Why is my Company Dissolved!? Pay Attention!

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Welcome, everyone, to the Main Street Business Podcast with Mark Kohler and yours truly, Matt Sorenson. We are excited to be with you today and we want to help you stay out of trouble. That's kind of part of the topic

today because it sounds like a parental lecture to a teenager. Let me.

You know, this is what it's kind of going to be a little bit today. Hey, but you need to know this stuff. Just like some of the crap you parents need to tell your kids. And we heard from our parents. Yeah.

Are we going to say, are we going to say nothing happens good for your company after midnight? Just be home. Anything after midnight, you're going to get in trouble.

So let's just think of any business that's selling something after midnight. Also, dark side of the business world.

That's a separate podcast, what to tell your teenager to and not do so. But today we want to help you business owners, whether it's an llc, an S corp, a corporation, a partnership. What are the things you need to do for basic asset protection? This is the low hanging fruit. This is easy stuff. It doesn't. We're not selling some package that, you know, in the thousands of dollars or that you've got to do in order to be compliant. It's really kind of, it's like, eat healthy, brush your teeth, go to bed on time. All of a sudden you're healthy. It's kind of your company. Like, what are the little things you gotta do?

Yeah, yeah, you gotta work it out. It's gotta do a couple things every year. So we'll talk about that. But it's not just about asset protection. It's also about not getting fined from the state, not having your company entirely dissolved. You know, which people, clients come to us all the time. They're like, oh, I set up this entity online five years ago and I went to sell my rental property that it owns and they're like, you don't have an entity anymore? And they're like, how did that happen? Well, you didn't do, you didn't brush the company's teeth, you didn't work it out a little. You did nothing.

Who was that? I think it was Jim Gaffigan. He's like, you know, I represent kind of what, you know, doing whatever I want, you know, and he has got a great stand up on that. He's like, this is, you know, he goes, what do I expect? You know, I'm, I made the move to double xl. You know, this is what, what happened. But anyway, he's so Funny. So. But I thought you were going to say this, too. This isn't just about good asset protection. It's not getting fine keeping you not being dissolved. It's also audit protection, because if the IRS comes knocking or a state agency, which could be a payroll related matter, it could be a workers comp related matter, a state unemployment matter, any of these agencies at the state, they can sometimes be harder to deal with in the irs. And if your books and your crap is disorganized, it's like fodder. I mean, it's just like sharks smelling blood in the water, you know? Yeah. Not good.

Yeah, don't. Don't give them that.

No.

Okay, well, let's jump into some of these items that you need to do. And remember, there's some little differences here from state to state. So your state may be a little different. We're going to talk about Universal Concepts. We'll give a couple caveats to states like California and other places where there's a lot more people. But let's hit the first one.

Okay, I got five already. I'm like, got my yellow pad out. I'm like, making fun.

Oh, my gosh. I wrote down five, too. You did five? Yep.

We'll see if we're on the same page.

The same.

And, you know, we finish each other's sand sandwiches. Whenever you hear me say that, you got to be ready with sandwiches.

Okay, Sandwiches.

You know, we got it. We need a director. We need cue cards, you know?

Yeah.

Cory, can we get cue cards going? I mean, something.

All right, well, it's not just the cue cards. It's about comedy, is all about timing. Timing.

Is that what I'm supposed to say with you? Timing? Yeah. There we go. All right, let's get into it. Okay. My number one. Can I give my number one, which I think is a pretty damn good number one. All right. And you. You can veto it. Okay, here's number one. Everybody out there with an LLC or a corporation, or maybe you filed a limited partnership or an LLP or an LL triple LP or a LC or series PC, whatever the frick you filed in any state. Here's number one rule. Create it properly. It's like it's number one. You got to file it with the right agency. You got to get your tax ID number. You got to have the right articles. I had a fight with a lawyer the other day out of California that thought member managed was okay. In fact, he didn't even understand manager managed. And I was like, oh, my hell. Now he wasn't in the area of business law. He was sticking his nose into a matter for family. And, you know, I'm like, if you're a government lawyer, stick to the government.

But anyway.

But here's the point. You've got to set up this properly. And everybody goes to legal. Zoom. They get the cheapest price they can, or they go to the state and do it, and they're like, it's only 50 bucks for the state. I don't need to pay you guys. Yeah, you only got about 10% of a fricking entity. You got to have all the pieces and parts. And you're like, well, an LLC doesn't need an operating agreement or minutes. Okay? You use that when you go to court, bud. Good luck. Knock yourself out. You know, you can't cut these corners on the setup and think it's going to be okay later. How many clients of ours in the middle of the night have been recreating their entity because they have depositions the next day? So people set it up properly. That's my number one. Can you argue with that one?

