How To Avoid Getting Sued as a Business (Compliance Expert Explains)

Treaties are changing between countries, you know, some tax havens aren't becoming tax havens anymore. Even if you're living outside of the US, if you're selling to our citizens and you're in that country, you've got to still pay income tax to the US. The US are becoming more aggressive with some countries.

Welcome to the High Voltage Business Builders Podcast, a show where we interview high voltage entrepreneurs growing and scaling through ecommerce, real estate, and other wealth without Wall Street ventures, showing you the path to making your first or next million.

All right, everybody. Welcome back to another podcast episode of the High Voltage Business Builders Podcast. If you're here to learn about making your next million, keeping your next million, or, or growing your first million, then you're on the right podcast. Buckle up. We've got a great episode today. We're gonna talk about what it takes for you to get in compliance so that the IRS doesn't storm your doors and break through, and the UK doesn't come in and want to, you know, liquidate your VAT LTD or any other place in the world where you may need to know how to stay in compliance. For US citizens and non-US citizens alike, guys, pay attention to this episode. It's going to be for you when it comes to the boring things that are very important. I think it's boring. You're going to argue with me on this one, Ruben, because, you know, it's needed, but it's not the fun topics, right? Did you make it profitable? Did you keep it? Were you in compliance? Are you got all your ducks in a row? And that's why I bought him, brought him in today, right? So Ruben, welcome to the call, brother.

Neil, thank you so much for having me.

So you're going to bring sexy back to Nexus, right?

I'll try my fighting best.

Well, tell us a little bit about what you're into, you know, into right now. And then maybe how you got there. A little quick history lesson for us.

Yeah, of course. So we're just in the wonderful world of sales tax compliance, which kind of navigating over the minefield that is all of the different sales tax regulations across the US. If people are selling online in the wonderful world of America, so whatever platform you're selling on, You have to be obviously aware of where your liabilities are. So that's our main focus. I mean, how we got there, I guess in a nutshell, I was always very interested in the world of e-commerce. Started my own, well, my own e-commerce business on my own initially 5 years ago, and kind of built this business out of that because I realized the demand and the need. A lot of people were coming to me asking for help. I can't say it was what I planned for, but I guess You've got to learn to adapt and adjust and move where the demand is in the world of business. And I guess, yeah, that's what I managed to do.

Now, Agility, were you a W-2 employee? Did you start your own company and that? Did you go to university? How did you get off the ground?

Well, my original first degree I did was physical therapy in the healthcare industry, and then I moved into high school science teachings. I was always in the industry of working with people and helping people, but the kind of business and entrepreneurial side, I've just kind of developed myself as a passion and as an interest. My self-serve company was just started by myself and it was a limited company in the UK that I basically started out of my bedroom around COVID time and maybe didn't expect it to grow as quickly as it did and as much as it did. And when I realized the potential, just trying to get the right people around me as quickly as possible, staff in place. But yeah, it just started out of this humble British man's bedroom, bestest of enclosures.

No garage? You were in a bedroom?

Not a fancy garage.

Where's the garage?

A small little bedroom, nothing fancy.

So you pulled a Harry Potter, not a Google, basically, by—

I wouldn't say that.

Did you stumble upon that? Did you pivot to it when you realized there was an opportunity? And how did you identify that?

Yeah, it was through the process of setting up my own ecommerce store initially when I was— this is, like I said, over 5 years ago. And yeah, I just realized the complexities of what it took to get my business going and to be compliant and protected. And I spoke to so many different firms and accountancy places and law places. They all seemed pretty clueless when it came to the ecommerce niche and this thing called economic nexus. knowing all of the different legislations across every state. So yeah, and I was in a few communities at the time when I was starting my e-com business and selling and people kind of become aware of what I'd done and that I was doing it successfully. So people started coming to me for guidance and help. So I kind of, yeah, the light bulb went on. I was like, actually, maybe this is a better business idea than even just selling online. So I started, you know, continued doing both. And then as this grew, I actually moved away from just selling products online and actually growing that business.

