← Mondays with Matt
Mondays with Matt
#9: 3 Steps to Launch Your Business TODAY
00:42:09
Be a person of action and officially start your business today with these easy steps: File articles of organization Obtain an EIN Open a business bank account
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- [00:02]
A
You're listening to the Build you'd business podcast, powered by Turnkey Coach, where we help business owners find freedom over fear. I'm Matt Reynolds and I'm his brother Chris Reynolds.
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Join us as we help build your business and move from fear to freedom together. You're listening to the Build you'd business podcast. I am your co host, Matt Reynolds, here with my brother Chris Reynolds. We have 40 years of business experience. Between the two of us, we are helping you walk from fear to freedom, getting rid of that anxiety for starting a business, running a business. All those challenges we've come up with over the last four decades of business ownership, really two decades of business ownership between the two of us and want to dive in today. We've talked a lot about bootstrapping, getting lean, profit first, zero based budgeting, founder risk over the last several weeks. And now I recognize that there are a lot of people that are listening to this who haven't actually officially started a business. It's gonna be a very practical episode. I don't think it'll take a long time, but I wanna start with this. In order to be successful in business, we must be people of action. When we pursue knowledge and we learn a thing, there is often a bridge between turning that knowledge into wisdom. You should have that bridge and that wisdom should turn into actionable items. And one of the great downfalls, I think, of modern day entrepreneurs or wannabe entrepreneurs is that they spend all their time reading the books and watching the YouTube videos and watching Hormozi and all that sort of stuff. All that is great. I do all those things too. But if you never put it into action, then you never accomplish anything. And now you're just a person walking around with all this knowledge in your head. But you never actually did the thing. And so this is very much a call to action to do the thing in the podcast this week of actually starting a business. This is something that can be done in about an hour to an hour and a half of work, maybe less, maybe a little bit more, but not very much. And again, when you don't know what to do, it's a very scary process. Once you've done it once, then it's not scary. Now there are, there are companies out there that will walk you through this and do it for you. I think that is valuable. You've used Stripe Atlas for this thing. I think that this is such a simple process that it's something you should do on your own because it also puts the responsibility and the onus in your hands and also lets you know that it's not that hard. Almost all business owners will eventually open additional businesses or they'll have other businesses that run under, like holding company businesses. And all those will require starting new businesses. I want people to understand how easy it is to actually do this. So first off, welcome to the show. You've started lots of businesses, as have I. I've helped a lot of other people. I've sat down and done this. I've done this many times. I did this a few months ago with a good buddy, Nate, who is one of our video post production guys, a contractor for us, and he's a huge YNAB fan. He budgets his money well. He's got more excess cash than he's ever had, but he never officially started a business. And I'm like, look, there's all these advantages to starting a business because of things like being able to take tax write offs for business expenses and things like that. And so being able to get all the business stuff in one account and in one articles of organization or llc so that you can separate your business and personal is a tremendous tax advantage for everyone. Not only that, it gives you a lot of protection as an llc, so that if the LLC owns the business, owns the property, owns the thing, and something happens and someone sues, they have to sue the owner of the business, which is the llc, not you, which means they can't take your house and they can't take your car, they can't garnish your wages or take money out of your bank account. And so it's very important to actually start a business. And happy New Year, everyone. Early January is the best time to do this. You don't want to do this in the last couple weeks of December because then there's going to be paperwork you have to file for taxes and you would show like no income. That's easy paperwork to do. But in January it's great because you have an entire year to kind of build the business and then file the the taxes and the paperwork and the stuff that you have to do. It will cover probably end of year stuff next year. At the end of year, we may talk about taxes in April. Most business owners don't file till October, just FYI, you file an extension, we'll talk through all of that. But there are essentially three primary steps to officially start a bit to legally, officially start a business. The first step is to file an articles of organization, typically an llc, in your state. And it's going to be different for every state the cost is going to be different per state, but it's not very expensive. I'm going to dive into details of each one of these. Number two is to get an employer identification number, or what we call an EIN number. The simplest way to think about this is an EIN number is like a Social Security number for a business. So you don't have to use your personal Social Security number. You get to use the EIN number, which is again, just like a Social Security number, but it's for the business itself. And the third big step is to open a business bank account. We've already talked about the value of that in Bootstrapping and some of the previous episodes of why it's important to have a business bank account. That all the business money goes in, that all the business expenses come out of, that you pay yourself out of the business expense, out of the profit category, expense category, or the owner category. All of those things need to be done. And so that's the three steps. Articles of organization. And now you're a business in your state, Employer identification Number, which is a federal thing through the IRS to give you an actual number. So then the IRS sees you as a real business and then you just want to open a business bank account and you're off and running. And so I'm going to dive right in. So I realized, again, welcome to the show. Glad you're here.
