[00:00:01]
WELCOME TO THE SCORE HOUSTON TV SERIES, THE ENTREPRENEUR'S JOURNEY WITH SCORE.I'M YOUR HOST, RUCHI GUPTA, BUSINESS MENTOR AND VICE PRESIDENT OF THE NORTH REGION AT SCORE HOUSTON.
FOR THE LAST 60 YEARS, SCORE HAS BEEN PROVIDING UNFAVOR SUPPORT FOR SMALL BUSINESSES, PROVIDING FREE, CONFIDENTIAL MENTORING, AND A PLETHORA OF TOOLS AND RESOURCES ON DIVERSE BUSINESS AREAS.
OUR LATEST ENDEAVOR IS PARTNERING WITH OUR FANTASTIC TEAM AT HOUSTON TV TO DEVELOP A SERIES PACKED WITH ACTIONABLE BUSINESS INSIGHTS.
EACH EPISODE IS CURATED AS A HANDS-ON GUIDE TO ELEVATE YOUR UNDERSTANDING OF THE EXCITING AND MULTIFACETED JOURNEY OF ENTREPRENEURSHIP.
IN OUR LAST EPISODE, WE EXPLORED THE ENTREPRENEURIAL MINDSET AND LAID OUT A LEAN ROADMAP FOR BUSINESS PLANNING.
A NATURAL NEXT STEP AS YOU EMBARK ON YOUR ENTREPRENEURIAL JOURNEY WOULD BE UNDERSTANDING THE LEGALITIES OF SETTING UP AND RUNNING A SUCCESSFUL BUSINESS.
AND THAT IS WHAT WE ARE GOING TO BE TALKING ABOUT IN TODAY'S EPISODE TITLED THE LEGAL TOOLKIT FOR ENTREPRENEURS BUILDING A SOLID LEGAL FOUNDATION IS KEY TO SAFEGUARDING YOUR BUSINESS'S FUTURE.
WELL THINK OF YOUR FOUNDATION AS THE BEDROCK UPON WHICH YOUR BUSINESS STANDS.
WITHOUT IT, YOU ARE OPERATING ON SHAKY GROUND, VULNERABLE TO LEGAL PITFALLS.
ADDRESSING LEGAL CONCERNS EARLY ON CAN HELP YOU MITIGATE RISKS, NAVIGATE COMPLEX LEGAL MATTERS WITH CONFIDENCE AND CLARITY, AND LAY THE GROUNDWORK FOR SUSTAINABLE BUSINESS GROWTH.
I'M EXCITED TO WELCOME A SPECIAL GUEST TODAY WHO BRINGS A WEALTH OF EXPERIENCE IN GUIDING ENTREPRENEURS THROUGH LEGAL COMPLEXITIES.
JOIN US AS WE DISSECT THE NUANCES OF LEGAL COMPLIANCE.
FROM SELECTING THE RIGHT LEGAL STRUCTURE TO SAFEGUARDING YOUR BUSINESS INTERESTS.
WE WILL COVER SOME CRITICAL AREAS ESSENTIAL FOR THE LONG TERM SUCCESS OF YOUR BUSINESS.
WELCOME BACK TO TODAY'S EPISODE TITLED THE LEGAL TOOLKIT FOR ENTREPRENEURS.
SO ARE YOU READY TO DEVELOP YOUR LEGAL TOOLKIT AND UNDERSTAND THE LEGAL CONSIDERATIONS TO SAFEGUARD YOUR BUSINESS ENTITY? LET'S DIVE IN.
JOIN ME IN WELCOMING OUR DISTINGUISHED GUEST PANELIST FOR THE EPISODE, RITA, LEADER RITA, WELCOME TO THE SHOW.
RITA IS AN ATTORNEY WHO HAS PRACTICED CORPORATE LAW FOR OVER 40 YEARS.
SHE RETIRED FROM HER LEGAL PRACTICE IN 2013 AND HAS BEEN PASSIONATELY SERVING THE CORE HOUSTON CHAPTER EVER SINCE, PROVIDING MENTORSHIP AND LEGAL GUIDANCE TO SMALL BUSINESSES, ENTREPRENEURS AND STARTUPS.
RITA, IN ALL HONESTY, LEGAL MATTERS CAN BE QUITE DAUNTING AND IT'S OFTEN A FEARFUL TERRITORY FOR ENTREPRENEURS OUT THERE.
SO LET'S UNPACK THIS A BIT FOR OUR VIEWERS.
I WANNA TOUCH ON THE MOST FUNDAMENTAL AND CRITICAL ASPECT OF SETTING UP A BUSINESS, WHICH IS CHOOSING THE RIGHT BUSINESS STRUCTURE.
LET'S CONSIDER A NEW STARTUP FOUNDER WHO IS JUST SETTING UP THEIR BUSINESS.
