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Episode 31: Essentials Every Business and Entrepreneur Should Know (with Sam Johnson)
13 Plays2 months ago
This week we're diving into the world of business law with Sam Johnson, the founder and managing attorney at Johnson Friedman Law Group! We’re breaking down everything from the nuts and bolts of setting up LLCs to the risks of using cookie-cutter documents from online sites. Spoiler alert: It could get messy if you're sued! We'll also tackle the big stuff like business succession and the new Corporate Transparency Act, which now requires most U.S. businesses to report ownership details to the federal government.
Stick around for our Sam and Sara segment, where they pitch hilariously bad business ideas to Sam for his expert take. This episode is a must-listen for business owners and anyone curious about navigating the legalities of entrepreneurship.
Join us every Wednesday for new episodes!
Where you can find Sam Johnson:
Where you can find Burch Law:
- IG @BurchLawTX
- FB @BurchLaw
- YT @LorieBurchLaw
- hello@burch-law.com
- (972) 385-0558
Visit burch-law.com/podcast to reach out!
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Transcript
Introduction: Importance of Wills and Estate Planning
00:00:03
Speaker
Welcome to another episode of One of Us Knows What They're Talking About. And the other one is you. I'm Lori Burch, your host. Join us as we discuss and unpack wills, trust, estate planning, and probate law in a way that's actually informative, interesting, and well, hopefully entertaining. Because if you don't have a will, the state of Texas has one for you. Let's dive in.
Episode Milestone and Title Origin Story
00:00:39
Speaker
Which episode is this? Are we at 27, 28? This will be 31. 31. We've done this 31 times. I know. So for 30 times I've carried it. Now it's your turn.
00:00:59
Speaker
I do think, you know, because I actually stole this from our John. That the title is one of us knows what they're talking about and the other one is you. So I didn't know you were going to take that from him. yeah Well, I made sure when he said it, it was in a dragon training. And so when he said it, I thought it was just so brilliant, as are so many things that he says. And I did a lot of research to see if that's been used before, if he's quoting something else and I couldn't find it. So I decided to steal it.
Misconceptions about Legal Knowledge
00:01:31
Speaker
So we like to talk about things and we have guests from time to time where
00:01:37
Speaker
a frustration that we have where we know things and we're challenged with other people who think they know things like Google, whatever Google tells them, or whatever chat GPT tells them.
00:01:52
Speaker
And then somehow this is evolved or devolved, depending on your
Meet Sam Anderson and Colleague Humor
00:01:57
Speaker
perspective. Oh, we have a special, special guest today. Is it Memphis? Oh my God, I feel like I haven't seen this. a lot I know, but he's been very neglectful lately. Come on, buddy. Or neglected, whichever. And somehow, because Sarah and Sam share a brain cell, this is according to them, by the way.
00:02:20
Speaker
yeah And I decided yesterday that it's more like a community property brain cell, meaning you cut the brain cell in half and each one has half. It's they have equal access to the whole.
00:02:31
Speaker
And Jordan as well, I feel like. I feel like she needs her own brain cell if she's really planning to do this law school thing. That's when she ramps up. She gets her own brain cell. She gets her own brain cell when she ramps up. That's when she gets awarded it.
Law School and Firm Dynamics
00:02:48
Speaker
Yeah. So Sam, our case manager, Jordan, left earlier this year to go to law school to study for the LSAT. And then she came back.
00:02:59
Speaker
and she said She, she's been studying for the LSAT and and she actually takes it this Saturday. Yes. 11, 45. So we had some other transitional things happen with the firm. And so Jordan really knows her stuff. And so she came back.
00:03:19
Speaker
what I thought was going to be in a temporary capacity to assist. And then it was one day a couple of weeks ago, she's in the office and I'm just chit chatting with her about the LSAT, like when she takes it. And so she said, you know, I take it first, first week of November and or second week, I guess it is in November. And she said, but after that, i'm I'm going to be ramping up. And I looked at her and I said,
00:03:45
Speaker
yeah What? What does that mean? and I'm like, you know what? I don't need to know. Like, why would I? No worries. It's been worked out. I will make sure that she just is her notary capacity. She has, you know, yeah, doesn't matter. No, we don't know what's gonna happen. we're We're kind of hoping that maybe Maybe she'll pick a local law school and, you know, some time for us or potentially like I've floated the idea of doing a part time program, which not all the local ones do that. But I do think an M does the four year part time one. And so, you know, it means one more, but she's young. So what does it matter if it's one more year before she becomes a lawyer? Right. And then to really ramp up.
00:04:37
Speaker
okay Yeah, I wouldn't tell anyone to hurry to to finish law school. I wouldn't even tell anybody to go to law school. Correct. In fact, I don't know any lawyers that support people going to law school. Every lawyer I know, we all try to talk everyone else out of it.
