MBA1963 Guest Teacher – Joe DiChiara – How to set up and manage a business’ finances

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I met today's guest teacher, Joe a few months ago and I thought to myself, I gotta get him on the podcast. Most people that no entrepreneurship and no finances or have a CPA license are not the best communicators. They don't know how to give it to you straight, but Joe does. So I'm going to pass it on to him to teach his guest lesson. But I'll be back to wrap up today's episode. But for now, take it away, Joe.

Hello, entrepreneurs. Joe Dechera, entrepreneur with a CPA license, coming to you from downtown Bethpage, New York, Long Island. And I want to thank you for joining me here today. If you don't know who I am, here's a little bit about me and my background. I am the founder and CEO of Bedrock Business Builders, and you can see everything about us and me on our website, bedrock businessbuilders.com and just a short version of my background if you want to know why and how I'm qualified to be talking about this. Like I said, I am an entrepreneur. So I've gone through a lot of the pain and just about all of the pain and suffering as any other entrepreneur does when, when we try to start, build and manage a small business. Not as easy as it seems, but I'm also a licensed CPA, which I became a CPA about 35 years ago as a way to learn about business. I didn't know that that meant I was going to be an accountant for all this time. But that, that's another story. But in that time, I've gotten to work with thousands of small business owners in all kinds of capacities, trying to help them, trying to serve them, really, mainly to stay out of trouble with the IRS and any other agency that was trying to dip into their pockets, if that makes sense. So what I'm going to talk about for the next 10 minutes are a couple of topics that I believe in my experience really throws new entrepreneurs off. And, and when I say new people that are just starting out and people that may have started a couple of years ago, because once you get into the first couple of years, you start seeing the results of some mistakes that you may have made. So the first thing I'd like to do is start with the beginning. When does a business actually start? You know, in all my years, over 40 years in business, I've never heard anybody ask the question like when exactly does my business start? When can I start war? When can I start writing off deductions? What people ask is, what can I write off? And I have a whole another presentation on that. But we can't go into all kinds of details. It's just simply not enough time. So the short story is that the business starts the same way as anything else, with a thought. If no action is taken, then there is no business. It's just, it stays as a thought. It's a fantasy. It goes poof. It's. It's up there in the universe forever. Sometimes they come back and you do what we call take action. Once you take action on that thought, you are not officially, but you are technically in business, if that makes sense. For instance, if you decide you, you, you're going to be in business, you need office supplies. So you get in your car, you drive to Staples. Well, guess what? That's a business deduction because you just took action. You used property that you own for a business purpose. Now the business purpose has to be that you're in this to make money. Okay? That's the, you know, if you're not in it to make money, then it's either a not for profit or a hobby. And I'm not covering that today. So this is how you start a business. Now the second step is actually a step that happens for you and you don't even know it. Just like if you pass away without a will, somebody's going to decide what happens. If you have children, if you have money, it's just not going to be you. So the same thing happens when you start a business. You are automatically by default classified as what we call a sole proprietor. That's your legal structure. Now you only have a couple of other options that I go into in depth on, on my YouTube channel and my writings. But again, we don't have time to go into all of the different issues. But your choices are to be a corporation, a separate entity with a separate tax ID number. You can also become an llc. Now, also, I'll back up a second. When you become a corporation, you have the choice of electing to be an S Corp, a small business corp, if you qualify. And there's all kinds of rules to qualify. Most people if you're living in the United States, if you're a US Citizen, you probably qualify to be an S Corp. Now the decision on what kind of entity you should do business on has to be done at your level, your current situation. You got to talk to somebody that's knowledgeable about legal business entities. Okay. Preferably a CPA or an enrolled agent that knows the tax ramifications. Attorneys are great, but they don't always take into account the tax end of things. And. And that there's a lot of weight that has to be given on how much you're going to be paying in taxes, and that is a direct result of what kind of legal structure you're doing business in. Now, if you decide to be either an LLC or a corporation, you have to go to your state. You either go to secretary of state in your state, okay, that. That's like a tongue twister, but you got to go to the secretary of state where you live, okay? And. And that's another issue about where you, you know, set up your ant today. There's not enough time again to go into that, but 99.9% of the time, it's gonna be right where you live, right where you're doing business. So now you can do it yourself. There's ways to do it yourself online. It's really not that complicated. But if you would rather have somebody else do it, there's all kinds of places that will register your LLC or corporation. And when you do that, when you do that, just so you're aware, you need to have what they call a registered agent. Now, the registered agent is the entity or the person that will get served legal papers. If there's ever a lawsuit against the corporation, it's where the. The state Secretary of state will send mail. So if somebody other than you is the registered agent, you have to make sure that you stay in contact with them because the state might be sending you bills, and if you don't pay them, then you're not a legal entity after a certain amount of time. The incorporator. So now if you incorporate yourself, you are the incorporator. We incorporate people, and usually when I do it, I'm the incorporator. So the Secretary of state wants to know who is in charge. There has to be somebody that has a fiduciary responsibility. That doesn't mean that I have fiduciary responsibility, but it's a way for them to contact somebody. If they lose contact, the next thing that we look for is are there any other business licenses that have to be registered for? And that's important because especially if you're in something like the trades, a contractor, there's all kinds of state and local licenses that you may have to apply for. And that's very, very important. So it's not just the you know, the, the state taxing and the, the IRS taxing authorities that are looking at you. It's the state whatever organization and there's a lot of them and they, more of them just keep popping up and they're, they're function is to, to get you to pay the money to be in compliance with whatever the new rules and regulations are. Again, not just at the federal level, but at the state and local level. That's where everything really starts. Now the last thing that I want to cover because we're almost on 10 minutes, I want to keep this below 12 minutes, is the business name. Now a lot of people get caught up on deciding about a name. Now the name is important, but not for the reasons that people think. For instance, my business is, is called Bedrock Business Builders Corp. That's the legal name. Now I have bedrock business builders.com that's just because that's our name and we decided to use that domain as our domain name. But we also have several other websites. Bedrock University Pro Bookkeepers. You know, I have a couple of other entities and, and branding that is not Bedrock Business Builders Corp. All goes under the same tax ID number. But for branding, for marketing, you know, a lot of times that's not the issue. So you could be XYZ Corp. I could be XYZ Corp. And still have my website. I don't have to go get a DBA or anything like that, a certificate. I do if I want to set up a bank account in that name and, and have money paid to that entity. So you can't be XYZ Corp. And somebody makes a checkout to Bedrock Business Builders because you won't have a bank account to put it in. So you do. There's the formal requirements that you have to follow when it comes to banking and registration and stuff like that. And there's the, the marketing end of it. Now also, and last but not least, the type of business that you do in an entity, in an llc, in a corporation, you could do, have. I've had clients with five different types of entities under one corporate ID number. Now for legal purposes, that might not always be the best way to do it. Okay. But I have had, you know, one corporation owned three restaurants, some other businesses. It was all reported under one federal tax ID number. I didn't set that up, somebody else did, but that was all legal. And people get caught up and when they're get trying to think of their name, they get too caught up and, and want to procrastinating on setting up the entity because of the name. So again, I want to, you know, thank Omar and the, and the production crew here for inviting me. I've enjoyed this podcast, giving it. I hope the information was of value to you and if you want to reach out to me, it's very eas. I'm all over social media and, and you can go to bedrock business builders.com and also bedrock university.com it's free registration for some really great courses that, that you could, you could take for free. That's, that's one of our gifts. And again, thank you, Omar. Back to you. Thank you.