THE OVERARCHING QUESTION FOR THEM WOULD BE, SHOULD THEY BE A SOLO PROPRIETOR? SHOULD THEY BE AN LLC CORPORATION? CAN YOU ELABORATE ON THE DIFFERENT BUSINESS ENTITIES AVAILABLE TO US AND OFFER SOME GUIDANCE ON HOW TO SELECT THE RIGHT BUSINESS STRUCTURE THAT CAN CATER TO A VARIETY OF BUSINESS GOALS? YES, I'VE FOUND FOR SMALL BUSINESS CLIENTS, THE MOST POPULAR TYPES OF BUSINESS ENTITIES ARE THE SOLE PROPRIETORSHIP PARTNERSHIP, LLC, AND CORPORATION.
TO TAKE EACH OF THOSE IN TURN, A SOLE PROPRIETORSHIP IS SIMPLY YOU, THE INDIVIDUAL.
YOU DON'T NEED TO SET UP AN ENTITY IN ORDER TO DO BUSINESS.
UH, THE GOOD NEWS IS IT IS VERY EASY TO FORM.
YOU GET TO KEEP ALL THE PROFITS MADE.
UH, IT'S VERY POPULAR, PARTICULARLY FOR HOME-BASED BUSINESSES.
UH, THE DIFFICULTY WITH A SOLE PROPRIETORSHIP IS IN THE LIABILITY THAT IS ANY OF THE CONTRACTS YOU ENTER INTO ANY OF THE, UH, RISK THAT ARISE IN THE OPERATION OF THE BUSINESS ARE A CLAIM AGAINST THE OWNER'S ASSETS INDIVIDUALLY.
AND, UH, THE PERSONAL ASSETS CAN BE AT RISK IN THAT WAY.
UH, A SECOND DETRIMENT TO A SOLE PROPRIETORSHIP IS THAT A SOLE PROPRIETOR NEEDS
[00:05:01]
DIVERSIFIED TALENTS.YES, YOU'RE THE CEO, BUT YOU'RE ALSO THE JANITOR AND THE SUPPLY CLERK CLERK AND YOU NEED TO TAKE CARE OF THE BOOKKEEPING.
SO THAT LEADS US TO THE SECOND TYPE OF BUSINESS ENTITY, A PARTNERSHIP, BECAUSE A PARTNERSHIP IS MORE THAN ONE PERSON, COULD BE MANY THAT PRESUMABLY HAVE DIVERSIFIED TALENTS.
YOU DON'T WANT TO HAVE THE SAME ABILITIES AS YOUR PARTNER.
UH, THAT PARTNER'S TALENTS MIGHT BE HAVING FUNDS TO SUPPORT YOUR BUSINESS, AND YOU COULD PUT IN THE SWEAT EQUITY THE PARTNER PUTS IN THE MONEY.
BUT ONCE AGAIN, IN A GENERAL PARTNERSHIP, THERE IS THAT ISSUE OF LIABILITY BECAUSE ALL THE PARTNERS OF A GENERAL PARTNERSHIP ARE EQUALLY LIABLE FOR THE DEBTS AND, UH, OPERATING RISKS OF THE COMPANY.
SO YOU CAN SEE THIS LIABILITY ISSUE IS A MAJOR ONE IN DETERMINING WHAT TYPE OF ENTITY SHOULD BE CHOSEN, WHICH IS WHY THE LLC IS A VERY POPULAR SOURCE OF, UH, CHOICE FOR SMALL BUSINESSES.
LLC IS, AS ITS NAME INDICATES, LIMITED LIABILITY COMPANY.
SO WHEN THERE ARE LAWSUITS AGAINST THE COMPANY, THE LAWSUIT IS AGAINST THE ASSETS OF THE LLC BUT NOT THE PERSONAL ASSETS OF THE OWNER.
THERE IS A CORPORATE SHIELD AROUND THE ASSETS OF THE OWNER THAT CANNOT BE PIERCED BECAUSE THE LLC IS THERE, UH, NOW AND YOU CAN LOSE EVERY PENNY YOU PUT INTO AN LLC, BUT AT LEAST YOUR PERSONAL ASSETS WILL BE PROTECTED.
UM, AN LLC IS A VERY FLEXIBLE ENTITY.
IT IS FILED WITH A SECRETARY OF STATE, SO IT'S ALWAYS A MATTER OF PUBLIC INFORMATION.
AND OUR FINAL FOURTH TYPE OF ENTITY IS A CORPORATION ALSO PROVIDES LIMITED LIABILITY FOR THE SHAREHOLDER OWNERS.
IT IS A BIT MORE STRUCTURED AND ITS MANAGEMENT, BIT MORE RECORD KEEPING REQUIREMENTS THERE.
ONE WILL SEE INVESTORS ARE MORE INTERESTED IN INVESTING IN CORPORATIONS RATHER THAN LLCS.
AND A PRIMARY DIFFERENCE IS THAT CORPORATIONS CAN BE TAXED IN ONE OF TWO WAYS, EITHER AS A CORPORATION, WHICH INVOLVES DOUBLE TAXATION, OR IF THE CORPORATION QUALIFIES, IT CAN BE A PASS THROUGH ENTITY SO THAT IT IS ONLY, UH, AN S CORPORATION THAT QUALIFIES.
UM, THAT IS THE PRIMARY BENEFIT OF, UH, A CORPORATION, IS THAT YOU CAN HAVE A, A FORM OF PASS THROUGH ENTITY IN TAXATION.
LET'S DIVE A BIT DEEPER INTO THIS.
