How to Protect Your Business Assets: Insider Secrets from a Legal Expert

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Hi, I'm Tom Powell and you're listening to the Powell perspective with one of our issues talking about asset protection. And I am pleased to be bringing Brent Bisquet from Laughlin and Associates and a newly formed enterprise called Laughlin Black. And I will give you a disclosure here that's probably not in the roll ups fine print, but I do have a ownership interest in Laughlin Black, a financial interest in that. So when we're talking about these things, keep that in mind. We're not here to sell anything. We're here to talk about entities and asset protections and those type of things. But you and I go back for.

We go back, we go back, we go back away.

And generally we're not used to being recorded on these type of scenarios around our conversations. Right.

Typically we are no mics, no phones.

Right. While we're talking, you know, I want to start off and first of all I want to say thank you very much. Can you tell me a 55 year old company in the state of Nevada and Nevada is very well known for asset protection trusts and asset protection entities. Why Nevada? What was that start?

Nevada has been one of the company, one of the states that was the forefront of looking to build real asset protection to be able to stand out for the entrepreneur. Delaware, as we know, has always been, you know, for your Fortune 500, your Fortune 100 companies. Nevada really took the lead early on in, you know, the 70s of having legislation and we only do it every two years here in Nevada. We're not a yearly or always in session, but really took the lead to make a haven for the smaller entrepreneur to be able to have an equal footing with the big boys. And that's changed over the years. Nevada has become headquarters for Google, Amazon, Microsoft. You know, Microsoft has really took advantage of Nevada laws. So it has changed for not only, you know, the smaller entrepreneur, but but for the bigger companies also.

Yeah, we've got a large number of high net worth individuals that specifically live in Vegas as well as up at the lake that benefit from that. It is interesting. I know that during the 30s I see signs because my family's been here since the early 1900s that they talk about the kind of libertarian free market approach for the state of Nevada. And that's why you've seen things such as gaming and prostitution and other things that were here that kind of led the way.

Is that a part of this concentration or is it back to what you said, which was the legislature's only in for four months every other year so laws aren't changing so you get consistency.

Correct. So with the way that we have structured our legislation, laws do not change consistently, as you know. Let's take a California, for example. California sees a foothold to be able to punish businesses or to tax them more. They're moving very quick. Nevada has stayed with the foundation of four months. Maybe we might go over a little bit, you know, depends on some hot, hot topics. But really it's one state that you could take both sides of the parties, Republicans and Democrats, who disagree on everything, but there's been a consensus that they have stuck with protecting businesses and modeling our, our laws, our statutes to protect businesses and make it a place that you would want to come to do business.

Let's take a step back because I think that's a great foundation on Nevada. And I do think a lot of people have heard of Delaware and how that may work, but they don't necessarily ever get into that. And it wasn't really all that long ago that you could, if whatever you wanted to do, you wanted to cut hair, you wanted to cut lawns, you wanted to be a doctor, a dentist, you didn't ask the government's permission. You just got a shingle. And if you needed to have education, you got that education. But that's how people started businesses. Is it that way now?

It. It's that way in a lot of cases for people who are making mistakes. You know, our litigation system, as you know, in the United States, is ridiculous. Nowhere else in the world do we have the litigation where the. That we do in the United States. So as people are taking shortcuts or the easy route, what we know. Right. I. If I know how to hammer nails, I can easily go out with my hammer my nails and make money. Does it mean I'm doing it right and am I going to suffer some consequences down the road for doing that? Yes.

Yeah. And we work with companies that are contractors, for an example, that started out with a person who was handling hammering their own nails, and now they have multiple LLCs within that. For protection purposes. Right, for.

For protection purposes and, you know, tax purposes. They don't always go hand in hand, but you have to think of both.

So. And that's, that's probably a topic for a later time. But can you still get Nevada protection if you don't live in Nevada, but the entity is formed in Nevada?

That's a, that's a good question. And yes, you can. In certain scenarios, a lot of times what happens is Nevada is misused. Nevada should be used strategically, using it In a strategic manner to protect you, to protect certain assets. And based off of your business model, it can apply. A lot of times what we're seeing is you take a contractor. Since we've opened the door for contractors here, we'll stay with contractors. I'm an active contractor in California. Is the Nevada company going to protect me in California? No. We would have to follow some steps again where we get. A lot of people are misled. They are told Nevada is your solution and they run with it. And Nevada is still part of the solution, but other steps need to be made to be able to use it properly. Yeah.

So what I'm hearing you say is this is not a do it yourself program. If you get beyond any complexity, I.