00:04:59
Speaker
yeah Yeah, it's, it's awful.
Demystifying Business Law with Humor
00:05:03
Speaker
But anyway, so we appreciate you being here, Sam and Sarah always have back to the whole sharing of brain cell, have their own little special segment towards the end where it kind of falls on rails. I'm excited. But it's actually gonna be it's going to be a little bit more interactive with you because I put in the topics that we want to cover and I put in what you had put regarding uh some of the business law aspects and both of them kind of were like deer and headlights like i what does that even mean which is really funny because part of it was that you put about like it and we can start here once we start i mean we we have started
00:05:46
Speaker
Sarah's gonna find gold here. But when we start with the most substantive part, notice I didn't say substantive part, just the most substantive part. Where you put BOI, what's so funny is that Sarah's like, she puts this this a GIF, or is it JIF? Oh, see, we should have that. Oh, are we gonna do that on camera? Are we doing that?
00:06:07
Speaker
one ah you know we should We should do JB and you in the same podcast and we can try to relive the GIF conversation and then talk about how we went to the loudest bar in Nashville with my child because it's the only place because it was like COVID-E. It was the only place we could find and we were we were at the same table but we were texting each other.
00:06:35
Speaker
It was too loud. We couldn't hear each other talking. So we had the only way to communicate. And it was one of the best conversations I've had. Oh, she was, she was in a Sunday. She's just like, you know, getting down to the live music either Sunday. And then somehow we started having the gif gif debate. And it, you want to talk about devolving.
00:07:02
Speaker
Seriously, that was isn't that right? I'm Gonson. yeah yeah Don't even Joe there. And it'd be goat for the love of john. Okay. So but the funny part, so you put it, you know, talking about bi slash corporate transparency act, and Sarah does this, Jeff,
00:07:28
Speaker
that it's way over my head. And I'm like, and yet Sarah, you put together our BOI email that we sent to everybody. All right, perfect. for for i guess I guess as an employer, that's actually a little heartwarming that she literally just does what I says say to do. She does not like look at what it is, think ah think about it on her own. She just takes it or whatever.
00:07:53
Speaker
yeah Sounds good, Lori, whatever this means. So anyway, of i did and this might be something that Sarah may or may not decide to edit out. i you know You had pointed out when we first scheduled this, when it's being recorded, not when it will be released, ah but when it will be recorded, ah is a day after our presidential
A Green Card Mishap Story
00:08:14
Speaker
election. And I'm like, oh, well, maybe we'll chitchat about that. And I don't and don't know that I want to, actually.
00:08:21
Speaker
and so I don't why. Yes, I agree. I mean, I have no words. Not much to say right now. Yeah. Yeah. So Sam Anderson, not to be confused with Sam Johnson. Sam Anderson um is not from here. She hails from New Zealand and parents are traveling right now. Are we allowed to share this Sam because you're I know that they do not listen religiously. Okay. Anyway, her dad lost his green card to get back to the country earlier this week. And I was kind of thinking maybe he should stay there. Hold on. Can they say he lost the physical card? Not like he lost the ability. He lost the actual thing while traveling. The physical thing. It never occurred to me that anyone would take that as it being revoked. No, he is abroad visiting the homeland.
00:09:19
Speaker
me and he lost it. And displaced it. Yes. journeys It's on own journey. Well, maybe someone swiped it ah where they knew it was going to happen. Okay. Thanks for the visit, Memphis. Okay. So anyway.
00:09:48
Speaker
We'll just skip right over that and hold on to our bridges. hunker down and see, see what we can do. Yeah. And we'll make it happen. But anyway, so but i'm I'm just sitting here, presuming everybody knows who Sam Johnson is, but Sam Johnson, I hate to say this in front of him, so, and recorded, but I just will. He's like one of my favorite human beings on the planet and probably one of the best things that's ever happened to me. I think it's fair to say. um And so despite the fact that he's also a lawyer,
00:10:26
Speaker
And so anyway, i um he really knows this stuff and he's just, i cannot I cannot tell you how sick I have gotten, because I have, of hearing um what a nice guy he is. But there's personal reasons why I got sick of hearing that. But anyway, he is truly a nice guy. And so Sam Johnson, not to be confused with Sam Anderson, home of the famous flapjacks,
00:10:54
Speaker
but Sorry. ah So Sam Johnson, that's something that came up. That came up, a I don't know, a year or so ago, where I just felt like Sam Anderson sounds like a coffee house, like this come down to the Sam Anderson, home of the famous flapjacks.
Business Entity Formation Mistakes and Advice
00:11:08
Speaker
So that's just kind of gems in Austin. buts Like would tell me this, if you were doing a road trip with your family, and you passed a Sam Anderson, would you not be like, we got to stop there?