SUPPOSING I WANNA START MY OWN BUSINESS AS A DBA.
IT'S GONNA BE A HOME OFFICE AND MAYBE I OFFER, UH, CONTENT CREATION SERVICES.
MAYBE I WANNA OFFER EDITING COPYWRITING SERVICES.
WHAT DO I DO TO REGISTER MY BUSINESS IN THE STATE OF TEXAS, YOU HAVE DESCRIBED A BUSINESS THAT IS JUST RIGHT FOR A HOME OFFICE, HOME-BASED BUSINESS.
SO, UM, THAT WOULD BE A SOLE PROPRIETORSHIP IN ALL LIKELIHOOD.
IF THE LIABILITY ISSUE WAS NOT CONSIDERED TO BE A, A MAJOR ONE, AND THAT WOULD BE A DBA, A SOLE PROPRIETOR WOULD FILE AN ASSUMED NAME CERTIFICATE WITH THE COUNTY CLERK'S OFFICE OF THE COUNTY IN WHICH THEIR PRINCIPAL OFFICE IS LOCATED.
UH, IF THEY DO BUSINESS IN A NAME DIFFERENT THAN THEIR OWN, SAY THEY WANNA GO BY CREATIVE COPYWRITING, THEY WOULD FILE AN ASSUMED NAME CERTIFICATE SAYING THIS INDIVIDUAL DOING BUSINESS AS CREATIVE COPYWRITING.
IF THE INDIVIDUAL DOES BUSINESS IN HER OWN NAME, THERE'S NO ASSUMED NAME, NO FILING NECESSARY.
LET'S DIG INTO THE LLC MODEL IN DETAIL.
OKAY, I'M SUPPOSING I WANNA START AN LLC AND YOU MENTIONED, UM, HOW AN LLC FORMATION HELPS YOU PROTECT YOUR PERSONAL ASSETS AGAINST LIABILITIES.
SO I THINK IT'S A VERY POPULAR MODEL FOR SMALL BUSINESSES.
HOW DO YOU GO ABOUT REGISTERING YOUR LLC, THE STATE OF TEXAS? WELL, FORTUNATELY THE SECRETARY OF STATE OF TEXAS HAS MADE IT VERY SIMPLE.
THERE IS A FORM 2 0 5 TO REGISTER AN LLC THAT CAN BE FILLED OUT ONLINE THROUGH AN SOS DIRECT ONLINE FILING.
UH, IT ALSO COULD BE UPLOADED THROUGH SOS UPLOAD OR ACTUALLY FILED IN PAPER.
UH, THERE'S A $300 FILING FEE PAYABLE TO THE SECRETARY OF STATE TO SET ONE UP UNLESS THE OWNERS ARE HONORABLY DISCHARGED VETERANS, IN WHICH CASE THEY ARE EXEMPT FROM THOSE FILING FEES.
I THINK THAT'S A STRAIGHTFORWARD PROCESS OFFERED BY THE TEXAS GOVERNMENT FOR LLC FORMATION.
IT IS LET'S, UH, STEER TOWARDS TAXATION.
ANOTHER CRITICAL TOPIC FOR, FOR BUSINESSES, RIGHT? DOES THE AMOUNT OF TAX THAT
[00:10:01]
A BUSINESS OWES, DOES THAT DEPEND ON THE KIND OF ENTITY THAT YOU ARE IN? WELL, IT DOES.SO LET'S GET BACK TO OUR FOUR PRINCIPLE TYPES OF BUSINESS ENTITIES.
STARTING AGAIN WITH THE SOLE PROPRIETORSHIP, A SOLE PROPRIETORSHIP IS TAXED ON THE OWNER'S TAX RETURN, THEIR OWN INDIVIDUAL FORM 10 40 TAX RETURN.
THERE MAY BE A SCHEDULE C ATTACHED, WHICH HAS THE, UH, INDICATION OF THE EARNINGS OF THAT, UM, SOLE PROPRIETORSHIP.
IN A PARTNERSHIP, YOU HAVE MORE THAN ONE PARTY EARNING INCOME, SO IT'S NECESSARY TO FILE A PARTNERSHIP TAX REPORT.
THE PARTNERSHIP ITSELF IS NOT TAXED, BUT THE TAXABLE INCOME IS ALLOCATED AMONG THE PARTNERS BASED ON THEIR PERCENTAGE OWNERSHIP AND THEY FILE THEIR TAXES BASED ON THAT PERCENTAGE OWNERSHIP.
UH, THE LLC AS I MENTIONED, A VERY FLEXIBLE ENTITY ALSO IN TAXATION.
SO IF THE LLC IS OWNED BY A SINGLE PERSON, THEY FILE THE SAME WAY AS SOLE PROPRIETOR DOES, THAT IS ON A SCHEDULE C TO THE FORM 10 40 TAX RETURN OF THE OWNER.
IF IT'S FILED, UH, THE PARTNERSHIP, NO, THE LLC IS OWNED BY MULTIPLE PERSONS.
THEY WOULD FILE A PARTNERSHIP TAX REPORT AND EACH OWNER FILES ON THEIR OWN INDIVIDUAL REPORT THE TAXES FOR THEIR PERCENTAGE OWNERSHIP IN THE LLC.