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A
I'll give a little feedback as we go. I'll say, yeah, please do.
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So most of you will be a sole proprietor. You might file as a partnership. If you've got a partner in the state, that will show you as a separate business. If you are a llc. Sole proprietorship. The federal government sees your sole proprietorship as just a combination of your. It's going to combine your business finances and your personal finances in your. You just file a tax return as a. You'll file your single personal tax return. You'll have, I think it's called a K1. Is that right for your business? And that's fine for the federal government and for taxes. And again, we'll do a future episode, maybe even have Kevin, our accountant on to talk about the value of an accountant, especially at tax time. But for your personal day to day bookkeeping usage, it's very important to separate personal and business. And so the first thing we do is we want to become an official business in our state. So you want to do this online, not on paper. It can be done on paper, it just takes way longer. The government moves slow. Right. The easiest way to do this is to just do a Google search for Articles of Organization and your state Articles of Organization and Missouri Articles of Organization in Massachusetts, California, whatever. Make sure that the website it sends you to is the Secretary of State official government website. Which means it will end, for example in Missouri with sos.mo.gov. it needs to be a.gov site. There are lots of sites out there, they're trying to take your money and they're like, we'll do this for you. And again, I'm not saying that that's always wrong. I would just rather everyone that's a business owner have a better understanding, kind of a Newtonian understanding of exactly what they need to do, rather than fill out a single piece of paper. And like, I'm not really sure what I did there. What's nice about this is when you do the Articles of Organization right then in real time, you will receive a certificate, a PDF document that's usually emailed back to you that you can download and you should and print and probably frame or at least put in a three ring binder. And a page protector is like I now own a business. That's page one of the business, right?
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That's right.
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So you, you search for that if needed. You often have to register as an agent with your state. This is free registering as an agent. So it's someone that's, it says like I can speak on behalf of the business, I'm the owner of the business, which is never a problem. You put in your, your basic personal information, your name, address, phone number, et cetera. And you are an agent with the state. And then once you're an agent with the state, not every state has to do that. But filing with as an agent with the state takes about 60 seconds. And then you do a quick business name search for conflicting names in your state. So we're Barbell Logic. I would search for Barbell Logic under the state of Missouri. I also often go to the US Trademark office and search for Barbell Logic or whatever the business is going to be. Now if there's a business that has the same name or a very similar name but is in a totally different industry, then you're still okay to use that name. Typically you do want to pick a name in general and we've got a podcast coming up on like what's in a name? And picking a good name, things like that. One thing you want to do is make sure you pick a name that's solid. I would highly recommend against using your personal name like Eric's Power Washing I would not use because it feels like it's a one man show. And it may be a one man show, but my lawn mowing team is called Oasis Lawn Care or something like that. I don't know if two guys work there or 30 guys work there because it doesn't say Phil and Pete's Lawn Mowing, right? Well, Phil and Pete's Lawn Mowing, that's a two man show and it feels like a little janky, right? So you want to come up with a name that's not associated specifically with your name. And in the future, should you want to build value in your business and sell the business, if your name is attached to the business, that's a problem, right? So come up with a name. You can always change your name via doing business, a DBA to something else. So don't overstress this. But you'll basically go in, you'll fill out the name of the business. You want to do the quick business search in the state for conflicting names and the trademark office for conflicting names. And then you're just going to file on the Secretary of State website. It's either going to be called Register a Business or Articles of Organization for Limited liability company. There's very basic information you need to fill out. You won't have an EIN number yet. It's basically just your name, the name of the business. There's usually a little spot for the purpose of the business. We're an online strength coaching company or computer development company, engineering team, whatever. And then you'll pay the fee. And the fee is usually somewhere between $25 or $50 for the Midwestern states. And I think California might be $400. It's a one time fee. Most places are somewhere in the 100 to $200 range. That's the only thing that will cost you money here is to file an articles of Organization with your state. At that point, step one is complete and you are an official business with the state that you live in.