No, I love that one. That's on my list. I mean, it's like Family Feud.

Okay. S Killing. Okay.

All right, so let me just say a couple other points on that. Why it's important to have all the pieces to the entity done. What we have is a lot of times clients will be like, oh, I'm getting a contract with a. With a. Another company. I'm getting a SBA loan. I'm doing all these things. They are going to ask you for all this stuff. If you just give them the one piece of paper from the state, they're going to be like, what the heck is this? Where's your operating agreement? Where's your tax id? Where's your bylaws? If you're a corporation, you have to have those. They're going to make you provide those. And so a lot of clients come back to us and like, okay, we have this thing called a cleanup because we clean these entities up because someone set it up and did it wrong and didn't get all the right pieces. And now they're actually in business, and they're doing a transaction or doing a loan or they're dealing with a title company or. And they're like, oh, I actually have to have this stuff. This does come up.

So it is so true, people. Stay in your lane. I think that's another major point. I think it's so important in this issue because I was giving a webinar yesterday to a bunch of RV owners that are traveling around the country doing inspections and repairs. You know, it's kind of the little dream of mine, you know, hit the open road with my RV someday.

They better stay in their lane.

No pun intended there. All right. Okay. Stay in your lane, people. Okay. No, but the funny thing is, was these guys are RV repair specialists, and they travel around as subcontractors, set up their shop in an RV community, and they start repairing RVs. It's a great business model. Love what they're doing down in Texas. Steve Anderson and Terry Cooper. But anyway, you can Google that. It's good stuff if you're into RVs. But anyway, the point was I was making yesterday these guys, because a repairman is kind of like that engineer that they're like, they're the diy. They go into Home Depot and they start lecturing the Home Depot worker, you know, And. And so these guys are all. Not all of them, but several on the webinar were like, well, can I just go to state, do this myself? And they're diy, and I respect that because they're. They're mechanics. They. They want to get their hands dirty and get in and do it. But I said, please, you will screw this up. I'm not going to go in and try to fix my RV and try to fix the heater. So in the middle of the night, I have a carbon monoxide leak and die because I will screw it up. I don't fix RVs because it's not in my lane. Don't go. Try to set up your own entity. Let us do it when you do it all day long. We know what the rules are in your state. We do it in all 50 states. We got a great, great paralegal team. We've been honing for 20 freaking years. So I just. I just think try to avoid doing it yourself at least the first go around or two until you really understand what needs to be all included.

Yeah. Okay. Love it.

I got one more. On that note, it's not just registering with the state, secretary of state, or even the irs. You might be doing payroll. You got to get payroll tax ID numbers.

You.

You might be doing sales tax. In some states, services can be sales tax. Like in Washington state, you've got states that don't have income tax, but they have a sales tax. And you want to know what the rules are for sales tax with reseller products or do you need a sales tax ID number? Do you love to go to Costco and not pay sales Tax or what are you doing with workers comp. State unemployment. So there. Are you getting a local business license? Do you need a food handler's permit? All of these things go along with the initial setup. And just think. Just think about it at a law firm. We're going to get you good with the Secretary of State and the irs. But all these other pieces you got to think about.

Yeah, yeah.

All right.

Okay. Now here's my second one. So yours is basically. Number one is set up the entity and get every piece of it done, too. Don't just get the one piece of paper. Follow through on all the pieces you need to get in place from the state irs. You know, this could be state Secretary of State, state tax commission, lots of other places. You got to check. Okay, okay.

Number two.

All right, Number two. And this is. This is before we're going to get to. Once you already have the entity. But I just. This is my first preface, which would be. Number two is make sure the entity is set up in the right state.

Ooh, okay, we're gonna have six here. That wasn't on my five.

It's on the survey, though. Okay. Survey is on there.

Okay.

Okay. Here's why I say that. And it's related to this topic. There's so many people who end up setting up entities in the wrong state. They're in California. They're doing business in California. They have a Nevada corporation and a Nevada llc. Okay, all right. That's not going to help you in California. For doing business in California, the California Franchise Tax Board doesn't care. They still want you to pay 800 bucks where the enemies registered there or not. But what you've also just done is you've subjected yourself to what Nevada wants. Now you got to file stuff in Nevada. Nevada has a master business license, like 400 bucks a year, and you're paying 800 to the state of California. You thought you were all being smart and getting out of 800 bucks in California when you just stepped in 1200 by doing this dumb move to Nevada. Now, lots. There's a lot of other states that this similar issue, but that's probably the classic one, is the Californian thinking they're going to be all smart and go to Nevada. Or if you're going to Wyoming or other states, make sure the state you're doing business in, or if it's a rental property, the state the property's at, that's where you set up the entity. Deal with the compliance in that state, deal with the fees there. Be careful Going to these weird states that make no sense that you hear hyped up for asset protection, it's just going to cost you a lot of headache, compliance and fees to stay active there.