AND THE LLC CAN CHOOSE TO BE TAXED AS A C CORPORATION OR AS AN S CORPORATION.
WHICH GETS ME TO THE FINAL FORM OF ENTITY, THE CORPORATION.
THE DEFAULT POSITION FOR TAXATION OF A CORPORATION IS AS A C CORPORATION.
AND THAT IS THE DOUBLE TAXATION.
THE CORPORATION IS TAXED AT THE 21% LEVEL AT THE CORPORATE LEVEL, AND WHEN THOSE DOLLARS ARE DIVIDEND DOWN TO THE SHAREHOLDER, THEIR SHAREHOLDER IS TAXED AT THEIR OWN MARGINAL TAX RATE.
SO YOU'LL SEE THAT WE HAVE WHAT ARE KNOWN AS DISREGARDED ENTITIES IN THE EVENT OF ALL EXCEPT FOR THE C CORPORATION.
SURELY UNDERSTANDING THE FILE RULES AND TAX REGULATIONS CAN HELP A BUSINESS PLAN AND STAY AHEAD IN TIME AS FAR AS TAX COMPLIANCE IS CONCERNED.
RITA, YOU'VE BEEN SHARING SOME REALLY VALUABLE NUGGETS BASED ON THE LEGALITIES OF BUSINESS.
BEFORE WE MOVE FORWARD, LET'S TAKE A QUICK BREATHER FOR OUR NEXT SEGMENT.
RITA HAS PROMISED TO WALK US THROUGH A STEP-BY-STEP CHECKLIST TO SEAMLESSLY MAINTAIN THE LEGALITIES OF YOUR BUSINESS FROM DAY ONE.
SO STICK AROUND AS WE CONTINUE TO UNRAVEL MORE IN THE NEXT SEGMENT.
COMING UP READY TO SPICE UP YOUR DAY, DOWNTOWN HOUSTON HAS EXACTLY WHAT YOU'RE CRAVING.
SWAP YOUR WEEKDAY DINNER FOR AWARD-WINNING TAKEOUT.
TREAT YOURSELF TO BOLD, UNIQUE FLAVORS OR FRESH FROM THE OVEN CLASSICS.
DRINK OUTSIDE THE BOX FROM BREWERIES TO COCKTAIL BARS.
THERE'S ALWAYS SOMETHING NEW TO TASTE WHEN YOU JOIN US DOWNTOWN.
VISIT DOWNTOWN HOUSTON.ORG TO FIND RESTAURANTS AND BARS FOR YOUR NEXT DELICIOUS ADVENTURE.
MOMENTS SHARED WITH LOVED ONES ARE PRECIOUS JOY ENCHANTMENT CONNECTION.
IT'S WHY WE TRAVEL AT HOUSTON AIRPORTS.
WE KNOW THE MAGIC OF FLIGHT BEGINS THE MOMENT YOU SECURE YOUR PARKING SPOT AND EMBARK ON YOUR JOURNEY.
THAT'S WHY WE WORK SO HARD TO BRING YOU THE MOST CONVENIENT PARKING SOLUTIONS THAT ARE THE BEST FIT FOR YOUR TRIP.
IF YOU'RE TRAVELING FOR BUSINESS OR LEISURE, WHETHER YOUR VOYAGE STARTS FROM BUSH INTERCONTINENTAL OR WILLIAM P.
HOBBY AIRPORT, OUR PARKING TEAM AT VALET PARKING ECO PARK, ECO PARK TWO OR TERMINAL PARKING IS HERE TO GIVE YOU A FIRST CLASS EXPERIENCE WITH A BIG TEXAS SMILE.
WE ARE HERE FOR YOU TO ENSURE THIS MOMENT AND EVERY MOMENT IN BETWEEN WILL BE FILLED WITH GREAT MEMORIES THAT WILL LAST A LIFETIME.
SO TRAVEL SMARTER, PARK SMARTER, AND GET MORE OF THE MOMENTS THAT MATTER.
LOTS OF PEOPLE WITH COMPLETELY DIFFERENT BACKGROUNDS COMING TOGETHER FOR A GREATER GOAL.
KIND OF REPRESENTS HOUSTON AS A WHOLE AND EVERYBODY HAS A DIFFERENT STYLE, BUT SOMEHOW THAT'S KIND OF OUR THING.
THESE DIFFERENT PATCHES OF PEOPLE AND CULTURES, THEY BRING SOMETHING NEW TO THE TABLE THAT INFLUENCE US A LOT OF WHAT WE DO.
WE EMBRACE THE FUTURE, WE LEARN, WE GROW, WE EVOLVE, AND WORK IS ONE TO BUILD A BETTER FUTURE HERE IN HOUSTON.
WE ARE TALKING TO OUR LEGAL EXPERT RITA, LEADER RITA.
OUR AUDIENCE ENCOMPASSES A WIDE RANGE OF ENTREPRENEURS, MANY OF WHOM ARE JUST
[00:15:01]
STARTING THEIR BUSINESS JOURNEY, AND NATURALLY THIS INVOLVES MULTIPLE STEPS WE JUST DISCUSSED ABOUT SETTING UP THE RIGHT BUSINESS STRUCTURE.THEN THERE'S REGISTRATION, THERE'S LICENSING, AND SO ON.
