How to Keep Your Business and Personal Assets Safe
Archives: Daily Issues
Issue #2336
- WEALTHY: Keep your business and personal assets safe (Darius Barazandeh)
- HEALTHY: Toss your Tylenol in favor of natural pain relief (Dr. Ray Sahelian)
- WISE: Cervantes on preparation
ALSO IN THIS ISSUE:
- If you follow our advice, are you going to become a spammer? (MaryEllen Tribby)
- How to "hide" product flaws from your customers (Suzanne Richardson)
- It’s Fun to Know… about salamander limb regeneration
- Add "brummagem" to your vocabulary
Revealed: Probably the Biggest Red Herring in History!
While the world’s been stock watching (and losing!), the elite quietly play a different game with different rules…
Feeling cheated and disillusioned by the stock market? Sure, you may have made a good trade here… but then lost on another. The people dutifully pour their hard-earned cash into investment banks to put into the stock market for them… and those investment banks gladly oblige, for a fat fee… which they invest somewhere else! I’m no conspiracy theorist, but in my opinion the stock market is really a diversion for the masses… a distraction from where the BIG and consistent money is made… in the world’s money mountain. And when I say “ Money Mountain,” I speak quite literally… the BIGGEST mountain of money on the planet. Click here to read more…
"To be prepared is half the victory."
Miguel de Cervantes Saavedra
5 Mistakes That Can Threaten Your Liability Protection – And How to Avoid Them
You may know that doing business as a corporation or LLC can maximize your financial reward while minimizing your risk. What’s less well known is that many business owners lose this valuable protection each year by failing to follow a few basic rules and regulations.
Even if it seems like a hassle now, ensuring that your corporation or LLC is properly managed could save you from IRS audits, lawsuits, or other headaches down the road.
Whether you’re a real estate investor, an independent contractor, or a small-business owner, forming a corporation or LLC can minimize your taxes and protect your personal assets.
Unfortunately, many people start businesses without proper instruction on managing agreements between parties, creating agreements with customers, internal paperwork, cash controls, voting rules, state and Federal reporting requirements, and a host of other issues.
In particular, there are actions, behaviors, or neglected tasks that can negate the value of your business – and leave your personal assets at risk. Here are five of the most common mistakes:
1. Using the Business for Fraudulent Activities
Do I have to say it? You cannot and should not use your business to cheat or defraud. Let’s say John Smith gathers money from investors, claiming he will use it to develop a new product for his company. However, he never intended to use that money for product development. When he is sued by the investors, John claims that his personal assets are protected since he was acting as the president of his limited liability company. But, because fraud was involved, no court will honor the limited liability company. So his personal assets and business assets are at risk.
You may think that this is an egregious example. That it would never happen to you. But if, for example, you’re a real estate investor, consider the fact that many deals struck with so-called "motivated sellers" could give rise to a lawsuit under your state’s Deceptive Trade Practices Act (DTPA) or a similar statute. Sometimes the line between a good deal and fraud is not so clear, so make sure your agreements are fair.
And if you’re a small-business owner, you can’t be wholly unfair or flagrantly one-sided when dealing with your customers. As in the real estate example above, a court can look at a one-sided transaction and decide against you. Even worse, a judge could declare that you are using your business to promote unfair dealings, a far more serious charge.
Avoiding this mistake is simple. Ask yourself if you would want to be the buyer/customer on the other end of your deal. There are plenty of legal ways to structure "win-win" deals and still make great profits. Ever hear of karma? Everything you do to or for another person will one day be done to or for you. So be fair!
2. Failure to Respect the Business as Separate From Its Owners
Don’t mix funds from business accounts with your personal funds and accounts. For example, don’t use company money to buy personal assets, groceries, etc. If you do this routinely (or perhaps only once), your business structure may not hold up in court.
3. Failure to Properly Capitalize the Business
Your business must have enough insurance or savings to cover expenses, liabilities, and obligations. If it doesn’t, a state court will likely "pierce" the business entity and hold the owners personally liable. The amount of capitalization generally refers to the total value of company assets (equipment, cash, etc.) and the amount of insurance coverage. This is a complicated area, because you may need more or less "capitalization" based on your type of business. Requirements vary, but, as a general rule, the more you deal with the public, the more capital you should have available.
4. Forgetting to File State Reports
Your secretary of state’s office will require you to keep up with reports and state taxes (sometimes called franchise taxes or business privilege taxes). If you don’t (even if nominal amounts are owed), your business privileges will likely be revoked. The privilege that goes first is – you guessed it – your personal liability protection.