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Which is going to feel amazing. Like the second that you do this, you're going to be like, whoa, that's all I had to do.
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I'm a business owner, right?
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It's amazing. A couple little things I'll insert here just because a few of you are going to fall into a little bit of a trap, which is what should I call my business? And also do I need to think about a domain name and all that kind of stuff. There's a couple of tricks here. First of all, don't get lost in the domain Name problem. All right. Hard to find a good dot com these days. It doesn't cost a ton of money, so don't worry about that at all. Change it later. You can buy another one once your business has enough money to do it.
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You can also do like we did, turnkey dot coach.
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Yeah.
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If you're a church, you know, we were quorum day o sgf dot church. So it doesn't have to be a dot com at this point. It could be a dot, whatever.
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Yep.
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Do the best you can. Yeah.
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If you do have a little bit of starting capital and you're not just starting from scratch. There are some websites that are selling brands, like whole brands that include the dot com, that include the initial logo and all that stuff as well. One that's I think probably one of the most well known is called brandpaw. B R A N D P. A nice Brandpaw.
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That's a great. That's a great name.
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That's a great name.
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Brandpaw.
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And if you go to brandpaw.com, you can actually go look at these different names that are out there. So feel free to peruse that. And it's sometimes not a bad idea just to get name ideas by looking at some of these things as well.
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So the other one that is free or dirt cheap if you've got an AI chatgpt. We did this for the build your business podcast is we had some optional names that we had come up with. We had a basic write up of what the podcast was going to be about and we said give us 10 options for the name of that podcast. Now, I didn't use any of the 10, but what I did was I combined, you know, like number three and number seven. I like the build your business here and the moving from fear to freedom here as the subtitle and put it together. And then I put that in and said, I'm leaning towards this. Give me five more options that communicate the same thing and you'll often. This is another great thing about AI is that you can come up with a great name now, even if you want to use like. My first business that I filed online was Reynolds Strong LLC in Missouri. That's still an active business that we don't do hardly anything with. And so my name is attached. But quickly I changed the dba. So the doing business as you can add, it's a really quick file. I think it's $7 to add a DBA. You can do it all online and then they'll approve it. Usually Within a couple days. And then you'll get a. Usually then you'll get a certificate in the mail. At least what you do in Missouri. A few days later, it's pretty fast and you've got your official DBA and you can, it'll show on the Secretary of State website. So number one, Secretary of state website for your business. Search for articles of organization or register a business. Register your business fill out. It's a very short amount of paperwork. It literally takes probably two minutes maybe to fill it out. Pay whatever fee you need to pay and you're good to go. Right? So that's number one. And then remember, paying that fee is actually a business expense. You don't have a business bank account yet. That's okay because you're going to get that next. You can then take money from the business bank account, pay yourself back and put a memo line to say like, hey, this is the filing of the ARCOS organization. So that's step one. Step two. This is very easy. Get an employer identification number. You're going to need an EIN number for things like point of sale if you use Stripe. Of course, turnkey coach coaches utilize our Stripe Connect account because we have a 10 year great relationship with Stripe. We've run tens of millions of dollars through there. A lot of the guardrails they put on a brand new business to try to get point of sale and be able to process credit cards, make sure that you're not trying to steal identities or run up credit card bills that you shouldn't have access to. When you use our Stripe Connect account, you can set this up. But any point of sale company that you use like a Stripe or a Square or even like an Etsy or things like that, they're going to ask for an EIN number or they're going to ask for your Social Security number. It usually says EIN or Social Security. And I would very much advise having an EIN number to not have to use your personal Social Security number. Again, we want to separate personal and business as much as possible. To do this is extremely easy. All you do is Google the government website for apply for ein. And again make sure it's a either I think it's a.irs or an irs.gov website. Make sure it's not a private website, but it's on the IRS website. IRS, I think it's IRS.gov on that website and you'll just click Apply online. Now for EIN. You can search EIN, answer the questions, it's easy. It's 100% free to get an EIN and it's instant and so it's super fast. Now here's the thing. They're gonna ask some questions that you're not gonna fully know the answer to. Some questions about the details of the business. Nobody cares. Just do the best you can