I love it. Great. Number two, and we're not a West coast podcast. I mean, I've got clients in the 5 Boroughs of New York City that. That don't want to pay the corporate tax for their S Corp. And so they're like, oh, I can set up in New Jersey or I can set up in Florida, because we're all attracted to these nine states that have no state tax. And we're thinking, oh, if I'm in New Jersey or Pennsylvania and I don't want to pay tax up there, so I'm going to go set up in Florida and set up my online business in Florida, generally not going to work.

Yeah. Let me give you a classic example. I had a client actually in Florida doing business in Florida that someone told him to set up their entity in Delaware.

Boom. Delaware. Okay? And.

And you know, he was like, well, Delaware, it's not that much. It's like 60 filing fee, Delaware's annual fees, 300 bucks. And you're gonna need to register that Delaware entity down to Florida anyways and you're gonna be paying Florida fees or the filing and compliance, and so just skip it. Don't go to Delaware. Let's. You're trying to go on the New York Stock Exchange or go public. Chill, people. Go to the state. Okay?

I love Delaware. Delaware. So, yeah, just so sequential. Quintessential. Quintessential. You know, I'm trying to use big words lately. I'm, you know, I'm doing my thesaurus a day, you know, just my word.

Okay.

I have my app for my space.

I don't know how to describe Delaware. I don't know how to describe Delaware. I don't know what the state motto is. Or like the what's what is. Delaware's the what state? What are they? The.

I don't know. But what I'll tell you is when I'm on a train going through Delaware, So beautiful. All those trees, those little red brick homes and those little valleys and towns. So gorgeous. All right. Since you just called out Delaware and alienated all over Delaware clients, I want to just kind of, you know, give them a shout out. You live in a beautiful state. All right?

Yeah.

Okay. Number three, I think, see what you think of this. Once you've got it set up properly in the right state, put on your freaking calendar to renew it every Year at the proper time. Now, you may think that is the anniversary date of when you set it up, but in a lot of states, it's not. Hence why. Oh, my gosh. And we're going to the printer. Literally. My assistant's over at the printer right now picking up another 150 calendars as they're falling off the printer. We're shipping them out to clients. But my annual calendar has all the state registration dates in the calendar. And if you don't use Mark calendar, that's cool. Find a rule for your state, because some of them, it's every March or it's every December, even if you set up your entity in July or whatever. So you've got to know what your annual registration date is, because if you miss it, they could. Your company could be dissolved. And then Matt brought up the F word and fines.

Fines, Yeah.

I don't know what everybody else was thinking, but I was thinking fines. I don't like fines.

Yeah, no, don't find me. Yeah. And the other thing on the renewal, because throw it on your calendar is some states are every other year. I mean, talk about forgetting now, because, you know, you set it up, you skip a year, then you're supposed to remember. So just know your state. You want to get up to speed on that. And I love the calendar methods. Get it, set it, and have it recurring so it recurs in the timeframes that you need. But here's an important part for on the fine piece, because this is what happens. There's probably a client a day that calls our law firm with this problem. They have an entity, and now it's dissolved because they stuck their head in the sand. They operated their business. No one told them otherwise. They thought they'd get something in the mail that would tell them so something was happening.

I can rely on the government to tell me.

Yeah. I mean, why didn't they tell me? No one called. You know, they don't call you guys. All right.

Yeah.

If they send you something, it just looks like a bill.

It's funny. We have so many clients that have faith in the government to do this and then clients that have no faith in the government whatsoever. So it's like, what camp are you in?

Yeah. Oh, all right. So don't. So this is gonna. This can happen. And so what I'm trying to say is it's on you. What happens is these clients will come to us. As I said, there's, you know, one a day. It's. My entities was administratively dissolved. What the heck does that mean. Well, that means not only did you start getting fined, you didn't do anything for more than a couple years, sometimes three or four years in certain states. Every state has a little different tolerance with how long they're gonna let you go without being in fine, you know, having fines, and what happens? You eventually get dissolved. You don't have a company anymore. And in some states, you can revive it back by paying a really large fee, but in some states, you can't. Game over. You're starting over. What do you do? You got to restart your bank account. Is that name going to be available? Did someone else steal that? Take that name now that you had in your business. I mean, so many complications by just being lazy, you know, so. So just stay. Stay on it. Getting the renewal. You got to stay active with the state. And there's some states, I'll just say, like Arizona, that are even more quirky. If you're a corporation, you got to make an annual filing. If you're an llc, you don't file anything. You never file anything. And so even within the state, there's a different rule with corporations and LLCs.