5. Other Formalities
Other formalities that you need to pay attention to include meetings, paperwork, required records, proper roles and obligations among the parties, and transfers of ownership interests. Make sure all of these are in order to preserve your liability protection and, if necessary, satisfy IRS auditors.
Don’t be discouraged by how easy it can be to lose your liability protection by falling into these five common traps. Knowing that they exist will help you avoid costly mistakes, keep your taxes to a minimum, and protect your personal property.
[Ed. Note: Attorney Darius Barazandeh holds an MBA and is an active real estate and tax-deed investor in Texas. He is also a leading national speaker on tax liens and corporate entities for small businesses and real estate investors.
Don't let the possibility of making the above mistakes prevent you from getting into the real estate business. Learn more about how to set up your business correctly from the start, protect your personal assets from lawsuits, and minimize the tax bite from your investing profits. Get the details here.]
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The Billionaire Way
I just wanted to say thank you for putting The Billionaire Way together for others to learn from as well as myself. I have made it a mission in my life to learn from the greatest minds in history and business.
I came from a humble beginning… searching. I found what I needed to know in The Billionaire Way. My most important lesson was they are all human just like you and me. They had special skills which anyone can develop to attract that bit of luck we all need in life… that extra edge.
These lessons can be learned in The Billionaire Way and you don’t have to spend your whole life as a mission, as I have, to find what I found here in The Billionaire Way.
I enjoyed our call. It put the final touches together that I have needed. If I do happen to get stuck on something thanks for saying I can contact you again. People look to me for advice. It is reassuring to ask and receive advice and have an enriching conversation… I find it is rare.
Thank you
- Aaron Kaggie
President. of Kaggie Holdings, Inc.
Kearns, Utah
Please click here for all the details on this unique program.
Dear ETR: "No rented list can pass the permission test."
"I believe ETR’s response to the question about e-mail list brokers was misguided. Yes, one may rent an e-mail list. It is, however, to the best of my knowledge, a federal crime to use such a list. Thus, it is money down the drain. No rented list can pass the permission test."
Orv.Barr
Livermore, CA
Dear Orv,
Taking control of an e-mail list and sending messages through it is called spam. Yes, that is a federal crime… and we would never advise anyone to do that.
What has been and remains best e-mail practice is e-mail list rental. This is when you make a deal with the owner of an e-mail list for a specific number of mailings (one or more). The list owner will send out your sales message to his list on your behalf. In exchange, he’ll get a percentage of the profits from sales of your product to his subscribers, or he’ll get a chance to advertise to your e-mail list.
If a list owner has his list on the "market," you can go through a list broker to get to the list manager. Or you can directly approach the list manager. Either way, the list owner sends the e-mail to his list. You don’t get direct access to it. If we were to rent the USA Today e-mail list, for example, USA Today would not send us a list of their e-mail addresses. We would send them our sales message, and they would send it to their subscribers through their server.
- MaryEllen Tribby, ETR’s CEO and Publisher
[Ed. Note: Send your questions to AskETR@ETRFeedback.com. Include your full name, your hometown and state, and the ETR team may answer you in an upcoming issue.]
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Turn Your Faults into Assets
At 4:00 p.m. last Saturday, a serious latte craving struck. But the line at my local Starbucks stood 10 deep. And the barista behind the counter moved like molasses.
While I waited, my eyes scanned the non-coffee items Starbucks decorates their counters with. A case full of pastries. James Brown CDs. The daily horoscope. Quotes from staff members. And on the blackboard behind the counter, this little tidbit (more or less):
"From Now Until ALWAYS – If you order espresso, service may be a little slow while our barista hand-makes your drink."
A little clunky perhaps. But this tiny fragment of marketing copy was telling those of us in line that the barista’s maddening slowness would ultimately benefit us. It implied that if she weren’t moving so slowly – taking such deliberate care to hand-make our drinks – our beverages wouldn’t be as good.
This is an example of what ad legend Eugene Schwartz calls "redefinition." Basically, you take a problem with your product – in this case, slow service – and redefine it as a benefit for your customers.
Your goal with redefinition, says Schwartz in Breakthrough Advertising, is to "remove a roadblock to your sale – if possible, before the prospect even knows it exists."
Schwartz mentions Lifebuoy soap, which had an off-puttingly strong medicinal odor. To combat people’s objection to the smell, Lifebuoy copywriters redefined the smell as proof that the soap had "the odor-destroying power to make a longshoreman acceptable at a society ball."
