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Small Business owners and Legal Questions

Outlaw Lawyer / Josh Whitaker & Joe Hamer
The Truth Network Radio
December 17, 2021 5:00 pm

Small Business owners and Legal Questions

Outlaw Lawyer / Josh Whitaker & Joe Hamer

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December 17, 2021 5:00 pm

The Outlaw Lawyers Josh Whitaker & Joe Hamer tackle questions concerning small business owners. If you're in business for yourself or are thinking about starting one stay tuned. Listener questions fuel this episode of the Outlaw Lawyer. 

If you have a legal question of your own here in NC give Whitaker & Hamer a call 800-659-1186.

Legal, Law, Business, LLC, Attorney, Lawyer

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Rob West and Steve Moore
Rob West and Steve Moore

This week on the outlaw lawyer Joe and I build listener questions around the small business owners now welcome into the outlaw Myers Josh Whitaker and Joe Hamer, your host Whitaker Haber law firm to the manager partners there and practicing attorneys here in the great state of North Carolina 46 combined years of between these two and offices in Raleigh, Garner, Clayton Goldsborough, Fuquay Marina and Gastonia and we talk legalese each and every week. Always a lot of fun. You may find yourself with your own legal question and if you need an answer. We got a number for you 800-659-1186. That's 800-659-1186 leave your name, brief description of what you're going through an attorney with Whitaker and Hamer will be in touch.

You can also email your questions to the program and will use them on an upcoming show, like we doing today that's questions at the outlaw will you do, please visit the website. I guess the outlaw will gentlemen welcome and always a lot of fun to talk with you each and every weekend, and here we go again what's on the show Morgan thing today we get a lot of listener questions and we appreciate his listener questions because they really make they make us think and so what we've done today as we get a whole show already to do is answer listener questions and we got a theme we had enough, one area so today's theme is going to be counted targeted towards a bit.

I said a small business owner in Ortiz, but a business owner to have some LLC questions were to talk about some asset protection with her about some estate planning for the business owner and so so answering these listener questions are, be helpful. I would think to into a small business saved a business owner but before we get there were only about a week away from Christmas when we could maybe 10 days. That said, I may win this show airs will be a week away and ready ready hereby done. I'm actually ahead of the game. This year, which I am absolutely thrilled I'm not going out on Christmas Eve to do any last-minute shopping knock on what I don't think I need to. So I'm good. I'm doing all right, Josh. I'm just because I'm doing just fine. The GE guys. So for me, though. The hard part for me like I love shopping for the kids. My kids are all in fun ages. Lots of cool stuff I can play with to have what I really enjoy that part but I always have a hard time buying presents for my spouse or significant other, your girlfriend or boyfriend or spouse.

That's always the hardest thing for me, especially when you been married for a while. You both have the same bank accounts. You can buy whatever you you want to buy for yourself within reason every day of the week. Ivan is really hard to get a good gift for the significant other out with you guys when I'm done, but it took me a lot of time on the Piazza finish that out. Now listen, let me just go ahead and state. Since we are recording actually this will be the week, consciously or week before Christmas. We have to be really careful we don't give anything away right to it. We don't want to go out over the air.

What we got. But man I tell you the next show that we do. I think it will be a lot of fun, but he likes this will be a lot of fun. I got I got a particular gift that you might get somebody that's practicing to become an MMA fighter.

Okay, and you'll you'll laugh it will tighten is that what we were still always the about just for our significant others have a very strange gift yes we are. It was a request and I'm I'm trying to surprise her, which she likes to throw the gloves man.

I think the last thing I meant to do is train my significant other in hand-to-hand combat just in case I want it getting beat up by my wife is very little my target list this Christmas thought all have all my wife something about my wife, something that she wanted and then stuffed it with something else that she wants to hear good news.

Josh will they will want to take some reveals a Russian nesting doll. The guessing hurricanes game that got canceled because a lot of folks testing positive you see that I did not see that but it's not shocking them in the NFL and the NBA amine. I want to say Brooklyn. One the other night with eight layers eight when I was watching the game closely because they had tenet one point and you know, if you follow sports betting at all that that was very relevant information. The fact that they kept hemorrhaging players they were coming off the back to back.

It went over time. I think they were down 10 going into the fourth quarter and they still came back and they won that game in overtime so a miraculous achievement for them but yet it was really blown up across every sport. If you if you follow sports tickers. It's like it's crazy the amount of, you know people that you're seeing testing positive in teams going to protocols just across literally every sport that there is what we want everybody to be healthy, but this is a crucial time for fantasy league football owners.

We were in the playoffs this week and then urine at quarterfinals semifinals and final. And you know if these teams are decimated what it what are these fantasy leagues can I do how you want your money. That's a bit that's tough. If everybody's dealing with everybody's dinner with a level playing field so that you and the waiver wire comes into play. I'm sure it is probably to be you do some notable absences you can see some guys that you know would never produce anything.

Probably putting up decent numbers so it's good to be a real test of the fantasy football general managers adaptability when you're growing up.