Yep. Oh, my gosh. So good. Now I think it is time for another good metaphor. It just works with our initial intro. Isn't it funny? Kids, you know, they got parents, and they're like, you know what? I don't have to check in with mom. You know, I'm good, you know, but, oh, I didn't know I needed to check in with dad. Oh, there's gonna be a fine problems. I'm not going out for a while, you know, and you think, oh, ignorance will get me out of this. You know, like, I'll ask for forgiveness later. You know, parents get sick, you know, it doesn't work all the time. And states, they do not tolerate that. It can't be like, oh, I forgot, and, oh, I didn't know you wanted to know that I needed to check in. Doesn't matter. Yeah, so some of you might have some flashbacks there. You can't play off mom and dad with the state. It's not going to work.

Yeah.

Okay, now I've got one that's right on the tail of this. Can I please, please, please give you number four?

Yeah, I was hoping you would.

Oh, well, thank you. It was. I think it was your turn, so I didn't want to take away your turn. Okay, Number four to you. Franchise tax returns. See, what we just talked about is your annual registration with the Secretary of State. Now, you've also Got to worry about franchise taxes. Now we've got a table. It didn't make it into my calendar this year. We're sending out alerts in our. In our newsletter every week of when franchise taxes are due. And in certain states and all sorts of states have different rules. You got Texas, you've got California. I won't even start the list. So we want to make sure clients know that, oh, if I'm in Hawaii, I might have a gross sales tax or gross receipts tax or there's a different word for it. But anyway, all these states have taxes that apply to entities, and you want to know what those are. And so note your calendar and be done with it. Now, I will give a shameless plug. Here. We have a company maintenance program to make sure you're always good with the Secretary of State. Our goal is to make sure every year you're renewed. We make sure it's done. We charge 150 bucks a year. So affordable. Don't get sucked into some company maintenance, asset protection, silver plan, blah, blah, blah. Crap. That's $500 or a thousand or more. 150 bucks. Our team will take care of you. We love it every year you know, you're taken care of. Franchise tax returns. We're trying to alert our clients in the newsletter, but see, that's something your accountant may or may not be doing. And so you got to again, take ownership of this and know when your deadlines are for franchise taxes.

Yeah, and some states don't have a franchise tax.

Most don't. Most don't.

Yeah, most don't, but. And some states have it, like Texas, but you never end up paying anything unless you make more than like $1.2 million a year. So. But you still gotta file it. That's where a lot of this misconception and mistakes can happen. So. Yeah, I like that.

Here's a good one. New York. There's a form that you need to file. You're 40 bucks. If you miss it, the penalty is 400. I mean, it's just like that all over the country. If you. If you do the form at the deadline you're supposed to do, sometimes it's no charge at all. You miss it. Fines. And then we get calls at our office. Why don't you do it for me? Well, you didn't pay us to do it for you, and you didn't tell us you needed that service per se. Franchise taxes are something we're trying to provide a better protocol for in our firm, law firm or accounting firm. It's It's. It's a difficult area because it doesn't always apply to every entity or type of business. But again, a reminder to all of you, make sure you're on top of your franchise taxes. Yes. You get to do number five. Okay, Number five.

All right. Number five, annual. Oh, man, I had a choke. Yeah, this is. This is really important, guys.

Okay, that's tearing up here. This is. Yeah. Emotional.

You know, this really gets me. Do your annual minutes. All right. Annual minutes. And a lot of people are like, but I don't have this big board of directors, and I'm not holding this big fancy meeting with all these shareholders attending. Surely I don't have to do minutes. Yeah, you do. You have a corporation, then you want the same corporate value that the big corporation does. It has all of these shareholders. But you know why you need it even more? Because you're a lot of times the sole shareholder, and we want to create separation from you and your corporation or llc. And this is one of the things that gets into case law. When someone has an entity that they're. And they have a liability, something goes wrong in your business, and the plaintiff's lawyer sues the entity. Well, a lot of times they know that entity is worthless, so they're going to try and sue you, too. And you're like, but I got a corporation. You can't sue me. How are they going to get to me? Well, if they can show. You didn't treat your corporation like a separate entity. You didn't do your annual minutes. You didn't keep it active with the state. You didn't have a separate bank account and keep the money and assets separate from your personal life versus your business. You know, those are the things that someone's going to use to what they call pierce the corporate val and get personal liability. So minutes. That's one.