Now we’re not saying that you should put a positive "spin" on something that makes your product sub-par. You should always strive to have the highest-quality products possible. But if your product has something – a high price, a complicated mechanism, an unpleasant smell – that might turn your customers off, see if you can redefine it into a benefit.
[Ed. Note: You can redefine a product in three major ways. Learn about all three - and discover dozens more techniques you can use to make your advertising copy more powerful - in Eugene Schwartz's Breakthrough Advertising. Get the details here.]
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Reader Feedback: "I not only find great, helpful, useful, interesting information in ETR…"
"I wanted to tell you how much I look forward to reading ETR every day. (Sometimes it’s more like LTB – late to bed – before I read it, but I make sure to read it every day!)
"I not only find great, helpful, useful, interesting information in ETR – but the articles quite often spark ideas or suggest a solution to a problem.
"And that, my friend, is what I believe to be your true measure of success. Anyone can disseminate information, and there’s sure plenty of it available at our fingertips. But if you can proffer that information in such a way as to be a launching pad for your readers’ own ideas, brainstorms, solutions, etc. – you’ve got a solid formula for many years of success.
"Please – keep up the great work!"
Juli Schatz
Elgin, IL
[Ed. Note: Want to get your name and opinions published in ETR? Let us know how reading ETR has helped you - maybe even changed your life. Send your comments to ReaderFeedback@gmail.com. Include your name and hometown... and we may print your e-mail in a future issue.]
Glucosamine as Good as Tylenol for Osteoarthritis Pain
Acetaminophen – the generic name for Tylenol – is an effective way to reduce joint pain from arthritis. But acetaminophen can cause harm to the liver, even at doses of one gram a day. So I do not think it is a good drug to take long term for a chronic condition like osteoarthritis. Instead, consider supplementing with glucosamine sulfate.
Researchers in Madrid, Spain compared the effect of glucosamine sulfate versus acetaminophen on the symptoms of knee osteoarthritis during a six-month course of treatment. Patients were randomly assigned to receive oral glucosamine sulfate (1,500 mg once daily), acetaminophen (3 grams a day), or a placebo. The findings of this study indicate that, in the long run, glucosamine sulfate is at least as effective as acetaminophen for knee osteoarthritis symptoms.
You can find glucosamine supplements in most health food stores. Combining glucosamine with chondroitin and other nutrients or herbs may be more beneficial than taking it by itself. So look for supplements that include CMO, curcumin, or boswellia – all of which play a role in joint health.
[Ed. Note: Ray Sahelian, MD, the author of Mind Boosters, is internationally recognized as a moderate voice in the evaluation of natural supplements. Visit Dr. Sahelian's website at www.RaySahelian.com, and read more of his articles about the supplements you should and shouldn't be taking at ETR's free natural health e-letter.]
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It’s Fun to Know: Salamander Limb Regeneration
When a salamander loses a leg, it can re-grow a perfect replacement within a couple of months.
How? When a leg is cut off, blood vessels in the stump close up immediately to stop bleeding. Then new skin cells grow over the injury. A few days later, the same type of cells that grew the salamander’s legs when it was an embryo are activated, and the replacement begins to form.
University of California researchers are studying this phenomenon in hopes of transferring the regenerative ability to humans.
(Source: Scientific American)
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Take Charge of Your Future
You don’t have much spare time… you’re not exactly rolling in the bucks… and you’re no Bill Gates when it comes to technology.
We’ve heard you… and that’s why we asked Marc Charles to be our “advance scout” for profit opportunities that you can run from a kitchen table, your desktop, or out on the road.
They’ve got to be inexpensive and easy to start, without a lot of red tape or technical know-how, and still have great income potential.
There’s a reason they call this guy “The King of Business Opportunities”…why not take a look at what he’s got for you?
- Charlie Byrne
Word to the Wise: Brummagem
Something that’s "brummagem" (BRUM-uh-jum) is cheap and showy or counterfeit. The word came about as an alteration of Birmingham (England), from the counterfeit silver coins produced in that city in the 17th century.
Example (as used by Betty McCollister in the Humanist): "But demanding that publishers replace their brummagem wares with books which embody [Madeline] Kunin’s ‘high standards of excellence’ would be a promising – and cost-free – way to begin."
Copyright ETR, LLC, 2008
“How to keep your business and personal assets safe is an excellant article, and “The Wealth Building LLC™ The Attorney’s Secrets is an excellant source for one who needs to incorporate like I do.