When you are in business it's important that you protect your assets so that you don't end up broken and homeless because of one big unexpected lawsuit. Learn how to protect the stuff you've worked so hard to earn during this powerful training.Sign Up to Watch
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-What is up, guys. My name is Daniel McKenna. I'm the executive producer here at Thrive15, the website that trains entrepreneuers on time management, pr, marketing, sales and more, and tomorrow at work is Jamaican hairstyle day and I am dreading it. But today we're sitting down with Clay Clark and super attorney Wes Carter. We're talking about asset protection for business owners. If you don't know about Wes Carter, it's time for you to get educated. Check this out.
Specifically if we're talking about asset protection for your business owners out there, later on down the line maybe sometimes soon, you might get sued. Probably will get sued. OK, probably definitely going to get sued. And when you do get sued, you want to have some asset protection in place already so when the people sue you, they can't take all your stuff. Comprende? Wes Carter is going to show you everything you need to know about the asset protection and getting that set up for you.
Here at Thrive we believe that knowledge without application is meaningless, meaning if you don't learn something today and then take it and then do something about it in your life or your business, today's lesson is going to be before meaningless than a kamikaze pilot wearing a helmet. Lack of dedication.
-Thrive15.com and Wes Carter are providing general legal information to provide Thrivers like you with the basic framework of the terms, concepts, and scenarios found within the legal system of the United States. If you are a human who is watching this video, you should seek the legal advice of a local attorney before making a legal decision. I you are watching these videos from any country outside of the United States of from any planets outside of the planet Earth, you need to seek the wise legal counsel of a local attorney who better understands the legal complexities found within your country, planet, state, or city. For instance, in some states, including California, Florida, Nevada, Alaska, and Hawaii, a motorist can be cited for driving too slowly. Other states do not have this law. Although Clay has actually been pulled over for driving too slow within the state of Oklahoma, which pretty much never happens. Wes Carter is a great American and a beautiful man. Thrive15.com and its partners are in no way legally liable for any fashion statements that he makes verbally or just by emitting fashionable awesomeness simply by entering into a room. Wes Carter is not related in any shape or form to Clarence Carter, recording artist, John Carter, entrepreneur and artist, or Joe Carter, MLB baseball great.
-Wes Carter, it is so good to have you back on the show. You're always a bro who's in the know. I feel like I go to your dojo every time we talk. I just learn all this awesomeness. Can I start with a boom? Just a little boom. Boom. Awesome. OK. So today we're talking about asset protection of business owners.
-Wes, it's great to have you back on the show but legally speaking I have to ask you this question. There is people in Australia right now petting kangaroos that are worried about this. They're wanting to know, legally, are you in any way related to Nathan Carter, an Irish country singer whose debut album, "Starting Out," was released in 2007?
-You know what they say. Wes, you know, if I'm a business owner watching this, walk me through your checklist of asset protection moves that every business owner should do to properly protect themselves. I mean, what kind of asset protection moves should I be doing to make sure that I'm protecting the stuff I've worked so hard for?
-One, you want to have a business entity. That's a good one. So we're talking LLC, corporation. Something that's going to help protect your personal assets from your business debts.
-OK, so number one you want to have some sort of entity, whether that's an LLC or a corporation, just some sort of entity.
-OK, what's number two?
-Number two is good insurance.
-Good insurance. OK. And this is a deal where I have met well with a lot of successful entrepreneurs all over the country and they always say have the right entity and have a ton of insurance.
-They always say insurance is like the cheapest peace of mind you can buy.
-And I always thought, whatever, I'm not going to do that. And then I ended up having one of my trailers stolen with a lot of equipment in it, and I realized that that was more expensive than insurance and so therefore I'm now a big believer in that. So--
-And insurance covers your attorneys fees which can be more expensive than the claim itself.
-Yes, more expensive.
-That makes me want to sue you more. All right, well, Wes, according to an article that appeared on Forbes.com on January 1, 2012, which is written by a guy by the name of Matt. It could be Kibb, Matt Kibby, Matt Kibby, we don't know. But he says tort litigation costs Americans more than $250 billion.
-With a B.
-Billion. That's the equivalent of 2.2% of the gross national product here. That's the GDP. And roughly $838 per person according to Towers Watson. What is he talking about? That's a lot of money.
-Well, I mean, tort is a very broad term. It's everything from a personal injury to employment kind of claims. Basically I wronged you, you owed me money for it.
-What does tort mean? That sounds like a dessert.
-It is a legal wrong. You did something to me that caused me damages, and so I want to recover those damages. You know, that's a broad word, tort. It's and old, crazy word for you hurt me.
-OK. All right. Well, I find myself a lot of times saying that, not knowing what it means. I'm just like, you've torted me, and people are like, what does that mean? I'm like, I don't know, I just say it. You know, it's like nip it in the bud. But people say nip it in the butt. That's kind of how I use the word tort. It just rolls off my tongue.
But Wes, on a scale of 1 to 10, if I'm the business owner for five years, 10 being the most likely, 1 being the least likely, what is the likelihood that I'll find myself in a situation where I wish that I would have properly protected my assets?
-100. A billion.