Yeah. And we. You can go to YouTube and just put in board of directors meeting, board of advisors meeting, board meeting. Put the word Kohler somewhere in there. I've got some great videos on how to do it, how it can be a great tax write off a good unifying family experience. We've got a whole podcast on just holding your annual board meeting. So go check it out. But, Matt, I. I'd like that you digress for a minute. Let's. Let's take a breath. I think the main reason we're talking about all this. Yeah, the fine suck. Yeah. You're. My entity might get dissolved. And some of you are like, I'll just pay the Damn. Fine. I'll just renew the entity. The problem is here is that lawsuit. I like that. Matt just brought us back to the main reason you're even listening to this freaking podcast is if there's a problem and you aren't doing these eight to 10. I think we're going to be around 10 by the time we're finished. I've already got seven or nine here. But whatever you're. If you're not doing these basics that really don't cost a lot, it's just being on top of your game. You could very well have your entity pierced. That. That's that piercing of the corporate veil where they come after you personally. I don't know, Matt. I'm going to leave it up to you. I could give my courtroom experience story. I think I could do it quickly. I mean, some people like a good story in a podcast. Now I could do it. Or you could say, now let's just stick to our 10. Sure. I don't know. It's up to you. Yeah.

I mean, go for it. Yeah. I don't know which courtroom story this is. I think there's only two, but

Matt's got a lot of them. Me objecting during someone's closing statement. That's always a good one.

That's a good one.

Yeah. Yeah. I'm. I. I rock it in the boardroom, people. And I won a trial last year. I was really stoked. Yeah, I did.

Yeah.

But you. You may want to think twice, though. I just watched Law and Order the night before. Stay in a Holiday Express and. Or what is it? Is it the Express commercial or.

Anyway, Holiday Inn.

Yeah, Holiday Inn Express. Okay, here's my story real quick. And I think all of you will love this. This is where you're enjoying the ride, listening to a podcast now. This is your feeling moment. Okay, so I was. I was going to my undergraduate. I was an undergrad pre law at University of Utah. Go use BYU sucks. Okay, there's the rivalry. So I was going to University of Utah, and all through college and through my master's.

All that around, by the way, quite a bit. I was pre law. I'm pre law, guys. I know what I'm doing here.

I don't know if I could throw down the Reese Witherspoon. You know, she kind of came in late to the game on the law school thing, but I was. Yeah, I was trying to be pre law. You know, it worked. Anyway, so, yeah, here's the second thing I had to say. Oh, you're pre law. What do you do to make money? I'm a janitor. So for seven years, including my master's program, I ran a janitorial business. We cleaned carpets, windows. I had, like, vans. I mean, it was the. Can I use quintessential again? It was quintessential.

Don't overdo it.

I mean, don't overdo it. So I. I don't know if you can use the word quintessential and janitorial business in the same sentence. But anyway, your typical. Typical janitorial business. We were cleaning toilets all night long. Restaurants, hotels. Not hotels, sorry, restaurants, grocery stores, company office buildings. Ra. Ra. Okay. So anyway, we went and stripped and waxed the floor of this hair salon, Beauty college, Beauty college and beauty school. And so we had a really good system of using wet dry vacs and waxing the floor, propane buffers. We could really make that thing pop the VC tile for all of you, you know, techies out there. So we'd make it sharp. Sharp and pop, like the grocery store floor. Anyway, I did it for. It was probably a three or four thousand dollars job. And the guy stiffed me, didn't pay me. I was like, no. I was pre law. I was watching Judge Judy quite a bit. I was pretty stoked for you old timers. And I said, oh, this is my time. This is my chance to have my first day in court. I mean, that's a big day, man. I know you've had bigger days in court, but.

Yeah, yeah, big.

Yeah, yeah. So I file a lawsuit by doing small claims court, and I sue the guy individually. I didn't sue his company, didn't sue Corporation llc. I sued him individually. Now I was going to some of my pre law classes, and I was so excited to, quote, unquote, pierce the veil. I wanted to go after this guy. I want a birdie made off him. Boom. I want to go after this guy. Screw the corporation. And so my professors are kind of like, yeah, this is what you do. You know, you got to prove this. And what they were talking about are these things we're talking about today. Just prove that the guy was a slacker with his company, and you got him. Like, all right, all right. So the day leading up to the. To the small claims court, I was so excited. I was thinking there might be 12 jurors there. No, that doesn't happen. Yeah, this is small claims court. There's one guy up there that's totally annoyed being a judge, doesn't want to be there. But anyway, so I get in There. And I still remember, literally, I had to go to my little table. I think I was on the left, he was on the right. I still get those tables mixed up. But anyway, so I was, you know, the plaintiff. He was the defendant. I get up there, and when I walk in, I sit at my table, and this guy comes in with two lawyers. I was like, this is legit. So the guy. And I still remember the sound. Like, when you remember things in your life, you can remember the smells, the sounds. I remember when the lawyer put his briefcase on the table. It was like this big thud in the courtroom. I was like. It was just ominous. And so the bail comes in, says, everybody, please rise. Boom. Judge sits down, we all sit down. And then, boom, this lawyer is on his feet, and he's like, your honor, this is. Case dismissed. This kid doesn't know what he's doing. He can't sue my client individually. We got a corporation, and blah, blah, blah. And he's just like, right. The judge is just like, oh, geez, this is a small claims court, bud. Why'd you bring a lawyer? You know? And I stand up, and I'm little Matt Damon rainmaker, right? Always a classic.

