If you don’t want to read it, you can watch this video.
An LLC is a tool. An LLC by itself, with no strategy, will not make money. It’s like YouTube. Everybody can use YouTube. Everybody can create a channel. More and more people are creating channels, but they’re not getting any views. The strategy is what will enable you to make money, including for anything like an LLC.
The other day I was talking to a client who has been in business seven years hustling really hard. They had no LLC or business checking account. They finally hit $100,000 and they were starting to make so much money they were having problems. We spent three hours on the phone.
Here’s the thing. All these tax deductions you can get don’t last forever. You’ve got a window when you count those deductions or they’re gone forever. I can give you some overview information, but the strategy is the most important thing.
I’m going to give you an example of how LLCs have helped me. Years and years ago, I used to be racially profiled in Dekalb County. I got pulled over all the time. It was always something. Then I put my car in the name of the LLC and all of a sudden, I stopped getting stopped.
This is the thing. Cops run your tags. It just happens. By putting the van in an LLC, I stopped getting stopped. It was the same van and the same driving behavior, but by putting it in the LLC’s name, I stopped getting pulled over. That’s pretty interesting, isn’t it? That’s one way that an LLC shielded me from bullshit.
Here’s another way. We had an issue years and years ago with eBay. A client bought a lot of office furniture. It was like $20K worth. I would not take $20K through PayPal. I took a $2K deposit on PayPal. I took the rest as a check. They didn’t get the furniture until the check cleared. They got the furniture and everything was good. But for some reason, the dude did a chargeback on PayPal. He never talked to me. He said the furniture was not as described. That PayPal account closed because that was the last strike on it. But that PayPal account was in the name of the LLC. It had its own EIN number and was not attached to my social security number. So, we just went with the other eBay ID and kept on trucking.
Another time the LLC helped me was when I was involved in a lawsuit. That’s one of the reasons Conundrum Publishing went away. They sued Conundrum Publishing and won, but they got nothing. There were no assets in the LLC. That dude was so upset. He couldn’t sue me.
That’s three times LLCs have protected me. Once again these are devices. As the President says, I just used the system like everyone else. That’s why I keep saying, if you have the right mindset these can be some very profitable years.
There was another thing I learned at the last job I had about LLCs that blew my mind related to how you get paid. One of the owners of the company sat in the cubicle next to mine and I would listen in and hear things. He got a paycheck every two weeks like most of us. What was interesting though was that he also got a dividend check every quarter. The dividend check was taxed like capital gains instead of like income, which is a much lower rate. That’s why forming an LLC and taking dividend income is a smart way to go.
Part of a sound financial strategy is to form the proper business structure to get business credit. You can do it off an EIN, but it isn’t the same. I’m a follower of Clark Howard’s. He’s a consumer advocate. If you don’t know who he is, he has a radio show. You should never do shit with your debit cards. I’ll give you an example of something that happened to me recently with a debit card. I went to the machine to get some cash, and somehow the machine screwed up and I did not get the cash. It gave me a receipt and it said you did not get the money.
I talked to the guy at the bank and he said your money should go back to your card. So, I waited a few days and then I literally had to force the bank to get my money. It took two weeks to get it back. If I had used a credit card to get a cash advance, they would have reimbursed me in a snap. There would have been no issues. Typically, if something goes funky with a debit card, you don’t have the speed or customer service you have with a credit card.
If you lose your YouTube channel in your name you can’t open up another one. With that said, my YouTube channel has never been in my name. It was once in Conundrum Media and it was sold to Hustler’s Kung Fu. You can sell a YouTube account. You can sell an eBay or Amazon account too.
One reason S Corps. make sense is because they don’t pay taxes. They pay taxes on dividends. So, you can form an S Corp and pay no taxes and then make an LLC for that S Corp. as the Operating Company and have all kind of money.
Every state is different in terms of the cost to form an LLC. In Georgia, it’s like $100 and it takes a day to three days. My advice has always been to create income before you start spending money to set up an LLC. You can get information about this from your Secretary of State. They will tell you what is required. You can get find out about the fees there.
Remember, if you don’t file the proper forms, you will be taxed at 55%. The details can really become a problem if you don’t know what you’re doing. We will be covering that information in Hustle Camp.
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