AT EACH ONE OF THESE STEPS, THE LEGAL CONSIDERATIONS ARE CRUCIAL, RIGHT? COULD YOU WALK OUR VIEWERS THROUGH A STEP-BY-STEP GUIDE TOUCHING ON EACH ONE OF THESE TOUCH POINTS FOR ESTABLISHING A NEW VENTURE? ESPECIALLY KEEPING IN MIND THE REGULATIONS FOR TEXAS.
CERTAINLY UNDERSTANDING EACH ENTITY CAN BE DIFFERENT.
STARTING OFF WITH THE BUSINESS LICENSE.
IF YOU'RE GOING INTO A BUSINESS THAT REQUIRES YOU TO HAVE A CERTAIN CERTIFICATION OR LICENSE, LIKE BEING A REAL ESTATE AGENT, YOU MUST HAVE THAT QUALIFY FOR IT.
THEN YOU DECIDE IF YOU'RE GOING TO BE SET UP AS AN LLC, IN WHICH CASE YOU NEED TO FILE THAT CERTIFICATE OF FORMATION WITH THE SECRETARY OF STATE.
AFTER THAT IS FILED, UH, YOU CAN THEN APPLY FOR AN EIN FROM THE IRS.
THIS IS AN EMPLOYER IDENTIFICATION NUMBER, THOUGH YOU DON'T NEED TO HAVE EMPLOYEES IN ORDER TO GET ONE.
IT IS THE IDENTIFYING NUMBER THAT THE UH, IRS USES FOR YOUR ENTITY.
UH, WITH THOSE TWO PIECES OF PAPER, THE CERTIFICATE OF FORMATION FROM THE SECRETARY OF STATE AND THE EIN, FROM THE IRS, YOU OPEN A BANK ACCOUNT AND ALWAYS MAINTAIN YOUR BUSINESS RECORDS THROUGH THAT BANK ACCOUNT.
DO NOT COMMINGLE FUNDS WITH YOUR PERSONAL BANK ACCOUNT.
AFTER THAT, IT WOULD BE TIME TO LOOK INTO INSURANCE TO EITHER HIRE A TAX ACCOUNTANT OR USE TAX SOFTWARE THAT YOU CAN DETERMINE WHAT TYPE OF RECORDS YOU NEED TO BE KEEPING FOR TAX PURPOSES.
UM, AND THEN A VERY IMPORTANT FILING NOW THAT IS NEW THIS YEAR, IS A BENEFICIAL OWNERSHIP INFORMATION REPORT THAT IS FILED WITH THE FINANCIAL CRIMES ENFORCEMENT NETWORK.
UH, I WANTED TO KNOW IF THESE ARE THE SAME STEPS FOR E-COMMERCE BUSINESSES OR ARE THEY DIFFERENT FROM BRICK AND MORTAR? THEY REALLY ARE THE SAME, BUT, UM, IF YOU HAVE AN E-COMMERCE BUSINESS, YOU'RE WORKING OUT OF YOUR HOME, YOU'RE PROBABLY NOT GOING TO GET THE SAME TYPES AND LEVELS OF INSURANCE, UH, THAT YOU WOULD IF YOU HAD A BRICK AND MORTAR STORE.
UH, IN ADDITION, THE BUSINESS TAX DEDUCTIONS MIGHT BE DIFFERENT IF YOU WANT TO TAKE THE HOME OFFICE DEDUCTION FOR TAX PURPOSES.
IF YOU, UH, ARE SELLING A PRODUCT THAT IS SUBJECT TO SALES TAX, IT IS LIKELY THAT THERE'S A TYPE OF, UH, TAX PAYMENT, UH, VEHICLE THAT YOU USE ONLINE.
AND FINALLY, IF YOU'RE OPERATING OUT OF YOUR HOME, THERE MIGHT BE HOMEOWNERS ASSOCIATION RESTRICTIONS ON YOUR ABILITY TO DO THAT.
GIVEN THE STEPS THAT YOU JUST SHARED WITH US.
SOME OF THE ENTREPRENEURS MAY FIND THEMSELVES AT CROSSROADS IN DECIDING AS TO WHETHER THEY SHOULD GO FOR A DIY APPROACH, WHICH IS A DO YOURSELF APPROACH OR SHOULD THEY SEEK PROFESSIONAL ASSISTANCE.
IN YOUR EXPERIENCE, WHAT ARE THE FACTORS THAT BUSINESS OWNERS SHOULD CONSIDER WHEN THEY DECIDE BETWEEN HANDING THEIR BUSINESSES INDEPENDENTLY OR SEEKING LEGAL HELP? I WOULD SAY IT'S MOST IMPORTANT FOR THE ENTREPRENEUR TO KNOW THEIR BUSINESS, HAVING BEEN IN IT BEFORE, YOU KNOW WHAT KIND OF RISKS THERE ARE, WHAT KIND OF LIABILITY YOU MIGHT BE SUBJECT TO, SO YOU'LL KNOW WHETHER IT'S WORTHWHILE TO HIRE AN ATTORNEY.