You were more Danny DeVito here because Matt Damon was an actual lawyer, right? Danny DeVito was kind of like, past the bar yet.

Yeah, maybe I was Joe Pesci, you know, And I was.

Yeah, Joe Pesci'd be good because.

Yeah, I didn't have a jacket on. Yeah, it was nugget. He's like, what are you wearing? Jacket. No, that looks like some sort of animal leather. Anyway, so I finally. The guy shuts up, and the judge looks at me, here's your chance. And I go, your Honor, I. I didn't know he was a corporation. I start laying my kids. I. I never got a paycheck from a check from a corporation. I never saw a business card from a corporation. I didn't have a contract with a corporation. This guy shook my hand, said, strip and wax the floor. Make it look pretty, and I'll pay an X. And I'm like, I. I didn't even know a company existed. You know, maybe I did after the fact. But I'm just saying, you know, playing it. I'm playing it. I'm playing my card. And so the judge looks at him and goes, do you really have a corporation? And this lawyer bounces up again. He's like, oh, we got. We got our articles filed at State, and we did this, we did that. And he goes. The judge goes, do did you do your annual minutes? Do you have your corporate book with you? Did you use a contract in the name of the corporation? Well, no, your Honor, but we went to legal Zoom, and we filed our sheet of paper. Here it is. And then he's like, so. But he was looking. It was weak, you know, he didn't check all the boxes. So then Matt, the judge comes back to me, and this. This was my day, and this was my moment. I mean, this is like Tom Cruise and A Few Good Men. I mean, I was ready to go. Yeah, you want the truth? Okay. So it's like, this is my moment. So I go. I practice my line in the mirror. It. And of course, I'm shaking inside. I'm nervous. And I stand up, and here was my line. I said, you, Honor, if they don't respect the corporate veil, why should we? It was like, silence in the room. Some guy that was in there for a dui, he even looked up, you know, I mean, it was legit. It was legit. Anyway, so all of a sudden, the judge is like, you know what, Mr. Kohler? You're right. You win. Boom. I was like, yes. And this guy was so mad, I mean, the courtroom went nuts. I mean, you know, there was reporters out front. No, none of that. But anyway, we got into the hall, and this guy was so pissed, and he wrote me a check. He wrote me a check in the hall, and he's like, damn it. And I'm like, you owe me the money. What do you mean?

Yeah?

I'm like, what are you mad about? But I pierced the veil. Bernie Madoff to my. Got him. And I was so excited, and the rest is history. I said, I'm going to write a book about asset protection.

Yeah.

Okay. Can I do pen drop? Yep, pen drop. So there is that. Okay.

Sorry. That's good story. We came back to the point of what we're talking about. I liked it.

Thank you. You're always nervous about me bringing it around.

Yeah, I'm always like, where is he going with this? Yeah, you always find your way back. You always.

Yeah, we'll find our way back. Okay, so you said five annual meetings. What is number six?

All right, this is. This is a tip. Watch out for bs Advertisements for fake services you don't need, for annual maintenance, for annual renewals, maintenance, all this stuff. There's going to be places called, like, the Bureau of Corporate compliance, whatever, and they have, like, a logo that makes it look like it's coming from the state. Then they'll put a little Asterisks and be like, this is not a state agency. You know, but they try to make it look all official, like it's coming from the state. They use the same formats, all these form letter states, and they charge you a fee to basically do your renewal for you. And then they do your renewal, but they, like, mark it up. It's totally fake. Watch out for these things. Just beware. They try to pose as a government agency and they call themselves some bureaucrats, so be careful. Watch out for those. Because a lot of times you're giving misinformation, and a lot of people think, oh, I called them and I. They answered my questions. I took care of it. Or I paid them. Yeah, you didn't actually deal with the state. You deal with some pretend company trying to look like they're the state.

Yeah, I love it. I titled it. Avoid the scams that say they do it for you. Double check that it's really happening. Okay. My number seven is. I know I'm the nerdy CPA in the room. You know, I would like to say more like Ben Affleck and the accountant. But anyway, do your annual federal and state tax return. This is not your franchise taxes. This is just your gosh darn tax return. Because I love what Matt said earlier. It's not all about asset protection. All I would say is the primary reason. But you may want to go get a bank loan. You might want to sell your company. You might want to get credit. You. I mean, there could be.

