What is the Best Legal Structure for Your Business? Attorney J.J. Childers Explains the Five Business Structures: Business Podcast [Updated for 2020]
![What is the Best Legal Structure for Your Business? Attorney J.J. Childers Explains the Five Business Structures: Business Podcast [Updated for 2020]](https://bcw-wp-content.s3.amazonaws.com/wp-content/uploads/2022/04/12073622/BUSINESS-What-is-the-Best-Legal-Structure-for-Your-Business-Attorney-J.J.-Childers-Explains-the-Five-Business-Structures.jpg)
Summary
What is the best legal structure for your business? This is one of the top questions I get asked from people starting their businesses.
So, I brought in expert attorney J.J Childers to explain each of the types of business entities and what’s the best to use when.
Our conversation covers a Sole Proprietorship, Partnerships, LLC’s, S Corporations, and C corporations
J.J. Childers is a licensed attorney whose primary practice focuses on business asset protection, estate planning, and tax reduction.
A full transcript of the episode is below
Brandon:
Hey, everybody. And welcome to another episode of Build your business with Brandon. We’ve got JJ Childers an attorney who sets up corporations and knows all the structures that you should have. G. And I know each other from speaking at entrepreneur events over the last few years, and I’ve always loved his talks. In fact, even having 20 years experienced myself. I always learn something from JJ. So it’s awesome. Thank you so much for being here today.
Brandon:
Thanks for having me, Brandon. Appreciate it.
JJ:
Yes. So today I’d love for I love to give a little bit of background how you got started doing this and your attorney career and then move into so that we can cover for everybody. Because I know this is a question you get all the time. It’s a question that I get over and over and over again, which is what type of company I should have. So we can cover a C Corp and escort sole proprietorship limited partnerships and LLCs. I think I got them all there.
Brandon:
Yeah, so when we jump in and how do you How did you get started doing this type of work for business owners?
Brandon:
We know it’s kind of interesting brand. And you know, I grew up down in Orlando, Florida, and my dad was and is an active real estate investor and developer. You got to start down there in Orlando, and he was active in the in that use developing automotive strip centers. He was president of his local real estate investment club, and then that kind of got him into actually teaching at real estate seminars throughout the country. And growing up around that, I was just actively involved in the real estate, but also in seminars. And even when I was in college, I was studying business for my undergrad. I got a bachelor of business administration, I thought, you know, probably wanted to get involved in real estate. May be, and I really enjoyed the teaching aspect of it and being involved in not only doing but then teaching people what we were doing. And I thought, you know, this may be what I want to do with my life and coming out of college, I was 22 years old and I thought, Yeah, who’s gonna listen to May 22 years old. I see. Yeah, I was a lawyer. They probably listen to me. Oh, yeah, that was something that I have always kind of thought I’d like to do. Anyway. Then I said, you know, And then if they pull speaking and similar thing didn’t work out, then you know, now you’re just a lawyer. There are worse things. That’s true. I can’t looked in. And I said, You know this What I’m gonna do, man, what would made that especially interesting was that knowing while I was going to law school, what I actually wanted to teach helped me choose my elective courses. Obviously, you’ve got certain courses that you’ve got a 10 because they’re your required courses.
JJ:
And the things that you’re gonna be covering on the bar exam get a lot of the electives I took were things that were more applicable based on what I knew already from working with my add things that he wanted to know about taxes. And, you know, different types of debtor creditor law making sure bankruptcy, which sounds weird that we have a backup. See. But bankruptcy is one of the key areas or asset protection, which is part of what we’re gonna be talking about here today. So I want to make sure that people understand that bankruptcy.
JJ:
When most people think about it, they think of it as a negative. And I look at it, I said, Yeah, but there’s some very powerful strategies that you can learn from bankruptcy. All that can be very beneficial for you with your asset protection, because you’ve got to take a look at what you can protect what’s not protected. So then that helps you in your planning process.
JJ:
So I kind of did that and then went to law school and ended up, you know, taking a state planning courses and things along those lines to make sure that I had the requisite background while I was in law school. I worked for the attorney general’s office because I wanted to understand that I also I did an internship clerking for a federal judge, so I wanted to see that aspect of it. I work for a plane, this law firm for quite a while, because I wanted to see what is it that they’re looking for when they’re going after assets, so I wanted to see What’s the other side looking at? And then I also worked in the state Legislature. I was the reading clerk during law school there, So I saw how laws were made and eso I got a very well rounded experience, not only going lost, but also through my jobs that I had during law school, which kind of got me uniquely qualified and prepared for the careers and asset protection. A journey.
JJ:
You know, I love that I love that you know, all the positions on the of the job. And I think that’s one of the things that makes you unique in that sense that you have that. And I think that’s something that I’ve tried to do myself. And I know how valuable it is, especially having been on the investment side, as in a V C. And then being an entrepreneur, you sort of you learn the what they call him dirty little secrets of both sides.
Brandon:
So you know how it works. Well, that’s awesome.
Brandon:
And with that, I’m gonna let you jump in. I don’t know where you want to start, whether you want to start with a C court, maybe we start with a sole proprietorship because that’s usually what people start with. And I know that there’s, Ah, there’s some issues, let’s say around Seoul verb ridership.
Brandon:
So we start there and then you can just drive how you want to go. You know, I don’t know if we rank him by best solution, Teoh or worse solution to best solution or however you want to do it, J.
Brandon:
J.
Brandon:
Well, you know, the way I always like to start is by taking a look at what do we want to accomplish and part of what I always tell people whenever I’m speaking or visiting with a client, or just even in just some one on one consultations where I always say that we have to understand that the government and other sources are attempting to place what I call a lid on?
JJ:
Well, and that lid is an acronym for the three legal pitfalls of lawsuits, income taxes and death taxes. So that’s that acronym lid. And I say you know what? We’ve gotta Folkestone is taking the lid off. Well, how do we do that? If we’re concerned with lawsuits, income taxes and death taxes, we’ve got to make sure that we focus on three essential areas and those three essential areas or asset protection, a state planning and tax reduction.
JJ:
And if we recognize that right from the very beginning that these are the three things that we’ve really gotta, you know, concentrate on. Then we said, Well, which entities can give us the best overall? benefits and best approach. And here’s something that I want to make sure that that all of our listeners and viewers understand, is it? You can’t hit the nail on the head When you said, You know, the question that most people have is what type of company should I have?
JJ:
And I don’t know the answer to that.
JJ:
No brain. I mean, that’s a good That’s a good answer.
JJ:
I mean, that’s a good answer.