MAYBE YOU NEED TO SET UP A-P-L-L-C IF YOU HAVE A PROFESSIONAL BUSINESS.
UM, I WILL SAY I CAN'T RECOMMEND ONLINE REGISTRATION SERVICES.
I WANNA STEER TOWARDS DOCUMENTATION.
GIVEN THE SCALE AND COMPLEXITY, MOST OF THE BUSINESSES ARE REQUIRED TO MAINTAIN SOME KIND OF INTERNAL RECORDS, WHETHER THEY ARE OPERATIONAL AGREEMENTS, WHETHER THERE ARE SPECIFIC DOCUMENTS REQUIRED BY THE STATE OR THE FEDERAL GOVERNMENT.
CAN YOU HELP OUR VIEWERS WITH UNDERSTANDING HOW TO MAINTAIN PROPER DOCUMENTATION? ARE THERE ANY BEST PRACTICES? CERTAINLY, AND I'LL SAY IT'S VERY COMMON FOR SMALL BUSINESSES TO BE SO CAUGHT UP IN THEIR, UH, RUNNING THEIR BUSINESS THAT THEY FORGET TO KEEP THOSE DOCUMENTS.
SO VERY IMPORTANT TO KEEP THAT CERTIFICATE OF FORMATION ISSUED BY THE SECRETARY OF STATE, THAT EIN LETTER FROM THE IRS.
UH, IF YOU HAVE MULTIPLE OWNERS OF AN LLC, THEY SHOULD HAVE AN OPERATING AGREEMENT THAT SETS FORTH THE RIGHTS AND RESPONSIBILITIES OF EACH OF THE OWNERS.
UH, IF YOU HAVE MULTIPLE MEMBERS HAVE MEETINGS AND KEEP MINUTES OF THE MEETINGS, PEOPLE'S MEMORIES CAN DIFFER ABOUT WHAT WAS AGREED TO.
SO VERY IMPORTANT TO KEEP THOSE CORPORATE RECORDS.
UH, OWNERSHIP RECORDS ALSO IMPORTANT IN CASE THE PERCENTAGE OWNERSHIP OF AN LLC SHARES OF A CORPORATION ARE CHANGED.
UH, CERTAINLY ANY INSURANCE POLICY VENDOR CONTRACTS ARE IMPORTANT TO HOLD ONTO AND ANY KIND OF GOVERNMENT PERMITS.
YOUR SALES TAX PERMIT AND ALL YOUR GOVERNMENT FILINGS, TAXES, UNEMPLOYMENT,
[00:20:01]
UH, COMPENSATION, WORKERS' COMPENSATION, YOUR PUBLIC INFORMATION REPORT, AND I NINE, THAT'S A LONG LIST.BUT THAT ALL SHOULD BE KEPT IN A CORPORATE RECORD BOOK THAT IS EASILY ACCESSIBLE IN THE CASE OF AUDITS, DOCUMENTATION IS REALLY KEY WHEN IT COMES TO SUCCESSFULLY RUNNING YOUR BUSINESS.
ON THE OTHER END OF THE BREAK, WE DELVE INTO SOME SIMPLE STEPS TO PROTECT YOURSELF LEGALLY WHILE STARTING A BUSINESS.
WE COULD START BY TELLING YOU HOW SLEEK IT IS, HOW IT'S AT THE EDGE OF INNOVATION IN ITS INDUSTRY, THAT IT MAKES CONNECTIONS FASTER AND MORE CONVENIENT.
WE COULD PROMOTE THE FACT THAT EVEN TRAFFIC SIGNALS GIVE IT THE GREEN LIGHT AND THAT IT MOVES SO QUICKLY.
WE HAD TO GIVE IT ITS OWN LANE.
OR YOU COULD JUST RIDE DISCOVER WHERE THIS RAIL LIKE RIDE IS GOING NEXT.
HELLO, MY NAME'S KLU HERNANDEZ.
MY WORK DEALS A LOT WITH GOING BACK AND REVISITING THESE PLACES OF MY CHILDHOOD IN MEXICO AND DOCUMENTING THEM.
THE INFLUX OF SO MANY DIFFERENT PEOPLE ARRIVING HERE IN HOUSTON FROM AROUND THE WORLD IS VERY IMPACTFUL ON MY PALETTE AS WELL AS MY CANVAS AS AN ARTIST.
MAINLY FOR ME, JUST ALL THE ART THAT WAS IN HOUSTON WAS A BIG INFLUENCE ON ME.
REALLY GOT ME SERIOUS ABOUT MAKING MY OWN ECO PARK.
WHEN YOUR GOAL IS TO SAVE TIME AND MONEY, BOOK ONLINE WITH ECO PARK AND ECO PARK TWO.
TRAVEL SMARTER, PART, SMARTER ECO PARK AND ECO PART TWO AT IAH.
WELCOME BACK TO THE FINAL SEGMENT OF TODAY'S EPISODE, THE LEGAL TOOLKIT FOR ENTREPRENEURS.
WE ARE JOINED BY RITA LEADER, WHO HAS BEEN SHARING SOME INCREDIBLE NUGGETS FROM HER LEGAL TOOLKIT.