Agility is an important measure in business. If you aren't quite in flow and you figure out what you can do and where you're, you know, some people call it your superpower, but you know where your real skillset lies and what you enjoy getting up and doing every day, then, you know, you should pivot to that because it was where you will create your biggest value. And it sounds like you've made your place in value. Did you learn this from your family, parents, entrepreneurialism? Did that come naturally to you or?

Interestingly, I wouldn't say I come from a particularly entrepreneurial family. But my granddad, who I never met, because he passed away just before I was born, supposedly he was like, you know, entrepreneur on steroids. He was like starting a business every 3 minutes, by the sounds of it. He was lecturing at university in engineering while juggling all these businesses he was doing. So I don't know if there's something genetic there, nature versus nurture or whatever. But yeah, he was very much like that. And I'm told I'm like him. Yeah, I kind of broke the mold and it came to I mean, those stories, that's very cool.

And you listen to them, which is awesome. Another thought process, another ear. Did you, as you pivoted through all that and found your way to this, is there things that you're looking at now, things you're seeing in the future that you find interesting, things you want to tackle, verticals, or is there different? Are you going to just keep working to grow this into an exit or kind of what's your game plan there?

Yeah, I mean, I think we're starting to focus more on technological scaling as far as what we can advance without our tech and what tech can do for us to advance us. Because I think we've just been really good at word of mouth, at growing business and just quality of our customer service and our reviews. But we've not been massive on pushing ourselves online as much as we could. So wonderful podcasts like this is obviously part of that, but also just kind of working on SEO and various things like that we're going to have a big push on in the next 6 months. And see where that's going to lead. But that'll be my main focus in the next half a year to a year or so.

So if there's somebody who is, you know, going after their first million in business and wants to know what to do to be in compliance from the very beginning, what are maybe 2 or 3 tips you would give those people who are just kind of kicking it up, getting started on their way or in flow on their first million in sales?

Yeah, I would say just start early with it really, because I think the biggest mistake we in this business is people kind of opt for ignorance is bliss and opt, you know, the idea because I'm not based in this state, I've obviously got no liability there. It's just the state I'm based in and they focus on just their business state or maybe where their staff are based. So I would say, yeah, I'd get checking early doors so you don't have that kind of backlog that's going to catch up with you or when you come to exit in the future and sell your business, you are you know, fully covered and your business looks really good. Because again, they're just easy things that you can miss. And there's good tools to do that. We as a company offer kind of free consultations to cover that, to do an assessment of the business. But there's good softwares out there as well that people can plug in. And if they just want to manually check, but yeah, I would just say get on it as soon as possible.

Okay, awesome. And they can go over to rgmtaxexemption.com. To check that information out and get with you if they're going after their first million. This is one of the things we help them, you know, at the very beginning of the fundamentals of business is get the business stacked up correctly, get their taxation correctly, their accounting correctly, their chart of accounts incorrectly, their bookkeeping and everything flowing right from the very beginning to track that profitability and compliance much easier. So I definitely echo that with you guys in terms of learning if you're new and haven't got that going or maybe not working with us to do that and you're in the process and you're getting started. Definitely go check that out. If you are in the more like small business space, say you're doing above $1 million, $2 million, $5 million, what do those folks need to pay attention to? You know, as we go through 2024 into 2025, what are some of the things you should advise them on here quickly that they should be paying attention to?

Yeah, of course. I would say number one, be aware of the different requirements of the different platforms that you can sell on because you've got a lot of platforms which cover a lot of the sales tax. Collecting and remittance for you, such as Amazon and eBay. But you've got platforms which don't do that at all. So you need to be very on top of the settings to be tweaked. And obviously, if you're selling on your own website, that's not going to be happening either. So they have a good look at the different platforms and collate that and work out the differences. I would say just keep an eye on states which have lower thresholds, because some have much lower thresholds than others. You only have to sell 200 products to in a calendar year to trigger nexus. Others, it's like $100,000 in sales. So maybe if you have at least an idea of which states have those lower thresholds, you can kind of keep an eye on that. And you can have some idea in your head of the cost of the registration to those states. You want to do it yourself or get a company to outsource it, to keep an eye on that. And I guess finally, you can again look up the kind of general updates and legislation. We do blogs on our website for that as well to keep people updated. But you can always reach out to states specifically. Keep an eye on the ever-changing landscape because these states are loving to change the goalposts every few months, it feels, when it comes to ecommerce because it's a kind of evolving niche that we're in. So yeah, just keep an eye on updates that you don't get caught out there as well.