You remember like me on the basketball rig team and you know you have like seven players show up my 3M file out to get the finished like the second half and four players different know I had it I had a great coach.

That legend, a legendary the John wooden of rec basketball as my coaches so we rarely get dealt with that because he was really good at managing flat foul trouble amongst his players.

That was that was always a dangerous team always you know even you know if you're playing the team now has four players. You can't lose right you can't you can't.

Why not with you coaching with you coaching me as a boy, and for our listeners to even follow the edge of Josh Josh Whitaker was my directly basketball coach that I was giving him props on his abilities as a coach very much a roll the ball out there approach to rec basketball but that's it, work it really work, but I want to say we want to. I want that we want to game with four players with you is the coach baby so maybe say that maybe think about two just lay here in the news that's all there's a there's a group of representatives are pushing a four-day workweek bill that would make the work week 32 hours. Anything over that would be would be over time, but that made me think about that. So you know that our losing folks to covert and these teams are playing shorthanded or not playing at all. We might want to four-day workweek anything about that.

I like it I like it for us and our employees. I don't know how to get by with that, but for the two of the two of us I can get behind that solidly denied lean more towards you know may be Friday at lunch man see you later. I like that idea half. Then one day work week I get by with a two week we got some some builders that we work with in our practice that that do exactly that.

They seem like some of the happiest people that I deal with in my day-to-day business. I gotta say it's working for my dentist only works two days a week and I think alike. I don't know that. Are you sure are you sure he actually works to think is Monday through Wednesday and Thursday through Sundays at the beach man. I guess if you can pull that off.

More power to you, but I saw the really push this 32 hour work week and I keep seeing in the news. How you know you know China's catch up with us on technology and everything else is like I don't know that China is pushing for that four-day workweek that would billing their action.

Then maybe we go seven day work week double down. Yeah, we could cut the life expectancy down by like half. By doing that probably, his work ourselves to death. Well, like Mike Morgan said we we are focused on listener questions and we do have this theme. We consult with a lot of it will report one of our practice areas as business loss. We spent a lot of time consulting with. I would say small, medium and large size businesses. So Whitaker name are major. We have clients better.

You know, business owners who deftly are localized and we have some better United States across the country. You have a few clients that are you know international and and so we we see, every aspect every level of business law and you know, we consult with folks and so today I'm in gear. You know all my home all these questions are geared towards someone who you know how I would say a small to medium-sized business owner who may be listening and so it's good to be interesting. We got 12345 so that a good deal of questions all geared to that topic.

The outliers, Josh Whitaker, Joe Hamer, Whitaker and Hamer law firm folks we talk legalese each and every week and working to get into listener questions were looking forward to it. We got a lot of them.

Some of these topics or issues may be close to what you're dealing with, but if you got your own individual questions, give them a call 800-659-1186 at 800-659-1186 and you can email your questions to the show will use them on upcoming additions that's please visit the website you have all work back on the other side 46 combined years experience between these two and offices in Raleigh Garner plate Goldsboro, Fuquay, Korea and Gastonia.

I Morgan Patrick consumer advocate and sometimes referee about we talk the legal topics that a lot of questions come in action today were looking forward to that. If you have your own set of questions you need some answers. Here's a number to remember 800-659-1186.

That's 800-659-1186. You can also email your questions to the program and will use them on future additions always go to the website of the outlaw you kick the tires there guys.

First question I Morgan so the first question I want to start at the beginning so this would be someone who was starting their first bit starting a business. So you starting your first business. You could be starting side business.

You know all kinds of fact patterns of this question could come up. But again, I cannot figure listener questions and contact names and situations and facts out of all mankind to meld them into something that's more of a general question and so I bulled down a couple of questions to just you know I'm starting a business, how what entity should operate under right should I operate my business as a sole proprietorship doing business as you hear that a lot of times, limited liability company and LLC. Here's corporation and there's a partnership there's always different entities. Structures may offer different protections in different advantages and so if I were to sit down with you. You know and and asked you, you have it say a Josh Klima starting a business. Here's the business on the first thing on ask is what what you did what it what you pointed you know I want to figure out how risky your proposed business will be. If you start the same way. Joe I start the exact same way, Josh, and because I mean I think that's that's the place to start for everybody because when you're outside of the strategical aspects of business. The marketing side. The.

The logistic side, things like that. What you're going to do how you're going to make money, you're really coming you're coming to an attorney and and you really discussing your liability. It is the is the primary thing that were looking at were looking at limiting your liability given you that the most protection that that you can have so that you know is something does happen God for bid with your business that your individually Juergen to be protected as much as you possibly can't be. And you know this is it's a good general question, and you know working at were to take it in one small segment but but honestly Josh, I feel like this could probably be it's on own show. You know you could do an entire show about just this topics order to kinda try to boil it down, but to answer your question, I started the exact same place because that's the natural starting point for what were discussing yet you coveting tell me you're starting a business, you know, shipping dynamite and blasting supplies are your you're going to be running. You know, a three-story bar.