LET'S TAKE THE CONVERSATION FORWARD.
RITA, AS WE'VE BEEN DISCUSSING, STARTING A BUSINESS REQUIRES A LOT OF MOVING PARTS, RIGHT? HOW DO ENTREPRENEURS AMIDST ALL OF THIS, ENSURE THAT THEY ARE LEGALLY PROTECTED? ANY TIPS OR STRATEGIES? I THINK A MAJOR, UH, TIP I WOULD GIVE TO SMALL BUSINESSES IS TO FORM A BALES TEAM.
UM, THIS IS A TEAM OF PEOPLE WHO CAN HELP YOU ENSURE THE SUCCESS OF YOUR BUSINESS.
YOU CAN EASILY GO ONLINE AND GET MONEY FROM A BANKER, BUT IT'S SO IMPORTANT TO HAVE A PERSONAL RELATIONSHIP WITH A BANKER SO THAT WHEN THAT, UH, PAYMENT, IT DOESN'T COME DUE IN TIME.
WHEN YOU NEED A LINE OR LETTER OF CREDIT, YOU HAVE A RELATIONSHIP WITH A BANKER THAT YOU CAN CALL ON PROMPTLY.
A IS FOR AN ACCOUNTANT AND WE DO RECOMMEND THAT SMALL BUSINESSES, UH, CONSULT WITH A TAX ACCOUNTANT INITIALLY AND SETTING UP THEIR BUSINESS.
SO IMPORTANT TO GET YOUR RECORDS RIGHT THE FIRST TIME TO MAKE SURE YOU ARE CLAIMING ALL THE APPROPRIATE TAX DEDUCTIONS THAT YOU CAN GET FOR YOUR BUSINESS AND REPORTING YOUR REVENUES, UH, COMPLETELY.
UH, THE I IS FOR AN INSURANCE AGENT.
UH, NO ONE CAN TELL YOU WHAT TYPES OF INSURANCE COVERAGE YOU SHOULD GET AND WHAT LEVELS, EXCEPT SOMEONE WHO UNDERSTANDS YOUR BUSINESS, THE RISKS INVOLVED IN YOUR BUSINESS.
YOU DON'T WANNA BE OVER-INSURED OR UNDERINSURED, AND AN INSURANCE AGENT WHO UNDERSTANDS YOUR BUSINESS IS THE PERSON TO GO TO FOR THAT INFORMATION.
IT IS IMPORTANT TO HAVE A LAWYER LOOK OVER BOTH YOUR BUSINESS, PART OF YOUR, UH, COMPANY THAT IS THE CONTRACTS THAT YOU'RE ENTERING INTO, THE CONTRACTS THAT YOU HAVE BEEN SUBMITTED BY YOUR VENDORS OR CLIENTS CUSTOMERS, AS WELL AS A, UH, LITIGATION ATTORNEY.
IN THE EVENT YOUR BUSINESS IS SUED, YOU HAVE
[00:25:01]
JUST 21 DAYS FROM THE NEXT MONDAY TO ANSWER THAT SUIT OR DEFAULT JUDGMENT COULD BE ENTERED AGAINST YOU.SO THAT MAY NOT BE ENOUGH TIME FOR YOU TO GO OUT AND FIND AN APPROPRIATE ATTORNEY WHO THAT YOU RELATE TO.
WELL, UH, FINALLY, WE AT SCORE BELIEVE THERE SHOULD BE AN S ON THE END OF THAT BAIL TEAM, AND THAT IS FOR A SCORE MENTOR.
WE HAVE SO MANY EXPERIENCED MENTORS AT SCORE WHO CAN HELP YOU, UH, MAKE DECISIONS ABOUT PRICING IN YOUR BUSINESS, MARKETING, UH, JUST RUNNING THE OPERATIONS OF YOUR BUSINESS IN WAYS THAT THEY ARE FAMILIAR WITH BECAUSE THEY'VE BEEN THERE.
AND WE REALLY RECOMMEND YOU ACCESS OUR SCORE MENTORS FOR THAT PURPOSE.
I LOVE THE ADDITION OF S TO THE BALE ACRONYM.
AS YOU RIGHTLY SAID, A SCORE MENTOR BRINGS THEIR WISDOM AND PERSPECTIVE TO THE TABLE AS THEY'VE SEEN THE UPS AND DOWNS OF ENTREPRENEURSHIP THEMSELVES.
FOUNDERS ARE OFTEN CONFRONTED WITH A NEED TO SIGN A CONTRACT AT SOME POINT IN THEIR BUSINESS JOURNEY.
ANY KEY CONSIDERATIONS THAT FOUNDERS SHOULD KEEP IN MIND WHEN SIGNING A CONTRACT SO THAT THEY DON'T INADVERTENTLY END UP SIGNING UNFAVORABLE AGREEMENTS THAT MIGHT BE DETRIMENTAL TO THE BUSINESS HEALTH IN THE LONG RUN.
CERTAINLY IMPORTANT PART OF A BUSINESS AND VERY IMPORTANT TO HAVE CONTRACTS IN WRITING.
DON'T RELY ON ORAL AGREEMENTS.