Brandon:
We’ll think that they think you’re just going to give me an answer. And when I say I don’t know, there’s a lot. I think you’re the expert. What are we talking to you? If you don’t even know the answer to that question, I say the reason I can’t tell you the answer that is that I don’t know enough about you in your situation and your unique circumstances to give you that answer first, right?
JJ:
And the reason I point that out is because a lot of times people think that there’s just gonna be just a general rule. One size fits all plans, and that’s what I want to make sure that people understand. That’s not the way that things work. You’ve got to make sure that you understand what type of industry here you what and that will determine what’s out of income you’re generating. And anyone let’s have an income you’re generating that determines what type of entity you may need from a tax standpoint.
JJ:
And we’ll get into some of this today is for us. When I talk about income, we’ve got earned income and unearned Inca on a lot of that is, is it generated from active activities, or is it from passive activities? You’re working with a lot of real estate investors. In particular, you’ve got different types of real estate strategies that you’re ever utilize in order to generate your income.
JJ:
If you’re flipping properties that’s more active in nature because you had to physically be doing the things first going in by the properties. You doing the rehab making, all of you. Those are actions that your take and because of that, that’s active income. If it’s active now, it’s earned income. If its earned income, it’s gonna be subject to the fight attacks. And, you know, I know we’re jumping in kind of pretty quickly, right? Like it? That’s gonna You told me. Hey, this is straight up here. Is it? Yes. Eso without funk attacks. You know, that’s your Medicare and Social Security Sex is well, basically those to add up to 7.65%. Well, the employer pays 7.65%. The employee pays 7.65%. Well, as you know, and your listeners and the viewers know right now, as entrepreneurs, you’re both if you work for yourself. Basically, you’re the employer and the employee. If you’re the employer and the employee, that means you pay both sides. So 7.65 in both capacities, you gotta multiply that times two. Now you’re 15.3%. And that’s just for your fighter. That’s before you. And looked at income taxes.
JJ:
Yeah, that killed There is yeah.
Brandon:
You know, said their structures that you can put in place that can help you avoid that. Not you, just ah, and we’ll talk about those particular structures.
JJ:
But let’s compare and contrast that for second. Let’s say that you are involved in real estate and you have rental income. Rental income is passive income because his passive income is considered unearned.
JJ:
Income as such is not subject to the fight attacks. No, Mel, that takes a different type of structure, and we’ll kind of take a look at those different types of structures. But that’s why where I talk about right there that was a consideration with regard to taxes. So it had nothing to do with liability protection. Yet we’ve got to make sure we have liability protection. And that’s where I always look at from the very beginning. Is that you know one of the things you ah referenced when you were first talking about the different things that we may look at us for his different types of business structure, you made reference to a sole proprietorship. You and I know you were partly setting me up on that.
JJ:
I was a slow pitch.
Brandon:
You’re setting me up because one of the things that that I other, some people is that personally, I think sole proprietorship should be outlawed. I really do. And part of the reason for that is that I think it should be against the law to put your assets at risk like that, because let me tell you what I mean when I say putting your assets at risk like that.
JJ:
Basically, what’s happening is that we recognize that, you know, there are risks involved in starting your own business.
JJ:
I mean, I don’t know the latest percentages, but it’s a pretty high percentage of all businesses fail there in the first year. My sister 1st 5 years. So you look at this. And if that business is gonna fail, you know, you may have your entire life savings at risk when you got a separate that out, because if you don’t have a limited liability type of structure in place, what happens is that now all of your personal assets service. So if there’s a lawsuit or their debts that were incurred on behalf, the business doesn’t pass through the yuan your personal name, and now you could potentially lose all of your personal assets a lot of times people, especially nowadays one of the hot things is to kind of set up a side hustle.
JJ:
Yeah, that’s really hot.
Brandon:
It’s really hot right now. And for good reason, you know, because you start thinking, Hey, you know, I’ve got a saying with regard to business, but also with entities and things I say, Don’t go into it. Grow into it.
JJ:
And one of the things that a side hustle allows you to do is maybe you’ve got a good job. But it’s not where you see yourself for the long ride. Well, rather than just quitting your job, okay, I decided to start this new business. Why don’t you kind of get it going on the side, and then it’s kind. It’s almost like an elevator where you say right here, you’re on this floor with your job and you’re growing your business up. We’ll wait until that business gets to the same floor where you jump off to just start the new business.
JJ:
Yeah, I want to interrupt you right now because I think that’s a really important point to make is that I get these entrepreneurs. You come and I mean God help him. Some of them come to me and said, I quit my job and my first question is Okay, what’s your burn rate? And they’re like, Well, that’s not what advice I want from you I said, It’s not about what you want for me is what you need for me as it relates to that point where, ah, and I just want to emphasize that for entrepreneurs, listening out there beside also is a great and be honest with you.
Brandon:
Every company that I’ve ever started has all come from a quote unquote side hustle.
Brandon:
because I know how long it takes to get that going. But I think it’s important to say and this is sort of a little off topic. But until you got your burn rate covered, please don’t jump ship yet and build that side hustle.
Brandon:
But protected, I think, is where we’re going with you, J. J. So that you’re not being exposed personally along the way when you know it’s interesting that you say that, and I think sometimes you know when we’re making kind of some of these side comments, they’re very important.
Brandon:
Sometimes I think people will hear different I don’t know it by I saw illustrations or things that they think that they’re doing something really good.
JJ:
Such as, you know, burned, burned all the ships.
JJ:
You know, you talk about like the strategy sometimes going in, he said, and was burned our boats so that we can’t retreat.
JJ:
And I’m saying, you know, that sounds good.
JJ:
In theory, you know that you’re getting yourself No, alternate it. But I’m saying that can also be quite dangerous if they haven’t done their homework.
JJ:
And I think that’s an important, like, if you want to burn the ship, I’m okay burning the ship. But at least have a plan that when the ships burned down, you actually know where you’re going to navigate to.
Brandon:
Because that’s and that I think that’s what we’re really saying.
Brandon:
Yeah, and that’s the key because, you know, I’m all in favour at risk, but mostly favor calculated risk and that the other thing is we can minimize the risk by increasing our knowledge.
Brandon:
And that’s portable.
JJ:
We’re doing here by talking about this asset protection that if you say a lot of science, people will say I’m just going to start up with sole proprietorship, I say. Okay, well, you’re starting off at your most vulnerable phase with absolutely zero protection. Why on earth would you do that? And really, you know, whatever. I’m speaking to a group like I kind of say, What’s the most popular entity? And people say, Well, sole proprietorship, I say, You know, why is that? Because really, I’ll kind of take him through a progression where we start off, he said. Asset protection, state playing tax reduction said of all of our different structures. Which one gives us the least amount of asset protection? People say sole proprietorship, I say. OK, which one gives us the least? A state player? Sole proprietorship. Which one gets released? Your tax benefits? Sole proprietorship and I say And guess what? Which was the most popular ridership?