You might enjoy your freedom and not want to go to jail for tax fraud.

Small.

I mean, I don't know, maybe that's valuable to you.

Maybe that's important. But when you don't do your tax return, it's just like you're snubbing your nose at the entire process of what your company's about. And hopefully there's. You got a good tax reason for this. A lot of times you're saving taxes by filing a corporate or a S Corp tax return. You may be doing a 1065 partnership LLC, but when you start not filing your federal tax returns, it starts a domino effect of disaster. And it also holds you back from the expansion and growth and all the things you want to do in your business. And so if you want to keep your company in compliance, do your tax return. File your extensions. Extensions are fine. Don't stress.

Yeah. Please file your taxes. Okay,

I got eight.

Okay. Okay.

I got one. Okay. Go ahead.

Okay. All right. Make sure you're maintaining the proper insurance. There's Going to be some insurance that's going to be required for your business. If you have employees, you're probably going to need workers comp. Now, if it's just you business owner, you know you're likely going to be okay in your state by not getting it. But if you have any employees, you're going to need workers comp insurance. If you don't have this, you're liable for their injuries. If you have workers comp, there's a whole workers comp system in every state that if an employee gets injured on the job, there's a whole system of how they get paid and compensated and it protects you and their business from any other liability that could arise from it. So frankly, workers comp is a bargain for businesses because it limits the amount of a claim a plaintiff could make an employee that may get injured. So make sure you're complying with workers comp.

If you got employees and there's all sorts of other insurance, you've got general liability insurance, you might have renters insurance. This is for your LLC that has a rental property too. We're not just talking about operational businesses, people. This is. You're trying to keep your LLC compliant in the state of Georgia with your rental. You know, what type of insurance do you need in that area? And I should go back to licenses. Like in Maricopa, Maricopa County, Arizona. Our number one was setting up the right registration and licenses. If you have a rental property in some counties and cities around the country, you got to make sure your rental property is licensed. So that's back to number one.

But on insurance, by the way, Arizona has, like, if you only have a couple of rentals, you get around it. If you have more than a couple, then you need it. Yeah, see, there's all these little caveats. Like if you got a lot of rentals, you might need a separate license with the county for your rentals.

Oh, geez. So general liability, workers comp. And you've got what was in their insurance I wanted to mention anyway?

Unemployment, maybe.

Yeah, some unemployment. Yep. Some insurance agent's gonna have something for you. Corey, our comment from our peanut gallery here. Okay, so Cory's got a business in photography. Yeah. He has an llc. He's living the dream. Oh, equipment insurance. Okay, all right.

Oh, yeah, good.

If it get damaged, if the equipment gets damages. Or your equipment to damage someone else. Yes, a little of both. Oh, yeah. No, I think this is an important point. Everybody out there, if you have a business with. And this might, I don't know if this is going to keep your entity compliant or not. But it does help you out in an asset protection claim is were you responsible as a business owner and carried insurance the way you should? And that's a way to pierce the veil. Now, if you've got equipment like a forklift, a backhoe, or expensive camera equipment, do you have personal property insurance that if those were to get damaged, do you have coverage? I think it's maybe more of a property issue than an entity issue, but. Good comment.

Yeah.

You know, Corey actually pays attention now to the show. I really. Yeah.

And I was going to say there's some insurance that's just optional like that. Those are going to be some of these insurance you're mentioning. Those are optional workers comp is required. Like there's certain unemployment insurance. You don't have a choice. Like there's some insurance you have to be doing.

Okay, now I've got two more. Nine and ten. Can I. Can I will be finished with ten.

All right.

And I. And maybe these last three insurance deeds, nine and ten. Oh, I just gave us. Okay, but these last two are important for asset protection that are basic and easy, and I think they go hand in hand with your entity. So number nine, make sure the deed to any real property, like a rental property, is in the name of your entity. I mean, you could go through all these steps, maintain your entity, make it all look great, do your annual maintenance, duh, duh, duh, duh, duh, duh. And then all of a sudden, you don't even transfer the rental property into the llc. And so if you want the LLC to protect you, you actually have to let the LLC do its job. Too much of a stretch. Do you like it?

Yeah, yeah, no, I like it. As part of the maintaining your asset protection happen, you know, which is about staying in compliance. It's. It's close. It's close.

All right, 10 might be a push. We may have to go back to seven or eight. Okay, number 10, good contracts. Now I want to set this up for Matt Sorenson, who has the most infamous amazing quote on contracts. You know what I'm talking about?

Yeah.

It has to do with polishing.