Would say any entity formation, whether it's to sell T shirts at a craft fair, up to, you know, $100 million business, you, you need some guidance along the way to do the steps properly. Most of us, if we're gonna start selling T shirts, nothing wrong with that. You have to start somewhere. It's a great entrepreneur spirit. Right. I'm gonna start to sell T shirts. Well, our goal is probably not to sell T shirts to make $500 a month. We have a goal that might be where we start today. Cause that's our bandwidth. But we will grow if we put our heads down and get to work. And you have the right team and the guidance to do it correctly. So you definitely need some guidance on, on the way.

And that's what Laughlin does that, that's.

What Laughlin is designed to do. And as we're talking Laughlin. Laughlin has worked with the startup from the T shirt I. That's a real example of somebody who I know now that is running a 25 million dollar shirt business.

And expanding into lawful and black. That is designed to help you further your journey along the way.

Along the way I equate it to. So let's back up and talk about asset protection for just a second. When certain circles hear asset protection, they don't have to be anti business, pro business, left, right, whatever. But when people hear it, oftentimes what I hear litigators actually say is they must purposely have wanted to do something wrong because they were protecting their assets before they ever got started. What's the fallacy in that comment?

The fallacy is we have a God given right to be able to protect what we've worked for and what is ours.

Knowing that if you do it right. So asset protection is not smoke and mirrors. Asset text is not to defraud somebody. Asset protection is to protect yourself from, you know, predators out there. Who, who are the fraudsters? People who are out to get you for no legal reason that our U.S. court systems allow people to come after for us. So it's not smoke and mirrors, it's not fraud, it's following the laws to do what they were designed to do.

Who do you think generally? And this is a loaded question because I think you already know, but I'm laying you down the question. Who is the best funded list litigator in the country?

The IRS.

Absolutely.

And the U.S. u.S. Government in general.

Overall. Yes, overall. The U.S. government overall. And I think most people don't understand. I think anybody that are at least in their 40s and perhaps older. In civics classes we were taught innocent until proven guilty. Civil law is not about innocent until proven guilty. It's actually just a preponderance of evidence. And well over 96% stated and documented settle. They never actually even go to court of suits, let alone against the United States government. So when you have the most well funded opposition on one side, what's the likelihood that you're going to lose a pound of flesh on your side?

You will lose a pound of flesh in that situation. If you're not prepared, structured properly, you will lose. And you're right, 3% of all lawsuits go to trial. But what happens in between? Right. They bankrupt you potentially to get to that point. The emotional stress of doing that and asset protection is about having that peace of mind.

And litigation fatigue is a very real impact that we don't talk about a lot, but it's if someone has a job and their job has a window of 10 to 20 years and you're running a business and a life and for the five years to eight years that you're involved in this litigation, you're losing your life. That is the opposite sides, the litigator side's life. That's what they do for a job. And then they go home and they're not thinking about it anymore. Right. So setting these things up is not about it. Goes to the old adage, my team laughs when I say it, but it's the best time to plant a tree is 30 years ago. And the next best time is to plant the tree now.

And asset protection, the best time to do it is why your legal C's are clear and everything is functioning as normal.

So the. And we've had this happen. The SEC has made a call. Is it still worth giving Laughlin, Laughlin Black or one of the Other entities out there and any of the other asset protection companies out there. A call to see where you stand. At least have a test of the assets.

There is no time not to call if you haven't formed any. A structure, a business structure, an entity structure. Thought about the asset protection. There's never a time not to call. Legal Cs are clear in litigation. Are there things that can still be done legally, working with your defense attorney? Yes, there is.

Can I. Shouldn't I. Can I just go to Rocket Lawyer or Legal Zoom or many of these others that are just there and get it all set up?

You can go wherever you would like. And we would prefer that we can make a great living off the Rocket Lawyers and the Legal Zooms. So if we just marketed and worked off of those people, we would never have to market, we would never have to look for outside clients. The problems with the legal zones of the world, the Rocket lawyers, do they get an entity filed at this, at the state for you? Of course they do. You can do that yourself. It's the back end. It's the documentation. It is the structuring that you put in. As you know, we've talked about before, you know, $100 to the secretary of State to receive a piece of paper to say I am an LLC or I am a corporation. Sounds too good to be true, right? $100, I have a piece of paper. I have all of these magical benefits.

Not from Steve Martin and the jerk. Do you remember that? When he's opening up the phone book and he's like, I exist and this guy hates those cans.