You know, with lots of steps and a lot of people drinking it. I try to try to look at what's your risk here you know if you get sued by somebody at as your conducting your business. If something if you're at risk for some way to be hurt and sue you that's that's kind of where we you know we drive and if you things business.

I guess another thing that back is important is if you things business is going to make $4 million next year as opposed $4000 next year you that's that's something else we look as we look at risk, your liability, and in what you think this is going to make to detail how organized power to set this up, but I would say I almost never recommend a sole proprietorship or you hear people say doing business ask is that's basically just you right that's if I may. Maybe if you're just building some furniture in your basement.

It's a side gig in your noggin.

I take it mainstream and people aren't coming to your workshop and it would it would have to be you know so low risk and and even that I'm using as an example, but I was never recommend a sole proprietorship or DBA so I guess Jody ever run into a situation. I guess that makes us you were not CPAs. I should I say me and Joseph were licensed North Carolina attorneys are licensed to practice law in the state of North Carolina either one of us are certified public accountants were not CPAs. We don't give tax advice just as a general rule, a sole proprietorship DBA.

I guess that makes your taxes probably will simpler to file but your wide-open getting sued and there get everything you own right, and all your personal assets. Everything you own your name is subject if you get sued in your operating structure. You make a good point Josh. We, you know, a lot of times when we're discussing business planning and were talking to folks about you know they're there business planning strategy one additional step that were were generally gonna recommend, especially if you get into more complex situations is consulting with the CPA as well because we know we can advise we can advise as to your liability how we can protect you how we can protect your assets, but there's only to be so much and you know so much advising we can do on specific tax related questions that you may have. So a lot of times it wouldn't work in conjunction with the CPA recommend that you discuss this with your CPA to get some additional follow-up because you know that tax piece of the equation is also important that something that you were knocking to be able to help you as much with but yeah so so proprietorship date that the DBA you almost never recommend out almost a week. We never recommend that you know because that the cost-benefit analysis that you do. Cost of setting up a simple, LLC, a simple Corporation that that you own solely it's not great.

You know it's not at a massive undertaking and the level of protection that you can gain by doing that if you do things correctly and if you manage it correctly it it's going to be. It's good, it's good to be an exponential benefit in the event that something goes south, as opposed if you were just doing business as you know, whatever name you're doing business as if you're just a sole proprietor refuges operate as an individual you know that that extra layer of protection for the cost that that it's going to be is always good to be what I would recommend to a client yet. There's this was the reason again over time.

It's gotten cheaper and cheaper to pay an attorney. Some folks might might have the experience kinda live in themselves, but yeah so proprietorship DBA. I think there was that used to be a misconception that I offered some sort of protection in an it offers no protection at all. So you an LLC or corporation, those together. You are two different animals because their an entity that that has a liability shield rights.

If you start your LLC.

The outlaw law, you are LLC you can't sue Josh Whitaker for for something I said maybe I defamed you on the outlaw lawyer you want to see me for something we get Josh Whitaker, you get to see the LLC analyses only to have what it needs to do what it needs and their rights of mock where I live, my personal house with me and that LLC you know I'm on my personal assets are to be somewhere else so that if you sued if you sued the LLC you're not getting to me personally under most circumstances, there are exceptions to that rule and will talk to others in a minute but yeah small business owner if you're doing anything remotely that has any risk of you getting sued your opening up to the general public can interact with the general public put something in the Westlaw school term for that product into the what the stream of commerce. Open yourself up to liability in there.

There's no reason not to go and organize as an LLC or corporation and and and and I completely agree Josh and like you said if that liability shield is the fact that you know you you're not yet own most likely it the traditional individual that hasn't done any kind of advanced estate planning everything you own your known that in your personal name for the most part, outside of you know the things that you conduct your business and being able to to create that separate entity that you never plan on getting sued.

You never plan on something going wrong. Never plan on your hat incurring any kind of liability but but you can't predict the future. You don't know what's gonna happen and in the event that something like that does occur that you do get sued. Being able to shield those assets. Being able to prevent a massive judgment being filed against you personally. It it's going to be just overwhelmingly beneficial to you and give you a whole lot of comfort and and a whole lot of peace of mind that situation anything that we can ask about his will.

Who were the owners going to be right as this can be a single owner is you and your wife can be 50-50 owners do you have a potential business partner who business partners can invest here with you. Get talk about your ownership structure and so in an LLC. That means you might have multiple members).

I want to know a member is an owner of an LLC. You can have winding up to a five unit week we talk about who's in a have a membership interest is going to be an owner and same thing in a corporation and owners of a shareholder, I think more people work on it more or custom talking about a corporate structure that may be an LLC structures little different animal little more flexible but so we thought about who's going to be an owner those owners going to share profits and losses. What owner to make decisions about you know what is going to manage the day-to-day affairs LLC that would be a manager corporation may be a president or vice president. The secretary, so depending on again what you planning to do with this entity. How many owners are going to have his gonna run it where the investments coming from the started up rely things that that will go into this discussion of how do how do I create this entity and and Mike said you're one of those windows will also be tax concerns how we will profits and losses to be shared. Again, we don't we don't get too much and that is just simple simple country lawyers but your CPA. I would also that's a mixed opposite a good CPA is worth their weight in gold.