JJ:
We said Now that’s crazy, because why on earth with the most popular choice be the one that gives us the absolute least benefit?
JJ:
And I asked him why that is, and they’ll say, Well, because it’s the cheapest and I said, That’s right, but I have to tweak it a little bit.
JJ:
Say it’s not the cheapest is the cheapest to set up cause it doesn’t cost anything.
JJ:
Set it up, I said.
JJ:
I wonder who made it that way. Who made the laws where it’s very cheap to set up a sole proprietorship. maybe the government and maybe the one that’s gonna benefit from you paying the Max moment taxes.
JJ:
So we think they’ve got get reason for that and the easiest. The government made it very easy, and they made it very cheap for you to pay the maximum of taxes.
JJ:
So no wonder they have it this way. But I personally feel like it should be outlawed. It won’t be because there wants you to be paying the top tax rate. That is just kind of crazy, but it should be really against the little. Put your assets at risk like that, because what happens is that maybe you’re starting on this with that side hustle.
JJ:
And then you get sued and you think, Well, that’s not that big of a deal. No, it’s a big deal because here’s the thing. Let’s say that you’re going along. All of a sudden, somebody sues you for $250,000 Well in today’s society at $250,000 lawsuit is tiny.
JJ:
It’s not going to make the news.
JJ:
It’s not gonna make. The newspaper is not gonna make it is not even going to show up on the radar. But I always ask people, I say, What would happen to you and your assets? If you are sued for $250,000 and they say after they take a pretty big gold, they say, you know, I’d be devastated And that’s exactly what happens because the thing is, what if they don’t have $250,000 of cash?
JJ:
Just satisfy that judgment was they don’t have the cash.
JJ:
Then they’ll seize the assets, they seize the assets, and now you may have to sell $500,000 worth of assets to free up $250,000 in a fire sale.
JJ:
And then now I really cost you $500,000.
JJ:
But I always tell people say, but there’s some good news.
JJ:
You saved yourself a couple $1000. It cost you to set up your end.
JJ:
Good job, Exactly. You showed them right. I mean, that’s kind of crazy, but that’s the way that a lot of people think it is just short sighted and I see yes, it’s gonna cost you through a little bit more money to set up. A corporation was set up a limited partnership to set up a limited liability company. But you know what? It’s well worth it, especially in the event that you get sued.
JJ:
But the thing is, it’ll pay for itself just in the tax savings so the next portable will talk about as well.
JJ:
Yes, so let’s let’s just use an example of a because you e think this side hustle things a great example. And I didn’t even think of it. But and a lot of people are doing that. So I have a side hustle. Clearly, you shouldn’t be a sole proprietorship, and I’ll just throw another log on that fire JJ and say, If you get sued for $250,000 that’s the amount that they’re suing you for.
Brandon:
But you, if you lose, will also pay.
Brandon:
And you can confirm this because I’m not a lawyer.
Brandon:
You are is You will also pay your legal fees and all.
Brandon:
There’s potentially potentially Yeah, I mean, you’re definitely a pale.
Brandon:
Yours? Well, for sure potentially even that way There’s which, which is crazy and adds up.
JJ:
I mean, it just enormous.
Brandon:
So I put that one on fire, but Okay, I got a side hustle.
Brandon:
I’m generating, you know, decent amount of money.
Brandon:
Even if I’m not, I’m going to go into it.
Brandon:
Where do we go?
Brandon:
How do we navigate the it from here?
Brandon:
Okay, the first thing we want to consider is we’ve gotta have limited liability, okay?
JJ:
Because before we’ve made our first dime, we’re probably not all that concerned about taxes. Yeah, but what are we gonna be primarily concerned with? From the very beginning, you’ve got to be concerned with asset protection. That’s limited liability. And whenever I tell people, I say limited liability. What you need to recognize is that when you set up in LLC, for instance, and that will be one of the entity options that we discussed, but a limited liability company. What that really tells you is that your liability is limited. Do the company.
JJ:
Now. That sounds okay. Well, thank you for clarifying the obvious for us, but I’m saying it’s not obvious to a lot of people because a lot of people think, Hey, I don’t have to worry about losing anything. I said, Oh no, you’ll lose everything but everything that’s in that company.
JJ:
So with that thought in mind, this is one of the first points that I’ve got to make sure that we understand.
JJ:
Brandon, is that, you know, people will say, What is the one entity I Nida? And I told you earlier, So I don’t know, right? But on top of that, it’s not just one entity. Chances are you’re gonna need multiple entities because you may have different parts of your business. Now again, you don’t necessarily start with that. Don’t go into it. Grow into it As your business starts taking off Now you may say, OK, we’ve got to acquire maybe some equipment or some other types of assets. Well, that may need to be held in a different legal entity that is then leased to your operating etc. And these were some of the strategies that I work with. People are making sure that they understand this, but from the very beginning my backup just second, see, you’ve got to set yourself up with a limited liability type of entity. For years, that was, you know, either maybe An s corporation or a limited partnership and then in more recent years, and when I say more re years, probably dating myself, uh, you know, basically, as of I think 1999 I think all states have limited liability company acts on their books.
JJ:
Okay, But that’s relatively recently. People listening to this time we’re watching this right now. Maybe say, that’s 20 years ago. That’s a long time.
JJ:
Yeah, but if you look at the case law compared to how long corporations have been around no, it’s, you know, it pales in comparison because, you know, LLC’s are essentially look like the new kid on the block when it comes to to legal entities.
JJ:
So but now that they’re also more clarified, and you you understand how they’re gonna work a lot better.
JJ:
So typically I’ll tell people, you know, if you’re getting started, I would generally tell you you need to start with a limited liability cup.
JJ:
And but here’s what you have to understand limited liability, and these are very versatile. That’s part of why I tell people that that’s what you need and limited liabilities. Air not super limited liability companies are not super clear. As far as how their tax they could be taxing multiple ways.
JJ:
According to the I. R s, there is no limited liability. Company taxation Limited liability company starts off, and it’s either going to be a disregarded entity, which, if it’s a single member, LLCs So it’s just you x typically going to be a disregarded entity. So what that means is that it’s gonna be taxed like a sole proprietorship. That’s OK, because we’re still getting limited liability protection. Got it? Now, if you have multiple people, you’re gonna initially by default, probably be taxes of partnership.