to be honest about what the business is going to be or what you think it's going to be. Again, we've talked about you're going to pivot at some point. Some in the business, it doesn't matter, just fill it out the best you can. They'll have like, what type of business are you in? Agriculture or service or it. Technology, fitness, health and fitness. Things like that. Try to pick the category that best matches what you do and then give a little detail about what you plan to do and hit enter, you're complete. It will immediately. I don't even think it emails you. I think it immediately gives you your document with your EIN number, which is a PDF. Print it, put it on page two of the three ring binder and. Or make sure it's in the Google Doc so it's in a safe place. So now you have an articles and organization with the state and you have an EIN number federally so that you can collect credit card payments and things like that. So that's step two. That process also probably takes two, two minutes.
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A
Also, quick tip, as you're filling out any of these websites where there are going to be questions that you may not know the answer to. If you will use ChatGPT and tell it what you're doing, describe the business the way that you're thinking about it right now and say, I'm about to fill out this field. It's asking me this. You can even get a little screenshot of the area on the screen.
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That's the question. Yep.
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It will format it for you and tell you what to do.
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So another great idea, it is a.
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Great little tool to help you get through some of these website questions that you're not going to know how to answer.
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I've done this a hundred times, but I've never done it since AI was in. I would imagine AI is a great help here. So.
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Yeah.
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And then the third step, which takes just a little bit more time, but still is fairly simple, is then you want to open a business bank account. On a side note, I am a big fan, quickly of local banks that are solvent, that are in a good spot and you want to ask them questions about that as opposed to using one of the big seven. As the business gets bigger, you're probably going to want to also have an account like you said, at Chase or Bank of America or whatever. In the beginning, I like going to a local bank and as a matter of fact, we go to Guarantee bank, which used to be Springfield First Community Bank. That's where you used to go back when you lived here. I love walking into a bank and everyone knowing who I am, asking like, hey, Matt, how's the business going? They're just more warm. You're not a number. If I need to get a loan, a line of credit, much better chance. When you have personal relationships with the bankers as opposed to the giant banks which are only going to look at data, stats, numbers, for all intents and purposes. You're like a prisoner with the numbers across your chest. And it's just like, this is client 19783 and you don't mean anything to them. And so I like to bank with local banks, especially in the beginning when there's not a lot of money in the account. You don't have to worry too much about. I don't think there's going to be too many more banks if any go under. So that's a great place to start for a business bank account. You're going to walk in. Yeah, I would call ahead of time and say, hey, I want to open a business checking account. Probably just a business checking account. In the beginning, what you're going to need is your articles of organization sheet, your ein sheet, personal identification, driver's license, passport, whatever. And occasionally they'll ask for an operating agreement and that's usually only if you have partners. So if you're a sole proprietorship, they often don't ask for operating agreement because you're the only person who can make decisions on behalf of the bank. If you've got partners or you want to add, even potentially, if you've got someone who does payroll for you or a trip treasurer or your wife or something like that, they may ask for operating agreement. And an operating agreement is just a very basic document that says, this is how we make decisions in the business. This is how we vote. This is the ownership percentage split. I own 50% and my business partner owns 50% or I own whatever that is. I own 51, they own 49. You're going to fill that out. This is another thing that you can do for sure online for free. You can utilize AI and you can say, I need a simple base generic operating agreement for a company that does X. The name of the company is this. We're an online coaching business Give me the basic operating agreement. They'll spit it out. It's going to be five to seven pages. You'll have to sign it at the bottom. Often you'll have to sign it at the bottom and get notarized, which everyone at the bank can notarize. So you'll actually probably go into the bank for this. The only thing that you'll probably, probably have to go to the bank for. Not necessarily. Now, there's online notaries and whatnot, but that's pretty simple. So articles of organization, Step one again, five minutes or less. Ein five minutes or less. And I'm probably being aggressive. There is probably less. And then opening the business bank account, which probably takes, once you're at the bank, probably takes 15 minutes. And then you have a business bank account. And then you'll want to go ahead and order checks and order a debit card for that account. And then step three is complete and now you fully own a business. The business has its own bank account, it has its own ein number, and it's officially recognized by the state that you live in as a real business. That's the big three steps.