You can't. You can't do a lot these days, without a good CPA giving some advice.

I really like that man simple country lawyers.

We need to put that on a T-shirt. I feel like, but I could be in the elite. He talked about flexibility Josh and and you know it really both of you know whether you go, the corporate router where the you you form an LLC.

You really do have a good bit of flexibility in and how you operate. But this comes back to you. One thing that we haven't really discussed heavily at this point and that's making sure that you consult with an attorney who has experience with this who's license in the state of North Carolina because there's a lot that goes into drafting it whether it be your operating agreement will whatever it may be that governs the way that that entity runs and you want to make sure especially if you're in a situation with multiple individuals you may be doing business with your best friend and and it's not always gonna work out the way you wanted to especially understand handshake understanding so memorializing the terms of your agreement that dictating how everything's going around making sure that there's no loose ends. There's there's nothing that can be misinterpreted. Put it all on paper is going to just say so much trouble. It's been a perfect those relationships can protect your your business asking to keep things from falling apart, far more so than if you're just operating off of hate is that we got a simple we got to the boilerplate agreement and and were just can it can operate on this understanding between each other because we've seen that go south so many times that that it's it's it's almost like it's an inevitability. If you don't have it stated clearly how things work is good point.

General Quicken or coming up against a break that's another good point when you when you organize an entity, an LLC or corporation. If an LLC can have an operating agreement, or corporation, or having corporation agreements and bylaws, one at one of the usual layout is what happens if you want to leave right weapons. If you want to sell your membership interest.

You want to sell your shares is one of things that we would we would talk about like with an exit strategy semi-wants to leave they have to offer you first to buy it out how to evaluate there's a whole host of questions when somebody wants to delete one of these, especially if everything works out your small business builds over time and it is very valuable. You take the time to do it on the front and you can't you can't do it on the back and edit that point it's too late.

You know you're stuck with, the default provisions, but which I know working as a break coming up next. I want to spend a little bit more time talking about the liability shield. What that actually does and how you protect your assets and add more asset protection. Next, the outlier's Josh Whitaker and Joe Hamer Whitaker Hamer law firm 46 combined years experience between these two offices in Raleigh Garner Clayton Goldsboro Fuquay Marina and Gastonia.

They are the managing partners of the firm practicing attorneys here in North Carolina. If you got your own legal question of your business owner will be super focusing very much on this today and you've got questions outside the questions we hit. You can always call 800-659-1186.

That's 800-659-1186. You also email your questions will use my future show it always go to the website. The outlaw and Gastonia. They are practicing attorneys here in the great state of North Carolina again working hit these legal questions of your business so you don't want to miss the rest of the show, but if you have your own question and you want some answers. Call 800-659-1186.

That's 800-659-1186 and leave your name and contact information briefly what the call is about attorney with Whitaker and Hamer will be in touch. You can also email the show will use him future additions guys I know are going to continue with it looks like asset retention yeah and this will spill over a proper conversation before the break were talking about entity formation why you would take the time and energy and money to organize into an LLC or corporation, and in one of the things was liability shield, someone sues you you're doing what you're supposed to do and you're not committing any fraud, you're not LLC assets right your nonbusiness assets would in theory be protected is that's very important that we call that a liability shield anytime and we we can talk about this a little bit but anytime you put yourself out there you're inviting the general public into an office or retail space or you're creating something that's going to go out into the world be sold, possibly resold to somebody else you. You want that that Sheila considers a couple things you have to do that shield to take effect and so the first one is, you can create an LLC go out and commit a bunch of fraud a right and and expect that LLC to protect you if you if you do something bad.

If you're a bad actor you commit fraud, unfair or deceptive trade practices. There's yet you get get sued for something like that. All that we got this thing that can happen called piercing the corporate veil which basically just means you do certain things that make you a bad guy and you get sued you get called out for those things someone wins a negative judgment. You get a court to get a jury decide with a negative judgment against you for those things in the courts can allow your personal assets to be attached by the judgment meeting your LLC. Did you know good you didn't get it. Using the right way and you know you get sick. That's just us, part of the deal so you can use this LLC can use us liability shield for bad things. I think that's how I would say Joe yeah and and that that's correct Josh and in this is if it gets really a good thing if you unity it's it's something that it's a protection that you want just for the general public as an individual as people who are doing business with with companies just in the general course of our day-to-day lives because this is this the general protection for the public. You know you you want to have you. You want to be protected from fraud. We all do, and while we were sitting here advocating for every body to go out that that operates a business and make sure that your Inc. make sure that you are set up in the proper way to shield yourself from personal liability were not advocating doing that. Just so that you can commit fraud on a wide scale basis and if anybody could create a business and then go in and do whatever they wanted to and then only that business could be sued and a lot of times you know the reason that this this is a thing in general is because when you were talking about shooting assets from liability and people who do this and do it properly. You know their their business isn't isn't going to own a whole lot of things as far as assets go.