JJ:
Well, partnership, that’s a pass through entity. No, we’ve passed through Means the LoC doesn’t pay taxes. The income After all the deductions, more the expenses were taken, passes through to the owners. And then the owners pay taxes in their personal tax bracket. No on their personal tax returns, but it still ordinary income.
JJ:
Yeah, candy.
Brandon:
You know, it can be because if it’s passed Aziz partnership, if it’s say rental income like we kind of talked about earlier, that could be passive in what about just ah, got a side hustle and I’m selling product That’s generally going to be earned Inca that’s be subject to the fight.
JJ:
So if you’re selling products or services or it is, that’s going to be taxes is earned income.
Brandon:
Well, that’s why sometimes people will say Okay, as an LLC, I’ll elect to be taxes the corporation.
JJ:
Well, initially, you’re gonna be taxes a C corporation, because what you’re gonna have to do is you’re gonna file your taxes is a C corporation.
JJ:
So you’re gonna be filing in 11. 20 and a C corporation has its own separate tax bracket.
JJ:
There are potential challenges with that because then there could be the prospect of double taxation, which is the corporation based access, than if you pull money out to yourself. You’re gonna pay taxes second time, some for you because that incomes being taxed for a second time.
JJ:
So what people will do is that they’ll choose to after they’ve elected corporate taxation, Then they’ll make there s corporation election.
JJ:
Now, when you make that s corporation election, that’s how you’re able to avoid the fight attacks.
JJ:
So that’s that’s part of the benefit of having an s corporation.
JJ:
So I know that’s a lot to kind of take in when we start off right out of gate.
JJ:
I’m saying Okay, Boom.
JJ:
L l c And then out of the LSE, you gotta choose all of these. Make all these determinations. It may just be if it’s just you getting started. Single member LLC disregarded into the taxes. So ridership, you still got the limited liability protection?
JJ:
Yeah, that’s important. Part time. Step one. And I love how you do this because you really make it digestible, and you start to cover the basis that anyone really needs to be covered, which is Get that liability, keep your house protected, keep your car protected your life insurance policy for your significant other both ways, whatever that is and then move into If you start growing your revenue Now, you gotta really be strategic, right?
Brandon:
Because, you know, you’re just feeling the pain sitting here when you’re talking about double taxation and all that stuff even being taxed as a sole proprietorship.
Brandon:
And I I think the s corporation is not understood.
Brandon:
Well, um uh, well enough I know that maybe you could elaborate on that. If you want to go somewhere else, but you know, I’m interested in how as you walked us through there on my Okay, well, now that s corporations. As we’re growing, our revenue starts to become appealing because we don’t pay this like a tax.
Brandon:
But there has to be set up correctly anyway, because you do have to pay yourself, right?
Brandon:
That’s right.
Brandon:
I mean, what we look at those that you’ve got a lot more auctions and flexibility. Um and really, that’s what we’re looking at it, making sure that we have as many options because that’s key to everything. You don’t want to pigeonhole yourself into just being stuck doing it one way.
JJ:
One of the things that I start people. And I think this is vitally important if you notice. You know, you’re asking me these questions to take you through the process, but a lot of times people come in, they say, I don’t you just tell me what I should be and just Well, you can’t do that, you know?
JJ:
And the thing is, there are attorneys to do you know, there were there, cos.
Brandon:
Or their CPS that’ll say, Yeah, here’s what you need to be an escort.
JJ:
It’s not necessarily knowing what is knowing why? Right? And that’s part of where I told you how I first started was that I said I would like to not only do this your practice law, but at the same time educate people.
JJ:
And the way that I do it is that when I’m educating, people say through my seminars and through my various courses that I offer two books that I’ve written. It makes them a better client in the long run, because if they understand what they’re doing, they’re gonna be a lot better at doing. And then if they’re better in doing it, it makes my job easier, which in turn makes their job easier since since kind of we all win when you when people will say Just do it for me, you know, say okay, well, then I do it for him, and then they have no idea what they’re doing or why they did it that way.
JJ:
And it becomes problematic because then they face different things in their business.
JJ:
And then they called me, said, Well, how come I did this?
JJ:
But here, let me explain it now and then, rather than having learned it early on there having to spend my time doing this where maybe another on the clock hourly fee, because exhausting. And four more than if they had just gone the education route to begin with.
JJ:
Yeah, and I think it pays as entrepreneur just to understand some of these things. I mean, ultimately, we’re going to get taxed, right? So we’re going to try to minimize that tax and crept me if I’m wrong. I always shoot for a capital gains long term if I can, or some sort of dividend, because I don’t have these Viking taxes and all this other craziness. So I’d rather be be taxed as a type of investment if you will, than this ordinary income. And that’s how I’ve sort of operated. Is that Is that how people should think about it or is?
Brandon:
But I tell you that there are different ways of looking at it, and I’ve had Teoh basically adapt my way of thinking to understanding what other people may want because a lot of time I’m especially entrepreneurs.
JJ:
Entrepreneurs in many instances say, Hey, it’s all about I don’t make much money as I can. I’m building my wealth in my business.
JJ:
But then there’s another way of looking at things. A lot of people build their wealth more through retirement plans. What they’re doing is they’re saying, let me set up before alone, K or let me set up And I are right, especially if you’re able to do in a rock IRA where it’s able to grow, you know, tax free.
JJ:
No, for a one k, some of the other ones, they’re more of a tax deferred. But then they’re also retirement plans That is completely tax free. And you think, how on earth do they ever let that pass?
JJ:
Because when you look at and you said, that would be, you know, incredibly powerful.
JJ:
But you’ve got to make sure that you’re able to do this. That’s gonna be funded with earned income.
JJ:
So you may want to murder income for things like that. But a lot of you know, a lot of entrepreneurs say I forget the for okay, after just building up my business. Now I sell it for a $1,000,000,000 you know, granted those you know, for the most part, few and far between.
JJ:
But hey, stranger things have happened. Everybody started off you know, all of these big time companies started off just as an idea, right?
JJ:
So that’s that’s one reason why you may want to have some earned income, is being able to do that.
JJ:
And then if you structure your retirement plan the right way, you can utilize what’s called self directed IRAs with self directed IRA. You can if it’s structured the right way, you can even use those funds to invest in real estate, which is appealing to a lot of people.
JJ:
Can you use that?
JJ:
Could you use that not just for real estate, but even a a business entity?
Brandon:
I mean fans, you know, because you’ve got there are a lot of different rules. When we’re talking about retirement plans as far as prohibited transactions, then you’ve got unrelated business taxable income. You’ve got a lot of things that you need to be working with an expert in that area, because I can assure you that’s not an area that you want to just say, Hey, I’ll just know it’s easier. Ask forgiveness in this permission. No, it’s not. E may go into that category in some areas, not when we’re talking about retirement plans Yeah, this is complicated stuff.