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A
So I'll counterpoint step three for the. Depending on the age of the people who are listening to the podcast, many of you will not want to go into a bank physically. And if you don't want to do that, or if you don't want to go to a local bank, which by the way, I did the same thing my early companies, I liked having that relationship. I liked knowing them. In my later businesses, I've just become very, I don't know, very. I just want to do everything online. And so for me, the way that I did that, you still have to have all the same stuff. So everything that you have to have to go open a bank account for in person, you have to have when you do it electronically. But the bank account or some of the bank account options that are available, many of these will allow you to open business bank accounts online. One of the more famous ones at this point is a bank account group. I talked about it, I think in the last podcast episode called Mercury, and it's literally exactly what you think it is. Mercury.com it's a great business bank account specifically for profit first style bank banking. It's very, very, very easy to create. You can create them without having anybody do it for you. Create these sub accounts that are named in different ways. So if you are millennial or younger or whatever and you really just want to stay online and do it, that Way Mercury is a great option for you. There are several others that you can have, but all of the requirements are the same. You still have to have your ein, you still have to have your articles of organization. You still need to have all of those documents and you will still have to prove you are who you say you are, which means you'll need your license and all that kind of stuff.
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Yeah. And usually I don't know if this is what you had to do at Mercury. A lot of times you'll scan your or take a picture of your driver's license or your passport. And then often it will turn on your camera on your laptop and you've got to be sitting there and it will match your face to the identification that you uploaded to make sure that you are who you say are. And that's it. And so those are the three steps that you have to have to start up to legally start a business. I'm going to say this again at the end of the episode, but because we must be people of action, my challenge to you is in the first three days of January, you do this. This is a set aside two hours at most. And it probably won't take that long to do all three of these steps in a row. It'll be less than two hours if you do open the business bank account online. But if you have to go into the bank, you can do that. And you're still talking about two hours total. Get it done. This is one of the first things that caused frustration for me when I would business mentor with clients who didn't actually own a business is a very simple. It's sort of a tester. The kind of did you pass the test? Like, are you going to do the work? You've hired me to tell you the things you need to do. This is about the easiest thing I'm ever going to ask you to do. And if the next week when we have our zoom call, if you haven't done it, I'm probably done with you. And I have a few of those and I have new business owners. The other thing I do is I have a stack in my library right now. I have a stack of E Myths. I give the E myth away to every new business owner and then I say when you've read this, we're going to sit down and talk through it and what you learned and things. I'll answer questions if a week later they haven't read the E Myth. The E Myth is a book you can read in one day or two days max. If It's a week or two weeks later and you haven't read the book. Now, occasionally somebody buys the book and they're like, hey, I'm going on family Christmas or something and spending time with family. That's fine. It's not a big deal. But I know right away if somebody's serious about this thing because they'll actually read it. And if they come back and they say, man, life's been really busy. I just wasn't able to get to it. My regular day job was busy. Go back to last week's episode. Your second shift right now is to start a business and to read that book. That's it. And then if you can't do that, you kind of know that maybe you don't have the internal motivation that you're not internally motivated enough to do the thing. One thing we didn't talk about last week is while you control your own destiny, you also have to control your workload and your work ethic and your ambition and your initiative and all those sorts of things. If you can't do these very basic steps, this is probably not for you, because there's a whole bunch of harder steps that you're going to have to do next. This is an easy thing that anybody can do.