So it goes into the implementation. So anybody can file you at the state and give you a piece of paper back, Will it do what you're expected to do? No, it will not. So having the implementation, the right pieces in place so you can do what you want to do, but more, having a team that is helping you think through the strategy, Do I have the right pieces? Are they working? Right? Are they working in conjunction with each other? Because what we see a lot of times, and I know you see this all the time, is, is entrepreneurs, we like to move fast, right? Form me an entity. Get me this entity. I have a new purpose and I'm just, I'm forming stuff. And they all have legitimate purposes. And then if we don't have that team or we don't stop to look at what we have, we're competing against ourselves, you know, we're putting ourselves in harm's way or they are literally counteracting the other things that we're doing.

So we're going really broad on these topics and I think that's great. But it also sets us up to have future podcast to talk about some of the more specifics. One of the things you said before we got started was that it's. It's relatively often that an attorney who does know how to do these, you take at least one course in law school on entities, and there's a couple questions on the bar about entities. So they do have the knowledge or at least the access to the knowledge to do it, but oftentimes they don't know the tax consequences of those entities and then the domicile consequences of those entities. And if they haven't been in litigation, they don't know how that entity is attempted to be pierced 100%.

We were kind of discussing it, like you said, a little bit is most attorneys are not going to be specialized in specific asset protection. And if they are, they're usually working in a box what they were taught, maybe who the predecessor or their mentor taught them. And as we see a lot of times, it's outdated strategies, outdated structures that they're not following what's happening in case law, they're not following what's happening in the tax codes. So you're being put into a box of what they know versus having a team of, you know, and that's something, when you work with us, you have a team, people with broad experience. I mean, we have hundreds of years of experience between the team and not only are we team members teaching this, team members implementing this, we use this. And that's something that I think that sets us aside from somebody else that I don't just, you know, teach this, I don't just implement this, I use it. And what I've. What I use has protected me from things that have happened in my life. So they're tried and true. So I know they work because not only from, you know, case studies and client folks feedback, they've worked for me.

You know, it kind of makes me think about the case studies would be a fun lineage of shows. I think it's all state that does the commercials that says, oh, this was the moose that hit the building and this was the football that went through the window. And they do all the various case studies and this is how a fire started. And you know, they've been in business so long, they've got a lot of case studies when things went wrong and when the people were protected. And that's back to what Laughlin has. And Now, Laughlin Black. Talk a little bit about Laughlin Black. Where is that going? What does it do and what's the need for it above and beyond what Laughlin's been doing?

So.

We identified as a team, partnerships, longtime relationships, that Laughlin had a certain bandwidth, that Laughlin's ability to take somebody to. To the next level, it was. It was lacking a little bit. You know, can we form thousands of LLCs or corporations a month? Yes, we can. Can we put you into the right structures? Yes, we can. Can we give you all of the pieces for the right structure? Yes, we can. But at that point is where we were kind of hitting a hurdle of, okay, we've delivered everything, we have professionals that we can refer you off to, but what happens next? So you have this structure. It has many moving pieces. In some cases, not everybody has that many moving pieces, but as people start to grow, we have a lot of moving pieces. What were we missing? The team that can sit there, manage you, guide you, coach you, and continue your growth and having the network where we can communicate on your behalf of what you need to do, how to interview an attorney, how to interview a cpa, how to get them to talk together. Because you take an attorney and a CPA that has no relationship and they're going to butt heads and everything they do is going to counteract each other. We have the ability to come in and make them work together, open their eyes and guide them. So you are getting the best of both worlds. Because as you as you know, asset protection and taxes do not always go hand in hand.

There's give and take, they don't. And I will tell you, one of the things that became. One of the knowledges that we became aware of that neither legal nor accounting side really paid attention to was an llc. What's called a single member LLC is a disregarded entity. Right. Okay, so what that means is that you disregard it for the purposes of the IRS and the state. If you have state income tax. Right?

Correct.

It is not a disregarded entity as to your liability.

Correct.

Would a jury understand that?

A jury would not understand that. And in most cases, a judge would not understand that.

So. So when you have an entity, that's the operating entity and it is 100% owned by a husband and wife. A husband and husband, wife and wife, whatever it is a joined couple in a house. Right. A single person, that's a disregarded entity. If it's also owned by another entity, it's a disregarded entity. It doesn't file its own taxes Its taxes go on the next highest level up, right?

That is correct.