JJ:
It really is, and it can’t be.
Brandon:
But but here’s the thing. Some people just shut down because it’s complicated from what I tell me that you don’t have to be the expert on all these things, but you need to work with maybe what we’ll call your mastermind team, as Napoleon Hill would call it in the book thinking Grow rich. Or maybe something will refer to it as your power team put together, maybe a board of directors that’s made up of various professionals.
JJ:
They can give you that guidance because the key is understanding in advance, because that can help you make the right moves.
JJ:
Sometimes people will just move forward. They make they make their moves, they take action. But they haven’t thought about it in advance. And they said, Oh, people fix it after the fact.
JJ:
Now, if you can go into is back what we said of taking calculated risks. No, the only way take a calculated risk is to calculate it way do that from the very beginning. A lot of people skip that step, so we’ve got a structure yourself the right way and a limited liability and we could be a great way to do that.
JJ:
Okay, Well, I feel overwhelmed and confused. Ah, uh, enough. Here, Take us through.
Brandon:
Ah, the other entities or how it really I don’t want to guide this. I want you to guide it cause you know more than me and us. Well, here’s the day.
Brandon:
You know, whenever I’m speaking to a group, I take the playoffs, Start off and I’ll say here the different options. I said, you know, we got a sole proprietorship. We’ve got a general partnership, got a limited partnership, get a limited liability company that we got corporations. Well, sole proprietorship. We already talked about that. You know, this is pretty much the worst one until you hear about a general partnership with general partnership.
JJ:
Basically, what happens that just means that you’re working with somebody else, and that happens all the time.
JJ:
You know, if you’re on your own by default, you are automatically a sole proprietorship.
JJ:
If it’s two of you by default, you’re automatically a general partnership. No challenge we have with a general partnership is that basically you’re not just on the hook for your actions and in the event that you do something that causes somebody to file a lawsuit against you. You also have personal liability for the acts or any lawsuits filed against your partner.
JJ:
Without you. Even this is just Hey, JJ, let’s build a business right. We become a general partnership just like that.
Brandon:
That’s right.
JJ:
So then let’s say that your partner, for whatever reason you know, decides to have maybe a couple beers with their lunch and then they get into a car accident headed back to the office. Your entire net worth could be a risk because of their actions. You didn’t do anything wrong other than partnering within through a general partnership, which you didn’t even formally do anything other than go into business, have an agreement and probably have a checking account in this business name.
JJ:
Is that about right?
Brandon:
One. And here’s where people don’t. Sometimes they’ll unwittingly subject themselves to the general partnership, and I’ll give you a quick for instance.
JJ:
You know, I worked a lot of real estate investors, but this could be for anybody that you say. Sometimes deals work where one person says, Hey, I’ll put up all the money, but you do all the work and go by his first of the other person says, Hey, I’ll do all the work. You put up the money and the person putting up the money thinks Okay, I’ve got it.
JJ:
I’ve got a limited potential for loss. Maybe I’m putting up 10 20 30,000 whatever it may be. And they think, OK, if I lose my 10 20 30,000. Obviously, that’s not what I’m going into this board. But if I do that, it’s not going to destroy me.
JJ:
Uh, but now they’re in a general partnership because their general partnership, because they didn’t draw it up the right way where it was, maybe either owner, that’s much they did it in a way that was just Hey, we’re just both partners and because we’re partners now, that person that does something that causes a potential lawsuit, they’ve now subjected the investor two personal liability.
JJ:
So we’ve got to make sure that general partnerships awful.
JJ:
So really, we’re looking at are the sulfur prior ship in general it basically, if you have not done some sort of legal paperwork, it’s one.
JJ:
Drop your in trouble.
JJ:
What sort of getting your automatically?
Brandon:
One of those, And that’s the thing to say.
Brandon:
You can’t even say you it’s not an active commission is an act of omission because what they’ve done is they’ve not done anything and because they haven’t done anything, that’s what caused in the problems. So what? I’m telling people you’ve got to do things, but you’ve got to do the right. Thanks. So what that now leaves us with is the limited partnership, the limited liability company and the corporation. I’m gonna first take a look at the limited partnership. And this is gonna kind of tie in to the need for multiple entities and with the limited partnership. Here’s how it works. Basically, you’ve got a general partner and you’ve got limited partners with a general partner. Controls everything, calls all the shots, has complete say so in the day to day operations of the business.
JJ:
The general partner controls checkbook.
JJ:
Now the limited partner, on the other hand, has zero control calls. None of the shops has zero. Say some of the day to day operations. The business have zero control over the checkbook.
JJ:
If you were to ask most people, which one would you rather be the general or limited. This you will.
JJ:
Well, don’t say is limited. I have zero control as general Have all the control.
JJ:
Well, jeez, I’m gonna have all the control, so I choose. General said Okay, that makes sense, because control is very important.
JJ:
Well, here’s the challenge. With limited partnership, the limited partners have limited liability protection, meaning the maximum they stand to lose in the event that something goes south. With this overall limited partnership business mashing, they stand to lose the amount of their ownership in that limited partnership.
JJ:
The general partner, on the other hand, has unlimited liability. Socially, they’ve got personal liability so that in the event that the business is sued now we understand if the business is sued, you’re gonna lose your investment in that business.
JJ:
So let’s say that the business was worth $100,000. Somebody sues you for $200,000 they win. The maximum they could get is $100,000.
JJ:
Except when you’re in a limited partnership, The general partner is now personally liable for any of the personally liable their personal level. So what happens is that if that lawsuit was $200,000 there was only $100,000 that’s insufficient to satisfy that judgment. So what happens is now the general partner is personally on the hook for the over bridge for the additional $100,000.
JJ:
So now if you ask somebody who said, Well, which one would you want to be in the general or limited? Well, now they say, Well, obviously I want to be limited, all right, You’re confusing because first you told me you would be the General Tommy LTD.
JJ:
Which one do you want to pay for their reacting?
JJ:
They don’t have a strategy, and that’s the point, right?
Brandon:
That’s right. Now here’s where a good strategy and you mentioned they didn’t have a strategy. Here’s where a strategy comes in.
JJ:
We’ve got to take a look at things we say. Stop thinking like individuals start thinking like entities because what if we structured it where the general partner was an entity?
JJ:
So maybe we utilized an LLC or we utilize the corporation that served as our general part.
JJ:
Now we’ve got limited liability protection for ourselves as limited partners, and then we’ve got limited liability protection that’s afforded to us through the use of that entity, the services, the general partner of a limited partnership.