So, and then let's say the Amazon platform, maybe we'll talk about TikTok and Shopify. Those are kind of the 3 big ones. Let's just go platform, you know, platform by platform for a second for me and kind of outline, you know, let's say Amazon FBA, what's something someone needs to be paying attention to?

So Amazon is the big one, which does most of the work for you and the lifting for you. So I guess the hardest one to be caught out on, but you still do need to be registered in your own state, you know, which you're businesses in. And there are some states as well with Amazon, which like you to actually do what's called a gross filing with deductions, you know, Amazon are collecting that tax and remitting it for you, a state wants you to still do a filing and say, this is how much we've sold. So they know that it's matching with what Amazon is saying. So that's kind of about when it comes to platforms like Shopify and TikTok, they've not got the ability to be collecting and remitting the sales tax at the moment as it stands. And this could change. But as in like to remit it for you, but they do have the ability to kind of ring fence the sales tax as an additional when you sell a product to, you know, know the right percentage to collect when an item is sold to a state. So with those types of platforms, you've just got to be more on the back office stuff things, and you've got to be aware of when to do it. And again, the opposite extreme of the spectrum to not get caught out on is that, you know, just tick all of the boxes to all of the states that I better just collect sales tax for everything when you don't have to, because you're going to really put yourself at a disadvantage because it's going to boost the prices of all of your products selling to every single state. And it's going to make the prices of your products seem more expensive because people are having to pay sales tax. So you don't have to do that. Even when you're selling quite a lot of products, keep an eye on that so you're not overcharging your clients. I think that's quite helpful as well.

Excellent. So for those non-US citizen entities, what would you advise them on here today?

So, I mean, our typical setup would be to form a US LLC, and typically in a state where you don't have state tax to pay, where we have registered agents in, a common one for us is Wyoming or Delaware, where you've got low fees to set it up, low ongoing costs, you've got that extra layer of protection that you're not just going in as a sole trader from another country, something goes wrong with you, your product that you're selling or whatever you're doing, you've got that extra layer of protection. And you've got more options as well of what you can do. I think you've got to be a little bit aware as well on double taxation laws, because on the wrong type of LLC, kind of as a corporation, or if you open a corporation instead of an LLC, you can come under some double taxation rules depending on what country you're in. Many different countries have different tax treaties between them. Again, you want to check that tax treaty that your country has outside the US with the US. You're not paying double income tax on that. And obviously that's moving a little bit into the income tax side of things besides sales tax, but it's still really important to be aware of, particularly when you're first starting that business as well.

Okay, so we've unpacked a lot of rabbit holes here. There's a number of these we could dig into, but just for time's sake, let's ask the question, was there anything I didn't ask you or something we didn't get to just yet? A particular audience, a person, a tax awareness, something maybe for 2024 they should know about? Is there anything that we didn't bring up that you should tell us about today?

So there's been a really big push at the moment from the US of basically a report that needs to be filed if you have an LLC open. So it's like a business ownership filing, a BOI. Yeah, yeah. So that is a big thing we're seeing amongst our clients, just to be aware of that if you don't file that, you know, they're threatening all kinds of big fines and issues and things. But yeah, at the moment, I would say Tax treaties are changing between countries. You know, some tax havens aren't becoming tax havens anymore. The U.S. are becoming more aggressive with some countries that even if you're living outside of the U.S., if you're selling to our citizens and you're in that country, you've got to still pay income tax to the U.S. Be aware of those changes with the country you're residing in and how the U.S. are treating that tax treaty which you once had. That would be probably my kind of most current. piece of advice with the initial startup and the tax that you could be paying.

