legal setup is all in good shape and order. That is, again, thegrowthbooth.com/prime. We will include a link to that on the show notes at episode number 11.

Something else I'm going to do is I'm going to work with Tommy here behind the scenes and see if we can put together a slide deck as well that you can actually go and download along with the episode show notes so that you get a bit of a written version of some of the things that we've discussed here today.

Now just before we wrap up Tommy one more time, could you give another overview of just the different types of things that you can help people with? I want to make sure that people here know the kind of things that you can do.

TOMMY

Yes, absolutely. I love it. Any business, right? Whether it's an e-commerce business, a real estate business. If you're investing in the stock market, if you have a business entity in place and would like us to review it and maybe you are unsure that it's set up properly, we're happy to do that for you. If you need a business entity, we can help with business entity structuring. For those of you that are interested in building business credit, corporate funding, that is something that we're able to help with. We have a full team of accountants and CPAs. If you need USA taxes filed, if you need USA tax planning, those are areas that we can assist with. 

Last but not least, going back to that generational wealth, estate planning, trust wills, living wills. Some of these things are going to be applicable to some of you or others. It may not, but I love that Aidan scheduled to have this free consultation for each and every one of you to understand more about your specific situation.

AIDAN

Yeah, I think it's just a complete no-brainer that people are aware of the kind of things they should be doing, the kind of things they can be doing. So, Tommy, thank you so much for taking some time out of your schedule here today to give people the 10,000-foot overview and hopefully give people a few ideas about some ways they can do better with their setup and their structure and so forth. 

Really appreciate it. Love working with you guys. You've got an amazing sort of one-stop-shop, everything under one roof, it seems, and I think that's really, really valuable. Thank you.

Once again, this is Episode 11. Get over to thegrowthbooth.com, find Episode 11, get the show notes, get the official slides that we're going to put together here and you'll see a link to where you can get more help on a private call. See you on the next episode.