JJ:
But see that down side of that is that it requires two different entities.
JJ:
A lot of people will say, Well, I don’t want to do that. I don’t have to set up two separate entities And I said, Well, hey, that’s what saved you in that scenario But that is a limitation on a limited partnership.
JJ:
It’s a way to get around the downside. But if you understand that, you say, Hey, that could be pretty good. But you know, people such as yourself that live in California are now saying, Hey, as two entities now I’ve got to pay the state of California to franchise tax fees every year of $800 plus the annual fee. Now you’re saying, OK, well, that cost me an extra 1000 bucks. Let’s say to have that extra entity would be well worth it.
JJ:
Well, this is where a limited liability company comes into play. What happened your years ago? People would set up that structure like I took it out when I was first getting started with limited liability company, uh was a brand new entity.
JJ:
We were structure. People with limited partnership with maybe a C corporation is the general part. That was a great structure. It’s still a great structure today.
JJ:
Now, with limited liability coming, what happened was that now you get all control, but you don’t have the personal liability, you know, it can be managed by a manager. And that could be somebody, that is no, you know, involved with the limited liability can be, maybe is a member. So it’s member manage or you could be manager managed where this an outside manager which now kind of falls back into the category that we had before where we’ve kind of got maybe a new entity, that manager.
JJ:
So we’ve got things that put in place for you get multiple auctions. But again, now that we make that decision to be a limited liability company, now we’ve got to choose how we want to be taxed. We’ve already kind of covered that these were just some of the considerations that take people through.
JJ:
Then finally, we have the corporation now, with corporation generally, and I tell people any time I’m just if I use the term corporation, I’m talking about a C corporation You know, I’m talking about an s corporation cause I’ll use the term s corporation.
JJ:
Okay, So, uh, wouldn’t make sure that when I just say corporations you almost equal C corporation.
JJ:
When we talk about corporation, it is a C Corp and otherwise we talk about S Corp and name it escort.
JJ:
Okay, and that you know for sure.
Brandon:
with a C corporation, it’s a separate stand alone entity. It’s got its own separate tax bracket. If I was his own circle tax return will stay all file their tax returns, but it pays its own taxes. So you look at that and say, Hey, this could actually be pretty good.
JJ:
We used to have a downside where you would start off when we say from 0 to $50,000 your tax it 15% tax bracket which hey, that’s pretty good. Until you bump into the next batch right here, which is almost 25 then you kind of go up higher. Anything love it started getting, you know, somewhat oppressive. Well, now, with the new tax act, those passing under the current tax code now corporations C corporations pay 21% just basically on a leader.
JJ:
There are flat, flat, 1%.
JJ:
That’s right. Now that the so that could be very beneficial. Downside, however, is that you’ve got to take the money out of corporation somehow.
JJ:
Now, that’s where you have the potential for double taxation. If you pay you something, did it end? That’s gonna be taxed too, you know is passive, you know.
JJ:
So it so you’re avoiding the flak attacks. But you’re still gonna pay income tax on this on that dividend. Inca. If you paid a salary to yourself, that’s deductible the corporation. So the corporations and paying tax on it, you’re paying tax on it. So it’s only one level of taxation, but a salary is earning ca now that earned income subject to fight us. So you’ve got that extra 15.3% tax now. That’s not to say a C corporation is bad. It’s just because obviously you think about you know, some of these huge companies in the country they’re set up is a corporation. There’s a reason for that. But for most people, starting off a C corporation is not going to be their primary entity.
JJ:
That being said it very well could be an additional entity that they utilize that maybe they utilize it for something. Such as Maybe they’ve got assets, that they purchased these assets through that corporation and then that corporation leases those assets to their LLC.
JJ:
You know that that’s a strategy that people utilize a lot of times. So have yet the key is just knowing that we’ve got different auctions about and, Ah, and there’s a whole other level of this right, JJ, that the ownership and the stock itself has to be done correctly because, I mean, you got to do the right filings so that you avoid these potential taxes down the road and that you could get hit with cause you could actually wind up with your stock being earned income.
JJ:
Yeah, you can meet.
Brandon:
And then there are other things that, like sometimes people say, Well, just leave the money inside the corporation.
Brandon:
Well, they’ve got ways that they get you on that that’s clubbing accumulated earning stats so that if you just stop pile money inside your corporation, you know, at a certain amount, you’ve got to disclose that how much you’re carrying over.
Brandon:
So the iris keeps up with how much extra money you have, so they know what? Well, what happened to that?
JJ:
You know, there limits on that. How does that work?
Brandon:
Well, if it’s anything over $250,000 that’s where you’ve got to disclose that. Okay, How much cash do you have on hand? You know, if your if your income was over a certain amount money. So that’s where you’re looking at this, that we’ve got to make sure that we we understand that that’s where a lot of times people say I’m just gonna have no do TurboTax or I’m gonna do my own taxes.
JJ:
Say no. No, you can’t, especially when you’re just starting. But I promise you a good tax accountant will pay for themselves many times old.
JJ:
Well, I’m just gonna I’m going toe all the listeners given example. I’m not going to name any names here, but my wife has a friend, and every year, generally, my wife and I have been pretty good with taxes, and we have a really good accountant who knows the laws just like you know, from a legal standpoint, and minimizes our taxes with all the legal things that could be possible of which TurboTax and these other things I just don’t think I never had faith that they knew the intricacies because they think they’re not built to be customized to the White House Here.
Brandon:
They’re customized to be more general.
Brandon:
And and her friend said, Well, how come you guys always either get money back or you don’t know taxes? And then they said, Well, we pay an accountant And she said, Well, that cost you a few $1000.
Brandon:
Yeah, but every year you owe taxes and readable, So I think there’s, Ah, there’s one thing to say to do it yourself.
Brandon:
But to pay a professional who knows Mawr and lives it every single day and our allies huge the whole state of things because, I mean, as it is with any, you know, computer problem.
Brandon:
You start looking at, you know, the whole Geico garbage in garbage out is what do you been in there?
Brandon:
You know, we’ve gotta understand.
Brandon:
I mean, it’s not going to tell you when Elvis and you input something, there’s oh Well, why did you purchase this?
JJ:
Was that for a business? And so if that was a business or just you may be able to do. Not that they’re not going to tell you that. Iressa. Sure not gonna tell you that. So if you have a good tax got they may. So hold on a second. I noticed you had this trip that you took. What? What was that trip you? So I attended a conference. Okay. Was an individual that’s not gonna be deductible for you, but for the business? Absolutely. The expenses of traveling down there attending the conference, You know, everything that you incurred while you were down there that’s gonna be deductible to you. So that gives you some added benefits. But you’re not gonna necessarily know that unless you have somebody that assist you with ease. Thanks. So, like I said, they’re gonna pay for themselves many times over, and we just transition a little bit accounting, but we’ll go back.