In a lot of cases and and that's the whole point right you want to prevent as a business owner you want to prevent someone who's suing you from coming after your house, your personal house your your personal things and that's the whole point.

But you don't want to allow someone who's a bad actor like you said Josh to shield all of their things for him to sit here and defraud people in some manner and then when they get sued. It's just it's essentially a shell that owns nothing, and there's no recourse for the person who's been done wrong. Want to make sure that you can't just use this in the wrong way.

There's other things. There's other things short of fraud or bad acting and so I use a lot of people start LLC let's say lessee got a duplex right you rented out. You got some residential tenants and you put the property right. You put the property into an LLC and properties.

There you can do things like not have insurance right so for the tenants. The house one side burns down the other side burns down people or hurt people are injured and it turns out you don't have appropriate insurance.

You know that something that that a judge of a court may allow someone like that tenant sues you for damages, there's no insurance, there's no assets in the LLC LLC basically has nothing then then that's one thing that properly. Being insured. They may be able to get to your personal assets as when they know it still feels like you have good insurance you get that cheap umbrella policy with your with your homeowners with your landlord policymaker you have plenty of insurance within reason, right, you know, don't. Don't be uninsured is one thing you can co-mingle assets right so you'll hear attorney say that a lot, your LLC needs to have its own account have its own EIN number needs to file its own tax return you need doesn't need to pay your personal bills. And you need a separation between yourself and his business.

You need to treat his business like another person. It's its own person.

That's his own thing on Sony's proper insurance. You don't co-mingle assets, business assets or business assets personal or personal. You know when you make your profit they can go to you personally but you can't don't pay your home electric bill out of your LLC. You know know know co-mingling and so you got. Did you get to treat the entity like it's doing business so that's that's that's those are things that people a lot of times gills slopping on get a little messy on Monday. The big deal if you get sued for something and we have to fight this accusation that you co-mingled it. Having used LLC properly that's a super important point Josh in it, it goes back to what I said earlier, as far as making sure that you've consulted with an attorney that that knows the proper structure that can advise you on these things because it you can do everything right to appoint you can and you can set up the business properly.

You can have all of the correct documentation in place but if you get into the backend to start operating the business and like you said your gear just co-mingling funds. You're not really operating the business as a separate entity.

If you can't defeat the point and you and you could be looking at a situation where all of that that liability protection that you have paid good money for and taken all the steps to achieve is just basically gonna go out the window and you're gonna be right back essentially operating this business as yourself and your end is essentially the same situation as if you were just a sole proprietor and and or an individual.

So Joe I think I think the lesson here is, again, is that my glasses. I remember when I first started you know when I first heard the firm. When I first started any of the businesses I've been involved in, especially early on wasn't swimming in cash and have a lot of money to spend on attorneys fees and and CPAs didn't know any CPAs to get.

I didn't know any attorneys off and as I get it when people first start out and eat them and maybe don't have a lot of money. This seems like something you can maybe put on the back burner globs get started don't have enough money you know couple years on the road all look back and try to get everything set up and people do that all the time I get it, but man sit down, you know, if you cannot dedicate enough your time to start a small business sitting down with the with some professionals, like right out the gate will save, she so many headaches armor the first year we had the Furman Gagne was not the pay some taxes. I was a nine consulted with the CPI had taken my own advice to spend money on the CPA first year.

I know what I was gonna make that remember saving some money. I know what self-employment tax was right Southaven when I thought I know what I'd paid and I work for somebody else. As an attorney is gonna put an income tax aside and things like that and I get to that in the year while whoever whatever she would yell whatever low level tax company act I could afford to pay to to my taxes came back that I would blank because of self-employment tax.

Look what is this what is this craziness that I can. I just had no idea and it is not fun to get blindsided like that, especially in business, and if I just met with the CPA right before get started. It would cost me some money that I didn't want to spend but sure enough, when the been surprised at the end of the year. My self-employment tax bill and I would've done some planning to maybe make that less brutal support yeah and it's a cautionary tale, Josh, and in one to one other point that kinda brings me to do is you talk about the fact that your your start a business, you may not have a ton of money to put in on the front in you don't know how it's going to go.