-That's more than 10.
-So you're saying it's definitely going to happen?
-Definitely going to happen.
-Oh, man, gosh. The legal eagle, just [SOUND EFFECT] always getting the negative stuff here. OK.
-We're all about worst case scenarios.
-So what are the most common misconceptions that people have when it comes to asset protection? Where they're like, I'm all good, man, I'm all good. I just doing good.
-One is, I don't need a business. I registered my name with the state, is what they call sole proprietorship.
-I filled out a form that says I can do this as a-- you know.
-I filled out a form, so I don't have any worries.
-I got online, I hit Enter.
-Bam. Keep all my cash in a Folgers can in my house.
-Right. The second one is, maybe I have personal insurance or I don't need insurance because my business is only making a few hundred bucks right now.
-Shoot, I don't need insurance.
-Because I've got all the stuff I filled out on that paper with state.
-Cash in a Folgers can. I don't need insurance.
-Or I got nothing to lose anyway.
-You know, so those are some of the misconceptions that you don't need it for X, Y, or Z
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-OK. Story time, Wes. Set the stage here. Give me the narrative here. Tell me a story about a scenario where a business owner wished-- You don't have to tell me the specifics. I know legally you can't really give me much. But just change the gender of the person you're describing. Change the city, the town, maybe the industry. But what is a specific situation where you were you saw an owner that wished they would have taken the time to protect their assets proactively after the fact?
-I've seen literally multimillion dollar manufacturing companies that had little to no insurance and very shoddy corporate stuff, as far as how they set the corporation. It was, I knew a guy, I borrowed his stuff, we switched out the names. There're still blanks in the documents. And so with that much money the company's doing, the owners are making a nice little chunk of change.
But the problem is, first time something really bad happens, let's say oh, I don't know, employee dies on the job.
-Easy to get your personal assets. Insurance isn't there to help you out. Next thing you know, all the owners are bankrupt. And the company's dead, because one claim wiped out everything.
-That story really went pretty negative pretty quick. It just kind of-- I want to ask you this, because I come from the hip hop generation.
-Because of Russell Simmons and what he did with the Hip-Hop Nation there, I kind of just view things in a hip hop America. It's like a hip-hopera. That's how I view life. It's a hip-hopera. You used the word shawty. Were you are referring t T-Pain like Shorty? Like that? Or shoddy like bad?
-Less than acceptable.
-I wasn't sure. Sometimes he starts throwing-- when it's a hit-- when you're dealing with life like I do, and you're talking, it's like a hip-hopera. And I'm trying to just sift through it there. I wanted to make sure you weren't talking about anything that T-Pain was talking about. So Wes, walk me through the action steps I should do right now if I own a business. Are you saying I should go and make an entity, buy some insurance right now?
-Yes, right now. First, get a corporation. Get an LLC. Talk to someone about what's good for you, besides nothing. If you just send in a DBA with the state, that's nothing.
-Doing Business As, that's what that means, right? DBA.
-Yes. Sometimes your state calls is a trade name, an assumed name. I get that all the time, where someone's like, no. I filled out this piece of paper, they said I've got to operate under this name. That's really just you with an alter ego, is what it is. And it's no protection whatsoever for any of your personal stuff. Second, get some insurance. Even if it's just a cheap general liability policy.
-Get some insurance. You'll be happy you did it.
-OK. Now Wes, if I'm watching this right now, and I'm going OK, I'm going to do it. Just go ahead and punch me in the face with a amount. How much is it going to cost?
-Setting up a corporation, $500 to $1000.
-But I mean, you're talking about setting up the building blocks of your entire empire you're about to build. So that's cheap.
-Gold-plated legal eagles is what you guys are.
-And then insurance, it just depends on what industry you're in and what your policy limits are.
-OK. Well, you heard it here. I'm not the one pushing the whole insurance deal, pushing the whole legal thing. That's this guy. He's saying, whatever, if you want to have peace of mind. I say, peace of mind, peace of schmind. Did Noah have insurance? Do you think, did Noah have an LLC? No, he didn't. And that's just goes to show you.
-Hey, everybody's got that buddy from college that sells insurance and calls you all the time. Next time just return the call.
-Yeah, I mean seriously. You'll freak him out. When he's cold calling you, he's like hey dude. Because he's got this whole-- If your buddy sells insurance, he's got this whole move where he's trying to act like he's not trying to sell you, but he is. Hey, guy. Why don't we get together and go out to lunch? I feel like we could talk about some stuff. It's been a while.
And you're going, we have not talked for four years. Yeah we go to Panera. I'll buy. And you're going, either you are in a multilevel, or you're selling me some insurance. And you know it's going to happen. Freak him out and say, brosef--
-I'd love to.
-I'd love to. Do you sell insurance? Sure, I'd be happy to buy. It'll freak him out. He'll probably end up having a--
-It'll make his year.
-Yeah make his year, make his year. So anyway, the moral of the story is, make your buddy's year, buy some insurance, form an entity, protect your assets, right?
-Sleep better at night.
-Boom. Wes, can I get a boom?
-Wes, I look forward to suing you later, my friend.
-I can't wait.
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