JJ:
This is the same thing with setting up your entity. That’s right. I mean that you gotta have someone who’s like yourself. Who knows this and can say Brandon, tell me what your situation is, where you are today and where you’re going and then let you go.
Brandon:
Use your mastermind to figure that out and make a recommendation and then build that, you know, it’s it’s not completely custom, but it is custom.
Brandon:
It’s absolutely when, especially the customized part of it is understanding how that how they work together.
JJ:
And like I said, you may have, especially if you’ve got multiple businesses. You need multiple business entities. And if you’ve got multiple business assets, you’re gonna need multiple business expertise. And on top of that, then you’ve got to understand how are those entities owned? You know? Ultimately, what’s your estate plan? Remember, we started off. We said Lawsuits, income taxes and death taxes. Will we combat those with a certain section, estate planning and tax reduction? We’ve talked about the asset protection of the tax reduction. We haven’t talked about the estate planning yet, so let’s talk about that just second.
JJ:
I haven’t talked about a living trust yet because it’s not a business entity. Now, that being said, it is an absolutely vital part of your overall plan. And the reason for that is number one. You gotta have in a state plan so that you know where your assets are gonna go. Whenever you pass away, You gotta know what’s gonna happen if you got sick. You gotta know what’s gonna happen if you weren’t able. Teoh. Act on your own behalf.
JJ:
Do you have powers of attorney in place for not only your general and financial matters, but also for your health care? Do you have a living will? It’s part of your overall estate plan. Do you have your hip A waiver and release in effect so that the medical professionals can discuss your circumstances with your trusted family members or friends or whoever that might be? You gotta have all this in place. Do you have the circumstances laid out for you know who’s gonna receive certain assets? Do you have a plan in place is gonna help you avoid probate.
JJ:
Well, because what’s gonna happen to your company whenever you pass away? All of that is laid out through the trust agreement and the ancillary documents that make up your overall estate plan. So really, when I speak with group, I begin by talking about the living.
JJ:
Trust is that’s the foundation upon which we build everyth So let’s talk about that.
JJ:
Yeah, because that’s a super important.
Brandon:
When you got ahead, I mean, here’s the challenge, Brandon is that a lot of times people will think, you know, you hear, you hear a state planning and the first word there is a state one People mistakenly believe I don’t have an estate. I mean, when I think the word estate as conjuring up images of grandeur, you know nothing about this young Manchester, this Downton Abbey or something, you say.
JJ:
I’m sure that’s an estate. But at the same time, everyone has an estate.
JJ:
I don’t care if you’re homeless living on the street corner, you still have a nest ache.
JJ:
So we gotta make sure way plan the estate. Because if we don’t have a plan for our stay, the government has won for us.
JJ:
Yeah, that’s really painful, which I’ll just exactly mets and heard some horror stories of how that goes on. And it’s ugly.
Brandon:
Yeah, because now you’ve lost control. You want to make sure that you remain in control, that your, um you’ve worked hard. Your spent your entire lifetime building up whatever it is you have today. You want to make sure that those assets pass to whoever you want those to pass to. I started to say to your family, Sometimes people may say, Yeah, yeah, I want to pass everything about family Sometimes people may say, Well, I want portion of it to get my family. But then another portion, they get a church, Make it a lucky charity may go to Ah, call is that they champion. Those things all have to be laid out because if you don’t have a plan, you’re not going to have any control.
JJ:
Everything’s gonna follow the laws of intestate succession where the government says, OK, here’s how your assets will be distributed on your death and one of the things they’re part of.
JJ:
The reason that I always talk about a living trust is it’s not because it’s going to save you. Hold out of the state taxes. Fact is, nowadays, the estate tax does not impact that many people because the the exemption amounts are high enough that it doesn’t really touch that many people. So estate taxes is not the primary motivating factor here is probate avoidance. We want to avoid the probate process because in many instances, especially if you have a business and you, if you have a bunch of real estate you have much of assets. Probate can be devastating for some people. You’ll hear some people say, Hey, probate, it’s not that big a deal. Well, it may not be that big a deal if you don’t have any assets or you have very simple assets, but you’re dead and gone and you’re not dealing with it.
JJ:
How about that?
JJ:
I had people to say that.
Brandon:
They say, What do I care? I’ll be dead.
JJ:
Yeah, well, you do care Family? Yeah, exactly like they’re the ones. And that And that’s what I’ve seen is the impact. So I was only joking like that. I mean, you should care. That’s not that. That’s not a very good answer. It is an answer, but it’s not good.
Brandon:
What’s you know, The thing is, you are kidding. But that’s how a lot of people look at it. And I say, Hey, you know that short supply we’ve got me thinking. Even as part of your overall estate plan, you’ve got to think about things such as you wanna be buried or do you want to be cremated?
JJ:
Do you wanna have a celebration of life service or a memorial service?
JJ:
Are there certain people that you would like to be involved, maybe as pallbearers. Would you like certain people to be in charge of the eulogies, certain people to speak at your funeral? Those are things that need to be planned out in advance It It’s not something people want to think about, but at the same time you’ve got to think about this and put a plan in place. That’s part of your overall estate plan. So you see how all this ties together, Brandon, you’re blowing my mind would be honest with you.
JJ:
You’re bringing up like Rimi remembering all this stuff and and I’m sitting here thinking what one of the listeners thinking they they think they’re listening to an entrepreneur podcast while you are. That’s the story here, right? JJ there listening to an entrepreneur podcast, and this is our business owner. However you identify yourself and everything that you’ve just said is part of that process.
Brandon:
That’s exactly right.
Brandon:
And that’s kind of what I would say is that this is a process.
Brandon:
I mean, when all is said and done, it’s a process that you’ve got to go through. But it’s also something that needs to be addressed on a regular basis. It’s not just a one and done type of ah format here. This is something you you. So I say don’t go into grow into it. What do you growing into as you’re growing? Is your plan growing alongside you?
JJ:
That’s something that you’ve got to take a look at on a regular basis on.
JJ:
And I think that the lesson that I would pass on to listeners is, you know, I learned some of these before I met you and and even with experience, to be completely open like I made mistakes and gotten out by the skin of my or where they caught the Harrier chin, chin, chin like and basically said, I gotta get my stuff together and you do not want it be in those situations.