No, that's a different one. Is that a different one, the polishing ones? Oh, no, no. It's actually about like, you know, an entity is set up that's all jacked up.

Oh, okay. Or wasn't the contract one like a good contract makes something or what?

Yeah, a good deal. If you have a bad contract, you have a bad deal because what Happens is even when you have a good deal, a bad contract screws it up. If you have a really good deal, you've negotiated an awesome deal, let's say it's a real estate deal or a business deal, and you're really winning under that contract. If your contract sucks, that deal is not going to stay together because the other person on the end of that is going to try and get out of it and be like, oh, man. You know, at some point they could realize, man, this is an amazing deal for them. But if you want that deal to hold, you got to have a good contract. Make sure you have good contracts if you want to win on your good deals.

See, I love that quote. See, I was just trying to edify you. You're so smart. Yeah, love you, man. But in those contracts, whose name's going to be on the contract? Who's going to be. Whose name is going to be on the lease agreement? It's your entity. So when you go out and do a photography deal, when you go do a rental property, when you do a lease, when you buy something, let your entity who trying to keep compliant be on the contract. Don't put your name.

Let me go to good example. Oh, if you're gonna hire some dumb college kid, pre law student to come clean the floors at your business, sign a contract in the name of your entity. All right?

Then screw them over.

Screw them over and not pay them. Well, you got a contract.

I'm out of here. He's closed. I know. I really wanted to say I object during that first experience, but that came later in life, you know. Yeah, I wanted to say that. I mean, I can say it on the street, you know, kind of little Reese Witherspoon opportunity here and there, you

know, and real lawyers don't say, I object. They just say, objection, because, you know, I object is like, are you calling

me a bad lawyer? Is that what you must.

It was kind of like this is. If you want to look like a noob in the courtroom, you say, I object. The judge will be like, okay, I overrule you. Carry on.

Okay. See, Matt has a little more courtroom experience. You know, he used to put away bad guys. He used to put away tax cheats. They probably were never compliant, were they?

Oh, definitely not. They were not doing this stuff. And, yeah, so people went to prison for that. But in fact, I remember my first time going to court, by the way.

Yeah.

Is now as a prosecutor, and I got a felony caseload. I was like 23 years old. It was like it was a little. I think everybody like the victims that I had their cases, they were like, oh, my gosh, who is this kid?

Now, I don't want to offend anyone here, but if you're not watching this on YouTube, Matt looks like he's 27 already right now. This is so. At 23. I don't even know how old you look. Do you look a little younger?

It's good skincare routine right now, so. But I remember coming to court the first day, I didn't know what desk to sit at. I was like, you know, there's two tables. There's like the. The prosecutor and the defendant. I didn't even know what desk to go to. You know, you got to learn this stuff. So I did dumb stuff, too. Trust me. But I did learn. You just say, objection.

Okay.

You don't say, I object.

I will. I will practice that one.

Okay.

In my limited, you know, courtroom. Speeding ticket trials for.

Yeah. Hope you don't go to court again.

Yeah, I don't. I don't want it. Well, everybody, I. I don't know. Maybe 10 was pushing it.

But I got one last thing.

Oh, you got one more thing because.

Okay, Mark mentioned we have our company maintenance program. It's 150 bucks a year. We do your entity renewal. We also do your annual minutes. We are on the tail end of our company maintenance special. We do it every year. Knock 50 bucks off. You want to get enrolled in it, go to kkoslawyers.com we've got some. The CMP special. Call our team. Talk to Becky Lloyd. She's our CMP manager. If you're like, I just want someone to take care of this crap for me. Do my renewal. Do my annual minutes. Just, I don't got to worry about renewing or tracking the date. Or am I every other year or not? Or do I renew on the anniversary date or a weird part of the year because I'm in a weird state. Don't stress. 150 bucks. We take care of it for you.

Love it. Corey, can you make sure that link is also for the special in the description for the show? Well, everybody, thanks for listening. Hopefully it was educational and entertaining. We love what we do. We have a good time here every week and love Main street businesses. We hope that we're helping you better live your American dream. Keep working hard. Don't give up. Enjoy the journey. It's not a destination. It's not like, oh, I'll be happy when I make X dollars, or I'll be happy when I get my new location or whatever it is. When I have 10 rentals, then I'll be happy. Hey, enjoy the ride. Right now, look out the window. Breathe the fresh air. Well, not right now. In Idaho, it's minus 10 this morning. It's a winch. Was it cold, Corey? Oh, my gosh. I'm keeping the windows up today so we're not smelling fresh air.

Yeah, okay. All right. Well, thanks, everyone. Get over to mainstreetbusiness.com to find other episodes of the show, also to sign up for our newsletter, and we will see you back here next week.