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What a great lesson by Joe Decheria. If you want to learn more, head on over to bedrockbusinessbuilders.com or get more training over at bedrockuniversity.com now, if you don't live in the US and you kind of listened to today's lesson and thought, you know, I don't know how this applies to me. Wherever you are in the world, there will be people that understand the law and understand finances in terms of taxes and how to make sure that you're in a healthy financial position in that regard. This is usually a certified accountant or somebody who runs some sort of financial assistance firm that has accountants or bookkeepers under their belt. You might be thinking, how do I find these people? Well, my advice to you is to, to go to your local startup or coworking space or WeWork or whatever it's called in your area. Why? Because you have a lot of great small businesses there that are probably already set up with somebody like that and they can give you some recommendations. You can be part of the community. You can go into slack groups or whatever it is and ask, hey, I'm looking for somebody who can give me some financial advice as I start my business. Who do you recommend? Don't reinvent the wheel, right? This has already been figured out by somebody else in your local area. Use best practices, use somebody else's experiences so that you can benefit from their learnings and their recommendation. Now, my one piece of advice when it comes to this is do not work with anybody you just do not understand. Maybe they're too confusing if they don't bring it down a level so that we, you know, humans on earth can understand it outside of the financial world. If you don't understand what's happening. This is a bad sign. You need to find somebody who's willing to break things down so you get it. You can't just hope that they are giving you the best advice or pretend you get what they're telling you. You have to actually understand what's happening when they walk you through certain processes or making certain decisions for your business. So I would say that find somebody who's trustworthy, credible, that's been recommended. But once you sit and talk to them and you walk them through your needs, make sure you're on the same page. You don't have any ambiguity. They're a clear communicator. That's a great, great quality and a great CPA or accountant or financ. Thanks so much for listening to the $100 NBA show. If you love what you hear, hit subscribe right now on whatever podcast app you like to use. Why should you subscribe? Well, by hitting subscribe, you get our next episode automatically. So you don't have to wonder if you're going to get all the goodies. Because in tomorrow's episode we cover the top five mistakes people make on their website and how you can avoid them. These are mistakes that cost you business and most of them are easy fixes. Looking forward to covering that tomorrow. I'll see you then. But before I go, I want to leave you with this. There are boring parts of starting and maintaining a business, okay? There are things that you probably don't want to deal with and if you can afford to hire out for it, great. But if not, just see this as something like going to the gym. I gotta, you know, push myself. I gotta experience some pain so I can get to the result I'm looking for. It's only temporary. Most of these things are not something you're doing on a deal daily basis. So grin and bear it. Even if it's not the most exciting thing to do, it's just part of the journey. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care.

Hey Fidelity, what's it cost to invest with the Fidelity app? Start with as little as $1 with no account fees or trade commissions on U.S. stocks and ETFs.

Hmm.

That's music to my ears. I can only talk.

Investing involved risk including risk of loss. Zero Account fees apply to retail brokerage accounts only sell order assessment fee not include A limited number of ETFs are subject to a transaction based service fee of $100. See full list@fidelity.com commissions Fidelity Brokerage Services, LLC member NYSE SIPC.