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Yeah. I think it feels very committal to do it. And so one of the other things that to keep in mind is if you're struggling to do this because it feels like you're making a commitment, that you're just, like, scared to make the commitment, you probably want to get to the bottom of that too, right?
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Yeah.
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So I feel like any way you look at it, these steps, these are the concrete steps to open a business. When you're done with this, if you don't go into this thing excited, like, wait a minute, all I have to do are these three steps, and I walk away with a business. And I am now a business owner. I'm amongst the business owners of the world. Like, this is insane. This is great. If you're not excited by it also, probably not for you.
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Right.
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A
So just. I just want to be super clear. There are many, many disqualifiers for being a founder. This is one of them.
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B
Yeah, I would agree. So once those first three steps are done, I want to dive in a little bit more about what next. Okay, so that's done in an hour or two or less. Now what do I do? Well, now you begin using the business bank account, the debit card and the checks and whatnot for all business revenue and expenses. So 100% of business revenue, credit card processing, cash, checks, everything get deposited into the business bank account. And if you've followed what we talked about a couple weeks ago with profit first, you can immediately start to allocate that money that you deposit into the master account into profit first, into paying yourself second and then to taxes and then what's left over for expenses and you know how much you have to spend and you budget off of the expenses and you give every dollar a job and you make sure that you're covering your expenses like whatever that is. Depending on in the early days you may have very little expense. Maybe just, you know, if you run an online business like Internet, Internet fees are definitely tax deductible. If you primarily use your phone for business, which I do the phone contract, the phone cost is a business deduction. If you primarily use a specific car for business travel, you can take mileage there as well like all. Or you can put the gas on or and oil changes and whatnot on the business card. If you have a business vehicle, all of that stuff should be done from the business account because that's. Those are just tax deductible write offs. Right. So everything point of sale, Stripe, ACH, PayPal, Venmo Cash App. I would even suggest cash. I think at some point it's kind of nice to have some cash just available like actual cash in your home in the beginning while you're trying to show and build as much revenue as you can. If people pay you in cash, I deposit the cash and the thing you're going to have to pay taxes on it. But I still think it's morally the right thing to do. We can argue about that later. It's not that big of a deal. I think it's a good step then all coaching and business related expenses should be spent from that same business bank account. Again tax free. They come right off the income so you don't pay taxes on that income. That's things like equipment supplies, travel mileage, car use for business, laptop for any work, online coaching for us, laptop obviously for you and developers, business meals which is only 50% tax free. You can't, they've removed the entertainment piece so you can't take clients or business partners or whatever to just a fun place. You can't take them to an amusement park, no strip clubs, you shouldn't be going there anyway. That's not going to be tax deductible. That entertainment can't take them to a casino. That kind of stuff is. That's a no no. So meals are fine, entertainment is not. Marketing expenses, anything. If you pay for your social media primarily for business, which you should and you pay for like the blue check mark on Instagram or you have premium LinkedIn or X, same sort of thing with the check mark, all that stuff, those are business expenses. Book purchases, audible, if you're primarily listening to business books, all of that stuff can be taken. And then like we talked about, I think last week or week before, if you work from home, and you probably should, most of you, you can take that square footage from your home that's being utilized for business purposes. And it's tax deductible each year for the things like utilities, renovations. If I do a renovation in the office, if I'm. Or the light, like wherever I work, my main workspace, I had some in the wall shelves built this year in my office that specifically used only for business. The construction of that wasn't very expensive, but I don't know, 1500 bucks, 2000 bucks, something like that. That's a business expense. That's something that didn't have to come out of my personal account. Right. So all of those things can be done. So then if you're a sole proprietor, single owner, you can then pay yourself anything you want out of the business bank account. And the best practice is to write a check. You don't need to set up auto deposit auto pay like you do for future employees. In the beginning, the best practice is just to write a check to yourself with the word payroll in the memo line for easier accounting from the business bank account or especially the sub account that's been set for you as personal. And then you can write dividend checks or draws out of that immediately. So the key here is what we're trying to do is get you in a space by having an articles of organization, an Ein and a business bank account so you can actually start to do the work financially on the business. You can actually start to spend money where you have business expenses. So you can begin to collect money not into your personal account, but but into your business account. Then you pay yourself out of the business account. None of those things can exist without the first three steps. Right, I'll stop there for a second. Any other comments on that?