There's a lot of Lotta speculation involved there, but the reality is if you don't do these things on the front end that you know with every year that passes, it's gonna be, you know, in theory, you're gonna get busier and busier. Even I have way more things on your plate that that are going to be seem far more pressing than going back in and making sure that your business structure is correct and that you've done these things on the front end so doing those things ahead of time going into the process, you know, prepared set up correctly, you know it's good to save you so much trouble because if you don't do it Juergen at you're gonna fall into that trap of just you continuing on the way that you are you'll keep kicking it down the road you got you'll get to it when you get to it and before you know it you could be making substantial amounts of money you could still be organized and correctly you could still have some of these issues that you could take care of on the front end for really not an incredibly large cost and energy to be in so much of a better situation if you go ahead and take care of it on the front and is much as it may seem like it's a headache or it's unnecessary or you don't feel like you got the resources that that require you doing that you know we would always recommend to go ahead and do it now you don't have to come back and revisit it down the road at the age of 1 to 1 of the things I've been very fortunate as I represent a lot of business people, businessmen, businesswomen were very successful in the fields that they may have pursued and in representing them. You see how these these people handle their affairs and so there's no really successful person in business who does it take care the stuff right out the gate right so if you guide someone is opening up a side business of writing out a new property ranging into a new business with someone else will make sure an LLC, a corporation be some structure to it like we talked about earlier and have an agreement that says this is to absorb losses. This is who gets income. First, the pay back this loan.

This is how we separate you can't sell your interest to anybody but these people. They at first right of refusal means all kinds of planning that goes into a successful business as most businesses you start and last forever to get bought out enough ALP organist split in the planning part, we all have a tendency to skip over the planning part, were excited about working to do but ye always pay for the always pay for organ folks minutes.

It's about making sure you have why I like what Joe semi asked these questions I mean if you are a business owner and you don't have your organizational skills going. I mean it could cost you down the road so asked the question spindle extra money upfront to make sure you have your all your ducks in a row and you know that comment about Nila good CPA worth their weight in gold. I mean think about that. If you're getting into.

If your business owner currently or you think about getting into business for yourself, were taking questions. Again, this is about owning a business. And if you're in it you want to listen if you're thinking about getting in to business ownership you want to listen to the rest of this program for sure. Josh Whitaker, Joe Hamer, your house, you can find them at Whitaker and Hamer law firm 46 combined years experience in offices in Raleigh Garner Clayton Goldsboro Fuquay Marina and Gastonia.

They are the managing partners they are practicing attorneys here in North Carolina and again we talk illegal each and every week I Morgan Patrick consumer advocate. Here's a phone number 800-659-1186.

That's 800-659-1186. You can leave your name and contact information briefly what it's about, an attorney with Whitaker and Hamer will be in touch. You can also email the program talking more small business when we come right Clayton, Goldsboro, Fuquay. And Gastonia. They are practicing attorneys here in North Carolina and we talk legal topics each and every week in real estate closings, estate planning and administration, personal injury, criminal traffic, family law, it's all in there today.

We are focusing on well you the business owner and if you got your own questions, you can certainly call 800-659-1186. That's 800-659-1186 and leave a brief detailed message about that your name and contact information and an attorney with Whitaker and Hamer will be in touch and you guys can talk and see if the firm can help you. Also, you can send your questions to the program and we will use those in future program so guys working to continue on for the business owners. Yet Morgan Rinne we work on fashion this whole show to be advice. General advice always general advice to you a small business owner someone is just starting a small business and so we kinda gone through some of the factors that an attorney in a CPA would want to consider advising you on how to structure this new business and we talked about asset protection. We talked about liability shield things you need to do to make sure your LLC is is doing what is posted is protecting you and said I want to spend a little bit of time.

This is another question. The question that God that's what spurred this thought was you know someone rode in and said they have had a membership interest in an LLC meeting.

They were an owner. These folks asked me a question or part owner in a membership interest.

Let's say they had a 33% membership interest so there were other people who also owned part of this LLC one or two. Three. Who knows how many owners, but our folks had to say they had a one third interest at a 33 1/3% one know what happens when they when they die right there.

What happens to my membership interest when they got an incident was question that made me start thinking about you just estate planning for the small business owners lot of folks you know if you if you if you live a good life in your senior project engineer for a big corporation and ended up buying a rental property and things like that you come to me, say, Josh, Joe, was to my estate plan. Were not talking about membership interest were not talking about's docs in a closely held corporations, different conversation with your small business owner and answer the first thing I tell people the first answer that question is your LLC that you own a membership interest in what is your operating agreement say. Let me see your operating agreement and hopefully there is one right John rest of that's the big thing rings a lot LLC's and never formally set down and did this planning and that's exactly the scenario that that we contemplated earlier.

You know the situation where you take the approach of how really need this right now I don't know how this is going to go.

I don't want to spend the time or the energy doing this on the front and because this might not work out and there's folks you do that you know their businesses really start blowing up. They get completely caught up in the day-to-day and they never go back and revisit that and like you said Josh you you get into the situation where people don't even had they don't even have the simplest of agreements that dictate how these things need to work so I cannot emphasize enough how important it is come, talk to an attorney give us a call.

Give someone a call. Make sure that you have these things taken care of on the front end because it it's going to be essential on the backend yes and your operating agreement. You might you might have's if you sign not if there was an operating agreement and you signed it, it could do all kinds of things right so it might have death.

Your death is as an opportunity where your other members of the surviving members might be able to buy you out by your estate upsets your membership interest to something you own and so it's good to go to the next generation. So if you have a will name if you don't have a will vote the laws of the state or to our get that membership interest to your to your heirs or that the surviving spouse.