Okay, awesome, dude. Well, these are some really great tips, folks. I encourage you to go over to the website on the screen, rjmtaxexemption.com. It'll be in the show notes and information as well. Get a free audit. Let his team go through, use their software, use their methodologies to determine is there anywhere maybe liabilities you may not be indemnified correctly or have your ducks in a row. Get your IP set up correctly for proper taxation and valuation for the company. It's extremely important. Especially when it comes to time of sale. So do you help with businesses in preparing any taxation and documentation for time of sale?

So we don't really go too hands-on when it comes to the kind of income tax side of things. We can help a little bit on the initial startup, but when it comes to the end of the journey and the kind of income tax that you'll pay, we have partners that would do that. Unfortunately, I can't say I'm a particular expert and pro at that stage of it. I'm gonna just be honest.

No, that's fair. You don't know the answer.

Uh, that's okay.

If you're not prepping, if that's not your business structure, then that's not your business structure. I was just curious.

Yeah.

It's definitely something we want to keep in mind as we're building businesses. As we talk about here a lot on this podcast, as we build with the end in mind, as you get these things correct, as you put taxation and controls and track your nexus and only attribute taxations for the right states at the right time when you need to. And of course, don't be looking at this thing like a giant black hole because then you could be victimized by it and you don't want that. And you clearly want to be in control of your finances and even look at the ugly things if you have to, to make sure that they're Tracked and controlled. Do not get one of those weird moments where you're like, I owe how much taxes at the end of the year? Because that is not an informed business decision maker who is paying attention to their business if they don't understand their liabilities. And make sure you're doing that and you will have some structured information and knowledge. And if you've got any additional questions, hit up Ruben and his team, go through that process, make sure you understand it and make sure where your liabilities are and where your opportunities are. Is there a good case study or something that maybe you got of somebody, you know, doing this right and wrong that you could share with us?

I mean, many, yeah, I'd say again, that the people who are doing it the best are the ones who are willing to kind of pay the cost upfront. And I say the cost, which makes it sound big and scary. But the cost is actually typically small when you start as a business selling with sales tax, but they're just willing to do the registrations. So like the best case is that, you know, the teachers perhaps in this scenario, they're just ahead of the game. The, you know, the worst cases are people who have maybe even kind of middle ground. They've registered to some of the states thinking, oh, I'll be safe and I'll register to them, but haven't then kept on top of their filing or really tracked it properly. And then they get holds on their card for $20,000, you know, out of nowhere, freezes their bank account. Or you get these huge penalties and fines through the post. Those are the worst cases that you hear. And it's, yeah, it's a mixed bag. Hopefully people will take a bit of initiative and not be the latter on the case studies.

I would hope so as well. Don't be victimized by your own ignorance. Go figure it out. Find the Knowledge to Path in its wisdom by learning, listening, liking, and sharing these, as well as making sure that someone else hears this who might need to hear about it. Thank you so much for coming on, Ruben, sharing some good words with us.

Thank you so much for having me.

All right, guys, as always, like, comment, share, engage. If you've got additional questions for Ruben, just drop them in the comments. Make sure you guys get out there and stay in compliance with your taxes. It's extremely important. It is a system we have to behold to. You don't want to become victimized by it. So make sure you have the knowledge you need. Hopefully today you gained some of that. If you've got additional questions, you know where to go. Until next time, we'll talk to you guys later.

Ask you this. If you're serious about building an e-commerce business starting on Amazon FBA, what if myself and my team worked with you one-on-one to execute the steps outlined in the podcast while helping you discover what the heck to sell, how to make sure it's profitable, and how to successfully launch a brand. Plus, how to do it under a consulting plus performance-driven model where I put a $10,000 skin-in-the-game guarantee for those that show up and are serious about building a real business done with us. If yes, text keyword profit to +1-417-413-4209. That's 1-417-413-4209. And I will personally respond with a few simple questions. If you're not in the US or Canada, please visit voltage dm dot com. That's voltage dm dot com. Click Get Started and book a no-pressure discovery call with me or a member of my team to learn more about the Business Builders one-on-one coaching and mentoring for CEOs, entrepreneurs, and those looking to build an empire or retire using the power of e-commerce. Once again, thank you for listening, and be sure to tune in next week for a brand new episode of the High Voltage Business Builders podcast.