- [32:34]
A
No, I think the only other thing that I would say is you will want to at least. And some of this happens in the articles of organization, but you will definitely want to also start keeping some. If it's an llc, this is going to be different than if it's a C Corp but if you end up doing a C corp, you will want to start thinking about what percentage of shares that you're going to own and to keep a cap table for future opportunities to either provide that equity to other founders that you may want to bring on in the long run or if you decide ultimately that you want to sell some of that to raise capital, that's a good way to do it. Most of the time. If you are going to try to keep a cap table organized, most people do that with a tool called Carta and that tool is available online, it's cheap or free. I don't remember actually which it is.
- [33:24]
B
No, it's not either. It's about five grand a year for.
- [33:29]
A
Carta at the start. I don't think it is. I think it depends on when you bring on additional capital.
- [33:34]
B
Okay. And if you do a 409A, things.
- [33:37]
A
Like that, I'm pretty sure I'm not paying for it. I don't have anybody else on my cap table outside of my, my business partner and I.
- [33:42]
B
That may be true. Here's the way I would look at it without getting over complicated. I'm going to paint with a broad brush. Almost everyone that starts a business you should start as a basic llc, sole proprietorship or LLC partnership. When you hit and you need to talk to your accountant and it's going to depend on the state as well. When you hit somewhere around 100 to $150,000 in revenue for the year and you'll know because you'll owe some taxes, then there are better tax benefits to go from an LLC to an S Corp. So an S corp is the bridge between the LLC and the C Corp, which is a full blown. Like all the big companies, like the giant companies, they're all C Corps and most of those are in Delaware. Some of them are now in Texas. Texas has started to move that direction. As he seen Elon, I think he's moving Tesla and SpaceX from Delaware C Corps to Texas. Most of that is putting the cart before the horse. You'll know when to do that and you can make those changes over time with a good accountant or a tax attorney. In the beginning, just file as a basic LLC gives you that protection. If you're by yourself, it's a sole proprietorship llc. If you have a partner, it's a partner and you'll show the percentage of ownership. Maybe it's 50, 50, maybe it's not. File that way with the state. When you get to a point where you have enough income, you will Convert over to an S Corp and then eventually you'll convert over to a C Corp if the business continues to grow, an S Corp and again paint with a broad brush. And where it was back when we did it, it was probably about 2 million in revenue. Definitely between a million and 2 million in revenue a year before we went from S Corp to C Corp. Once you get in the two and $3 million a year in revenue and you've got a handful of employees or more, it's probably more tax advantageous to move to a C Corp. But even all of those things, moving from an LLC to an S Corp and S Corp to a C Corp, those are just, those are full legit corporations, actual corporations, that is even that's above my head and probably yours. Like I've never actually done that myself. That's what accountants and tax attorneys do. And it doesn't cost very much to do that. Occasionally there's some complications, but it's rare. If you've raised money as an LLC and then you transition over to an S Corp or you did a raise money as an S Corp and you, or you have some debt and you switch to a C Corp, that's essentially a new business, you'll get a new ein number and you have to convert that debt and or those shares or whatever over to the C Corp. It creates a little more complication. Which is another reason why I would say to do everything you can to either not have any debt at all or either having never taken out debt or have all your debt paid off before you move to a C Corp and don't raise money until you're a C Corp because once you get there then you can do those things. You don't have the complications of trying to take people's shares from, you know, Reynolds Strong LLC to Barbellogic C Corp. So again, a little bit cart before the horse. The big deal here is the goal is to get through these first three steps in the next three days. Be a person of action, take an hour or two hours, get it knocked out because we have to be willing to do the work and then begin to again, get the debit card, get the checking account, get the checks and start to pay your expenses from the checks. Do exactly like Chris said and create the sub