AND MY BEST PIECE OF ADVICE TO SMALL BUSINESS CLIENTS ON CONTRACTS IS READ EVERY WORD.
AND IF YOU DON'T UNDERSTAND SOME OF THE WORDS IN THE CONTRACT, PLEASE GET LEGAL ADVICE TO HELP EXPLAIN IT TO YOU.
YOU WILL BE BOUND BY THIS CONTRACT AND YOU NEED TO HAVE AN UNDERSTANDING OF IT.
SOME, UH, ISSUES THAT I SEE OFTEN ARISING WITH SMALL BUSINESSES IN THEIR CONTRACTS IS THAT THEY, UH, DON'T ENTER INTO THE CONTRACT IN THE NAME OF THEIR LLC, BUT IN THE, THEIR INDIVIDUAL NAME.
NOW YOU NEED TO USE THE LLC AS THE PARTY ENTERING INTO THE CONTRACT AND SIGNING THE DOCUMENT AND YOU SIGN AS AN OFFICER OF THE LLC.
AND FINALLY, KEEP IN MIND THAT CONTRACTS YOUR OWN CONTRACT FOR THE WORK SERVICES YOU DO SHOULD BE CONSIDERED A FLUID DOCUMENT.
LEARN FROM EACH TIME THE, UH, CONTRACT DOES NOT FULLY EXPRESS WHAT YOU WANT.
THERE'S A CONFLICT WITH IT AND KEEP CHANGING THAT DOCUMENT TILL IT DOES REFLECT EXACTLY WHAT'S RIGHT FOR YOUR BUSINESS.
RITA, WE HAVE COVERED A LOT OF GROUND ON THE LEGAL, LEGAL LANDSCAPE FOR BUSINESSES.
UM, AS WE NEAR THE END OF THE PROGRAM, DO YOU HAVE ANY GO-TO RESOURCES THAT YOU COULD SHARE WITH US SO THAT FOUNDERS CAN VERY EASILY ACCESS THOSE RESOURCES AND ELEVATE THEIR BUSINESS UNDERSTANDING, ESPECIALLY KEEPING IN MIND THE COMPLIANCE REGULATIONS IN TEXAS? YES.
I WOULD RECOMMEND STARTING AT THE CITY LEVEL.
THE OFFICE OF BUSINESS OPPORTUNITY HAS A GETTING STARTED PACKET HAS VERY IMPORTANT INFORMATION FOR, UH, NEW BUSINESSES GETTING STARTED.
UH, REGARDING HARRIS COUNTY, IT WOULD BE THE HARRIS COUNTY APPRAISAL DISTRICT, HCAD, AND THE HARRIS COUNTY TAX ASSESSOR BECAUSE THERE IS A COUNTY TAX ON A BUSINESS'S PERSONAL PROPERTY OR REAL PROPERTY AT THE STATE LEVEL.
IT IS THE SECRETARY OF STATE OR THE STATE TREASURER WHO'S CALLED A COMPTROLLER OF PUBLIC ACCOUNTS.
AND EACH OF THESE HAS A FREQUENTLY ASKED QUESTION SECTION.
YOU CAN GET A LOT OF GOOD INFORMATION FROM THEIR WEBSITE FROM THOSE FACTS.
AND DON'T FORGET YOUR BAIL TEAM.
ABSOLUTELY SOME GREAT RESOURCES RIGHT THERE THAT CAN BE LEVERAGED TO ELEVATE YOUR LEGAL KNOWLEDGE AND SUPPORT.
RITA, THANK YOU SO MUCH FOR SPEAKING WITH US TODAY AND SHARING YOUR NUGGETS OF WISDOM ON THE LEGALITIES OF BUSINESS.
CERTAINLY IF YOU ARE FACED WITH A DILEMMA BEFORE MAKING ANY CRITICAL LEGAL DECISIONS, MAKE SURE TO CONSULT WITH A TRUSTED BUSINESS ATTORNEY OR A LEGAL ADVISOR.
THEIR EXPERTISE CAN PROVIDE YOU GUIDANCE TAILORED TO YOUR SPECIFIC SITUATION.
REMEMBER, INVESTING IN LEGAL ADVICE UPFRONT CAN SAVE YOU TIME, MONEY, AND HEADACHES DOWN THE ROAD.
IF YOU ARE LOOKING FOR GUIDANCE FOR YOUR BUSINESS AND WANNA GET IN TOUCH WITH RITA OR ARE SEEKING ANOTHER MENTOR FROM, FROM SCORE FOR A DIFFERENT BUSINESS AREA, YOU CAN REQUEST A MENTOR OR FILL OUT THE CONTACT US FORM ON OUR WEBSITE AT SCORE.ORG/HOUSTON.
IF YOU HAVE ANY FURTHER QUESTIONS OR TOPICS YOU'D LIKE US TO COVER IN FUTURE EPISODES, DO NOT HESITATE TO REACH OUT.
YOUR FEEDBACK IS MOST IMPORTANT TO US.
UNTIL NEXT TIME, STAY INFORMED, STAY EMPOWERED, AND STAY FINANCIALLY SAVVY.
THIS IS YOUR HOST, RCI GUPTA, SIGNING OFF.