Brandon:
And a lot of the things that you brought up today, especially I was thinking of, Ah, another entrepreneur friend of mine who had a whole bunch of patents, and I remember the lesson I learned from him was learning how he structured his company is is that those licenses were hand patents were held in another company.
Brandon:
Then we’re lice into this company. And, you know, I hear what you hear sometimes, asshole. Brandon. Well, I gotta pay. What is it, JJ $800 in California for your LLC or your C Corp or whatever it is, plus your local your local town fee. I know here in Half Moon Bay when I filed ours, you know, there’s a ah, fi there.
Brandon:
clutch.
Brandon:
When something happens to that one entity, you’ve protected those other assets.
Brandon:
That’s right.
Brandon:
I mean, it’s placed insurance if you look at it that way.
JJ:
Exactly. so what else have we not covered? That would be important that we should tell our listeners we didn’t talk too much about An S Corp. Should we talk about that a little bit?
Brandon:
We did, actually, you know, way talked about the fact that because it changes the nature of your income from our donor, Thank God, Like, which is primaries while you do that.
JJ:
And but And just so I understand, that’s not really our listeners shouldn’t take that as as just let me go run and make an escort because it all made it non FICA income. Because the truth is is that even that s Corp has to be set up correctly.
Brandon:
Grand. Well, there’s a process that you have to go through because remember what? When I was talking about Let’s say you do it. If you just rest stray that best Corp what you do, you stop set up a corporation, you’re gonna get your units declassification for my things form 8 88 32 You’re going to do that. Then you’re gonna have to do your S Corp election. So you see, when you look at some of these things, IHS ITT’s pretend ineffable process to somebody that does this on a regular basis, it’s not that big a deal, But it could be quite overwhelming if you just say, OK, let me just do this and then you don’t know why you did this. And then something comes up later and you know your limited as to the never investors that you’re gonna have, you know, depending fund what scale you’re on that that could come into play.
JJ:
So these are just things that you’ve got a factor in it. And long story short, I think the primary thing that I would make sure that people understand I’ll be the first to tell you there are certain things you could do on Europe.
JJ:
You’re a state plan in your overall entity structure is not one of those.
JJ:
Yeah. I mean, if anybody is listening to take that away is and we MME. And I don’t I don’t even have my timer here. But, you know, in the last let’s say our we we’ve talked about I mean, we could sit here all day long and talk about each one of these entities, right?
Brandon:
JJ, I mean, you and I probably had sitting eating dinner after that presentation had long discussions that at some point just say, Hey, JJ, here you go, man. U Here’s what I got. You go make your recommendation and handle it. And, I think that’s the way, Really people should approach it. And I also say that this isn’t a one and done, I mean, because I my business changes.
Brandon:
Right? Let’s say, this year we create we did. We created a technology asset.
Brandon:
Well, that technology asset shouldn’t sit along with all these other assets, so, you know, we’re gonna have to spend that out.
Brandon:
So I think that listeners should understand that it’s not a one and done.
Brandon:
It’s not, you know, I think people think, Oh, I’m just going to go. I’m gonna follow that paperwork in Delaware and And what everybody says, Delaware. Wherever state, which is a whole another discussion, right, cause different states.
Brandon:
There’s an advantage to doing it in different states are, um and then I’m done.
Brandon:
No, you’re not done. You need to really someone to be watching.
Brandon:
You know something? That what people want sometimes a set it and forget it. There you go. That’s not how this works.
JJ:
Yeah, I would be like saying said it. Forget what? Your business just Ah, just gonna set that thing on. Let it let it roll. I wish it was that easy. To be honest with you, it would be nice.
Brandon:
But it has not proved to be that over over my career.
JJ:
I don’t think your career, I think that I think that sign behind you about sums it up, keep calm and carry on.
Brandon:
That’s that’s why I have it. And I say that all the time. Scott. Hey, stuff’s gonna happen. It’s like, just remind yourself, keep going. Carry on the one thing just on that little thing that I have is, Ah, two circles and then the football in the middle On one side, it’s what you can control and what’s important and whatever intersex there, that’s all you should focus on.
JJ:
And then I just throw your keep calm and carry on in there. What good shape? Well, this is. But this has been awesome, JJ, I mean, ran. I think that Ah, I think we’ve given the listeners a good overview of of the different entities and also the intricacies of each one and why you you want to think about it from an evolution standpoint and then all the different angles you actually have to think about it from, cause there’s just so many.
Brandon:
It’s like this big puzzle.
Brandon:
That’s what ISS that you’ve got to put together.
Brandon:
Well, I’d like to end, and I gave you the heads up with my three hpts High percentage tips from JJ Childers attorney, A state planning business entity set up.
Brandon:
What would they be?
Brandon:
JJ from you for our for our listeners, you know, first, I probably say, Don’t put all your eggs in one basket, which that could be applied for a lot of different areas, but don’t put all your eggs in one basket when it comes to your overall entity structure.
JJ:
Some people are looking for the one in T is going to solve all their problems.
Brandon:
Cure all your ills. What I do is what’s called wealth structuring. What that is is structuring this the use of various legal entities working woman, another to give you the most rock solid, iron clad plan available.
JJ:
The next strategy, I would say as well that will isolate and insulate. We say isolated, insulate. What we’re talking about is grouping those eggs, the lack of a better term into multiple baskets and you isolate those eggs for our purposes those assets, those activities into their own different legal entities so that you can insulate them from the liability associate ID with the other legal entities and the other assets and the other activities. So that’s what the isolate and insulate. And then the final thing that I would say is always start with the end in mind and the ultimate end is gonna be our end here on Earth. And that’s where first things first. That’s your living trust. Make sure always focused with the end in mind where you ultimately planning to go as faras with your assets Where those assets going to go, that’s what’s going to drive this whole thing. That if I were to say, What is the first step? First I was put your estate plan together. Everything else can be done after that. But that’s the very first part of all this, which sounds a little contrary to run a business podcast. That would guess what we’re taking care of business.
JJ:
First business are top priorities. Think your family.
Brandon:
I think you’re absolutely right. Those were awesome boat. Thank you so much. I’m probably gonna ask you to come back at some point in the future. Maybe we’ll do a live Q and A with some folks will give the warning that you’re not gonna have the definitive answer. But maybe some case studies will help people even understand this this deeper. Sir, thank you so much for taking the time today, JJ, to be on here. Um really grateful table.
JJ:
Thanks so much for having me.
Brandon:
It was a pleasure. And I look forward to hopefully doing it again. Right on. Thanks, JJ. Thank you.
JJ:
Perfect. All right. Good deal.
Subscribe to the Build a Business with Brandon Podcast on your podcast player below?