accounts and you're off and running. And then we can start to talk about now once you're there, what are the next steps for business ownership? Because now you're official business owner. And by the way, if you do this in the next three days Congrats. It's a huge deal. It really is a huge deal. I still have my original filings of LLCs, and I don't know if you do for your first business, but for I have that for Strong Jim and I have it for Reynolds Strong and I have it for Barbell Logic. I have all those things because they're cool things to have in the history and kind of the annals of the history of the company. And you can go back and say, I was working on this for a while as kind of a side project and pocketing that money or using it as Christmas spending money or whatever, but on this date I became a real business. And that's really cool. And that's a great way to start 2025 because now we can really start to move into now. How do we make 2025 the best year of your life in business? We've got a great plan in place for Barbalogic. I'm sure you do too, for certain. And we want to walk alongside you with those things as really three separate types of businesses. From kind of a small startup business to your business, which is still a relatively startup business because it's young, to a business like mine, which is small, smaller than the business you sold, but is now a business with a full board of directors and investors, and a cap table, which is just a table that shows ownership across investors and stock options for employees and all that kind of stuff. It definitely gets more complicated. Right now it's really simple.
- [38:55]
A
That's right.
- [38:55]
B
So don't be overwhelmed and scared about these three steps. You can knock those out in a hurry. You can always reach out to us and ask questions. We're happy to help. So be people of action. Let's get it done.
- [39:06]
A
Spot on.
- [39:07]
B
Awesome. It's another episode of the Build you'd Business podcast. Happy New Year to everybody. Hope you have a great new year. It's also a great time to set goals. Maybe next week we talk a little bit about goals, actions, metrics, some of that like intro into game plan, which we've talked about in previous Legacy episodes. But I think it's a great time to set to talk about not just monthly game plans or short term game plans, but maybe the year game. Like how do you set up? You could talk through certain. I'll talk through Barbell logic. How do we set up the yearly goals, the major actions we want to accomplish, the metrics that we use to track those both in real time, which are called KPIs. I need to come up with the better key performance indicators, which is kind of real time stats and targets to improve which is the goal stats. So here's where we are today. What's the delta between where we are today and where we're trying to go and talk about how to set up a great plan of action, a game plan of goals, actions, metrics and execution for 2025 so that we make 2025 the best year in your business life.
- [40:14]
A
Awesome. Let's do it.
- [40:15]
B
Thanks for listening to the podcast again. If you're interested in Undoing Urgency, you can go to Amazon Search Undoing Urgency. It'll pop up again. Hardback and Kindle available. I got the Kindle the other day, just bought the Kindle and just paid for it just so I could see the illustrations. Came out great. A lot of times in the Kindle the illustrations aren't there. I hired a great illustrator. He's the guy that does all the illustrations for Art of Manliness Ted, who's a super interesting guy and I think he lives in Amsterdam, but he did a great job with the illustrations and they came across great both in the Kindle and of course in the hardback book. If you buy the book, would love a review there. It's a huge help on the book sales for the algorithm and to keep us as a bestseller. And as always, tell a friend about the Build you'd business podcast again. I know this is pretty heavy in business, but I think it's very applicable to life in general. For anyone who's pursuing greatness in their job management, upper management, executives, et cetera, Undoing Urgency is going to have a little broader appeal. The book certainly great for executives, founders, business owners, but I've had tons of feedback from homemakers, from stay at home moms, from people who work blue collar jobs because everybody's drowning in urgency. So regardless of what your demographic is, that's a great book. It's make a great Christmas gift and then do a Christmas gift or a New Year's gift to yourself by doing these first three steps and officially starting a business. So thanks for listening and we'll see you guys next week. SA.