Some kids and grandkids.

If you know it's it's good to go to your heirs and your heirs are going to be owners of of this this LLC) and step into your shoes when she passed away some operating agreements have provisions where when you die that triggers some, right of first refusal or something option where the. The other owners can can come in and for agreed-upon price or maybe they have to get it appraised, but there's me some valuation process and I can step in and if they so choose. No, don't buy that membership interest are you might've had life insurance in place. I know a lot of small businesses with law firm. For example, we have a buyout agreement and its funded with life insurance policies at some planning you do ahead of time so some happens to me, joking people on moving along in the lease on life insurance that goes to my heirs to compensate them for my interest in so you you plan right so you you maybe don't do maybe don't go that far in the very beginning right but you you have a plan in your business become successful.

Yes, some other owners yet to think about these things at wackos when I'm gone. We see some people put their membership interest into trust. We talked about trust before on the show as an estate planning tools and asset protection tool, but your trust, make it longer than you right, Josh Whitaker will be here 50 years but the Josh Whitaker family trust could be here 50 years and sets up as a tool you can use as well. But I'm telling you the death of an owner, especially thoroughly, co-owners you not something you want to be ready for because I mean, that happens I think we've seen it during the pandemic.

We lost a lot of folks may bill earlier than we would normally be used. To and it's disrupted businesses, LLC yet happens it happens literally 100% of the time that everyone is going to die at some point, so it is that it is an absolute certainty that you know and hopefully we all are here for a very long time, but at some point it's going to happen and so you know I talked about that. The front end of the process, making sure you consult with an attorney get everything done that you can on the front and betrays a really good point Josh revisiting that as well. Your situation may change things are going to change your estate planning at your personal estate planning.

It's going to affect your your interest in this business and all of these things, you know all of these things that fluctuate and change their gonna require you revisiting them from time to time.

So in addition to making sure you get that front end buttoned up. You know it's always important also to revisit your situation and look at things new look at things from a fresh perspective every now and again to make sure that no new scenarios have come up that you're going to get bitten by on the backend.

Like he said Josh your ownership interest in this company and this entity.

It's it's going to survive you, it's yours and it's can a transfer so that the real nightmare scenario that you can get into.

You may have someone that you do business with that you get along with a wonderfully and you guys work fantastically well together that person. Unfortunately, unexpectedly passes away. You have nothing in place that dictates what can happen to that interest. There's no buy sell agreement. There's no right of first refusal. There's nothing that dictates how that procedure needs to play out and you could be dealing with a scenario where that person's spouse or that person's air that you really don't see eye to eye with Internet take that that interest there you have the same authority that individual may have had, and you could be looking at just the terrible, terrible nightmare scenario it wheat we definitely see it more then then we like and then me and Joe are attorneys. It doesn't cost that we do want to pay attorney fees to our to ourselves enough and want to sit down and kinda look at our planet is still hard to do once a year or once every two years you know it's in your your value your asset values change might have a new business that spins off a new LLC that that your CPA may know about. Maybe your lawyer doesn't know about, or vice versa.

As a once you once you get to that point where your your LLC successful your corporation successful your business is successful and you really do have to make yourself sit down every man every year is probably good advice but I mean every two years.

Really, what you can, what, what, when you can see a lot of people pass away there was a unexpectedly but most people pass most people pass away unexpectedly and and if it's not if it's not all lined up. It is just it's just a problem for your for your heirs right. I mean and you don't want to do that to him on purpose but yet even estate planning is is very important always overlook everybody's busy know what he wants to think about it, myself included, Joseph included Morgan included but you got us down. You gotta do it.

Especially when you're self-employed, especially when you run your own on business because you don't want to leave chaos behind for every one of you be gone are you you won't care anymore right when I'm gone Joe. I hope you don't struggle but if you do, don't be around to fill that guilt you know but which can want to try to clean up everything in the more you're doing, the more you're involved in the rental property you have, the more businesses you're in the bigger master can easily be left behind that that's that's right, Josh, and you said it, it's you don't want to leave a mess for your ears, but she also don't want to leave a message for your for your business partners as well so you can you can protect against that on the front end and and I think you made a good point.

You know, sit down annually to review your situation is, is a great practice and that's not to say you need to sit down and you know consult with an attorney every single year but you need to do a personal inventory of what you got going on.

You need to understand your own situation. You need to be cognizant enough to say yeah maybe it is time that I sit down to revisit what I've got going on with with an attorney may be get with it with someone who is familiar with financial planning. Maybe I consult with some professionals to to make sure that everything's on the up and up and I'm not going to be creating unforeseen problems for myself or my heirs or my business partners. If I were to unexpectedly pass away, will gentleman that it brings up a lot of great topics soon and certainly business owners out there. Have a lot of things to you know to be proud of. The other successful.