So that's one of those primary cases that when I start meeting with entrepreneurs and I look at it, they set up the LLCs, and all of a sudden they're getting the K1s directly to or on their schedule C on their tax returns. And we're using big, fancy words. This is a little dated. It's Edition 7, though, by Aaron Scott. And it's the Financial Security the Corporation manual go out. It's normally retailing for 50 bucks. We're giving it away free. So you can just scan on that. Yes, you do have to put your email in there. You can put a fake email. We won't spam you, I promise. But when the update comes out, if you don't have a fake email in there, we'll reach back out to you and get you an update on the system. But most of the stuff in here is still actually really relevant.

The entity. The entity formations the structures, the strategies, even a lot of the tax codes are still relevant. So the book not only has, you know, how to form an llc. Why? What is an llc? What is a corporation? It goes into some strategies of how you can use multiple entities with some tax codes and some case studies.

In the book, I asked this question because it just seems, you know, so blatantly clear to me, but why not just a sole proprietorship? Why not? Can I just put my shingle out and just start earning money?

The problem, you know, that we have again, is as a sole proprietor, what do we stand to lose? Most sole proprietors have at least maybe a spouse who's a W2 employer employee. As a sole proprietor, I still might be a W2 employee working on this venture, this sole proprietorship.

Children, savings, college tuitions that we're saving for all are at risk.

As a sole proprietor really come after that stuff, can they? I mean, if you're. If you've got a lawnmower company that you're mowing lawns at the end of the evening and something happens and somebody gets hurt, can they really sue you and get a judgment against all of your things?

If you're a sole proprietor, 100%, yes, they can.

Like your future income as a W2.

Employee, as your future income and your spouse's income, your Savings As a W2 employee, what is the recourse for a creditor to come after you? They garnish your wages. How long are your wages garnished? Until the judgment is satisfied, until your debt is paid off.

So you're being a good Samaritan, going around to the neighborhood and cleaning up sidewalks for five bucks an hour, you know, five bucks. And. And somebody slips on the ice and.

Sues you, you are putting yourself at risk.

Right? So that's where these setups, for a relatively small fee, can be set up. And again, 100 years ago, it wasn't necessary. We didn't even really have the term sole proprietor corporation all that much. I mean, they were out there, but it just. You were in business.

But, well, 100 years ago it might have been solved by a gunfight.

We're getting too old for that. I mean, we're talking roaring twenties now, so it's no longer that. Right. But yes, you're right, it is that. Longo. So the LLC specifically for the state of Nevada, I also hear Wyoming is a great state for other purposes or other strategies within the Nevada and Delaware.

LLC and corporations, just to point out, were designed to protect the owners of the companies. Corporations go back from, you know, the 1500s when we had wooden ships selling across unknown charted seas. You were a ship owner and you were taking people's possessions and transporting it. How would you bring investors in if they knew they could be liable for a ship that most likely had a high chance of sinking or never coming back?

You know, so we go back all the way back to the 1500s in England of the concept of the corporation. LLC, as you know, is kind of the new kid on the block when we're talking about entity structures. You know, non mainstream, you know, early 80s, but not. Did not make the mainstream until the mid-90s. And it was in place of a partnership. That was. Its original intent was to replace a partnership. So you had some liability protection. As we know, partnerships, one partner goes rogue, brings in a lawsuit, you're suffering the consequences for what your partner did. That was what the LLC was created for. And it has really changed even over the last 10 or 12 years. I mean, LLCs are 80% of all formations now.

I would imagine even the large companies form llc. I mean, they just do it to hold their ip.

If you look at the state of Nevada and you could. And if you could navigate and find the principle behind some, behind some of these LLCs, you know, we know Microsoft Office has over 500 entities attached to it because each piece of the IP has been separated up to 500 times on one product. And it's done that way to put your eggs in different baskets. Let's spread everything out and let's, you know, insulate ourselves from the liability but in that case, that was a strategic way to protect the IP in a grand way.

I have infinite energy to talk about these subjects and I know you do too. But listeners probably have other things they need to do. So I'd like to pause this one now and come back and talk a little bit more. One of the things that you brought up was the intellectual property, because that is a key factor that we help guide people through and with is how to protect ideas and so they can go forward with things. And also you talked about that a house or savings could be taken because of the small business owner over here and the spouse had nothing to do with it. Yet all of their assets are wrapped in there. So I think we need to get a little bit deeper into that in nllc. So if you'll join me for another segment, we'll come back right back.

Yeah, I'd be happy to.

Again, Brent Bisquet joining me from Laughlin and Laughlin Black. And this is Tom Powell with the Powell Perspective. Thanks for joining.