But you also have to have your eyes dotted your tease cross when it comes to your business. We got a short segment coming up on the other side will kinda wrap this discussion up, but your listing to the lawyers were Josh Whitaker and Joe Hamer, your host Whitaker Hamer law firms where you can find them during the week there. The managing partners there practicing attorneys here in North Carolina 46 combined years experience in offices in Raleigh Garner Clayton Goldsboro for quavering and Gastonia. If you got your own set of questions you need some answers when it comes to the legal what here's number 800-659-1186. That's 800-659-1186 just with elites and contact information briefly what the call is about an attorney with Whitaker and Haber will be in touch and you can also email the program and will use them on future shows and check out the website de la back after this final segment of the outlaw fundament Whitaker and Hamer law. Further, the managing partners there practicing attorneys here in the great state of North Carolina 46 combined years experience in offices while you turn your head. You're probably gonna see one Raleigh Garner Clayton Goldsboro for quavering and Gastonia. I Morgan Patrick consumer advocate and referee between these two but always a lot of fun and were talking about some serious stuff, and that is you know talking about business owners and if you're out there and things to just be aware of when it comes to the legal side of things. The guys I know you got some final closing thoughts that we had a few smaller questions that didn't. That means your pride will have to pontificate on is as much but a couple small questions. I did get a lot and so one of the listener questions I had was Karen my small business out of my house waiting lounges, you know the answer is, generally speaking, it's going to be yes. You know will again with some exceptions because we we always seem to have exceptions to the rule and and there are a lot of things that you need to think about just from a strategic perspective. If you're if you look at that situation, you know, one of the things that we we see a lot of times, and we've actually as people who do a lot of real estate closings. I've actually seen this scenario actually kill some closings dead for people, but you got a look at the covenants.

If you live in a neighborhood if you got restrictive covenants that that govern your property.

Those covenants may state that you can't run a business at your house. You can't run a certain type of business at your house and that may be a prohibiting factor to to that cannot run this business out of my house question.

That's a relevant factor that you need to consider. Yeah, I see that a lot Joe. The covenants, the one I see happening on Thomas my buys a house and a partner tractor-trailer on the street early roller three dump trucks up there and United covenants. What you have commercial vehicles are what you partly may you have a commercial vehicle but you can't park on the street nesting place you can put your name tractor-trailer and and so we we see that kind of thing a lot and of course inviting the public in your house. Some covenants are very specific about you know your professional and you're just having the client meet you there may be get away with that. You can't just in general be inviting the general public into Boz Stauffer new stuff.

So you where you live, you know, if you're in a subdivision is very strict covenants. It may not be doing much for the general public. You know Addie or Addie or Allison might just be the way it is. Yeah, and in addition to looking at your covenants. It's also very important to to look at that the rules and regulations of your your local municipality. So whether it be the county of the city of the town that depending on what the zoning regulations are depending on what they are there rules are, they could actually have things that prohibit you from running the type of business that you are running and and that's also a relevant factor that that's something you need to consider if you're considering operating your business out of your home and everything is thing about your again your liability right. We talked about an LLC and things like that.

But if you're inviting the general public into your home. If there if they're coming in for a business purpose and they get injured your insurance as it stands now, your homeowners insurance may not offer much coverage and if that's the case that you need to look at there's a writer something else you need to have in place to protect you from again. The general public. Being invited onto your premises for business purposes, and manners.

Umbrella policies. I never turn out an umbrella policy on mug sucker. If any of our insurance folks offers me an umbrella policy in relation anything on my way.

I'll get that y'all get that you can't have enough coverage for the other thing I would. I would say is that you most. Most professions require some sort of license from a government body right Savior do not you know be a real estate agent. Any license you know if you can if you're in a course can be a lawyer or doctor. You need a license but it you might need all kinds of things you might you might even think about know we open an office camera which office was only opened it.

We needed we need a license just to have an office space open in the in the city you and I like to stay like accounting but it was like a city specific and we did have that anywhere. We were at before, but you always need to check in as you might you might be doing something without a license that can always OpenGL tools. It does, and it can open you up to just you know penalties from unit of them that the state or the county or the city, and it does open up a can of worms that that you don't often times consider, but it's all a part of it going into that doing that due diligence on the front and and if you do consult with an attorney that should be something that they can help you with as well that there can be more aware. Often they can, make sure that she again you you cross the teacher.the eyes, and you don't accidentally incur liability for yourself unknowingly, which unfortunately we see it we see it happen too often. While gentlemen another great show, and I look forward to what's coming up next. Certainly we we do have our holidays upon us. You guys stay safe and enjoy the family and that we will talk next week to Morgan. This is the outlier Josh Whitaker and SchellHamer make sure if you have any legal questions you can call 800-659-1186 or you can email a question to the show were back next week right here on the vine attorney licensed to practice law in North Carolina just appearing on the show. Maybe license North Carolina attorneys discussion of the show is meant to be general in nature and in no way should be interpreted as legal advice, legal advice can only be rendered once an attorney licensed in the state in which you live. Have the opportunity to discuss the backs of your case with you.

The attorneys appearing on the show are speaking in generalities about the law, North Carolina, and how these laws affect average Carolinian. If you have any questions about the content of the show, contact us directly

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