00:11:24
Speaker
probably would. I'm picturing like, like red log cabin style. Oh, finish out. Yeah. Oh, yeah. Absolutely. Butter syrup that you can buy at the register. with you Oh, yeah. I'm like, I got it. Writing it. Yeah. Yeah. Well, that could be actually Sam, please edit the part that you want to talk to Sam Johnson about and add that please.
00:11:53
Speaker
That's my personal request. So anyway, Sam, tell us a little bit about you and your practice, and then let's talk about some things that you know about, but other people are just absolute morons about. All right. Well, in our line of work, we come across a fair amount of that, like a lot of people in a lot of industries.
00:12:12
Speaker
Um, a little bit about myself. I'll just stick with the law firm stuff for now. Um, so I am a manager of Johnson Friedman law group and we are a business and real estate law firm. So I would say what that means is that we i give business owners and real estate investors that convenience, but not the cost of having an in-house legal department.
00:12:37
Speaker
um My law partner, Max, does all the real estate work. I do the corporate work and then I also oversee all of our business litigation as well, which is more interesting sometimes from an academic level, but it's usually not very fun for our clients. But the best way to end up in litigation is to start running your business and keep running it without learning what it is you're doing along the way.
00:13:06
Speaker
Do you know, or does it frighten you? It's got to, we've never actually talked about this. the number of people that don't set up any sort of protected business entity, such as an LLC or whatnot. Like i I remember this was very early on in my practice, maybe within the first five years even. And I was doing a probate for someone and it was their family. It was their family that was coming to me and they owned a family automotive repair center.
00:13:38
Speaker
And so I asked them, you know, how how is this set up so we can figure out how we can and they're like, no, we don't have an LLC or anything like that. And I'm just thinking the liability that could come.
00:13:51
Speaker
from fixing people's cars. And so the first thing I did is, look, look you guys need to to look into this and get this set up. you know just and it's we We deal with that in the same way you do. And that is people, and actually, I really want to talk to you about the people who do the DIY stuff, because that's a big point of contention for us.
00:14:11
Speaker
And the way that I usually talk about this is it's it's like being a bad lib lawyer. You just fill in the blank and like anybody can do that. Like you can have a piece of paper. And it doesn't mean anything if it won't work when you need it. And the only reason you think it works.
00:14:29
Speaker
To your point is because you haven't been sued yet. And the only reason you think it works in our case is because you haven't died yet. And you'll actually die thinking it works. It's your family. Right. And they either end up hating you, us and or the court system. And, you know, that's that's really not the legacy people need to believe now, is it? Right. Or the or they their kids
Piercing the Corporate Veil Explained
00:14:53
Speaker
end up hating each other because of it, too, because they can't agree on it. Right. Exactly.
00:14:59
Speaker
No, i I totally agree that I have a similar story. I had some clients that I was a husband and wife that owned a cheerleading gym in the Metroplex. And they, you know, they had gone to legal doom or legal zoom, excuse me. And we have the same jokes, everybody. say Wow, they're gonna really be like, y'all do hang out in her life.
00:15:28
Speaker
So they went there and they formed a general partnership, which means nothing from a legal perspective. And then when a student got injured, they were sued personally because a general partnership affords you no legal protection whatsoever. I don't even really call it an entity. It's just ah a relationship.
00:15:51
Speaker
And they were shocked because they were like, but we went to LegalZoom and we formed a general partnership and we thought that would protect us from whatever happens in the business. And and they learned the hard way again in and a lawsuit that, oh, this means absolutely nothing to protect our personal assets whatsoever. I'm really surprised to hear that because I find it hard to believe that parents of cheerleaders would be litigious.
00:16:21
Speaker
Right. I understand why you're confused. There's very, very little drama that goes on. actually Yeah. know Right. Yeah. That's like dance moms. I was gonna say. that's Yeah. Yeah. Yeah. So what else? say What else? what What else do you see? What else is the word on the street? Like, what are you just constantly shaking your your head at? And can't even believe that people conduct their lives this way.
00:16:50
Speaker
Well, there's the other thing is when people form an LLC and they do it themselves or they do it through like a legal zoom and they do the filing with the state, but they don't get any of their internal governing documents done. yeah Like within LLC, you're supposed to have, uh, I call it a company agreement. Some people call it an operating agreement.
00:17:15
Speaker
And so it's like, great, you've got this little sheet that you filed with the state, but the real meat of like how you're going to govern your entity is an internal thing that that really you should have. So that is very, very common for me to ask.
00:17:31
Speaker
you know And it usually comes up right when there's multiple owners, like partners. It's not usually two spouses or a single owner. It's when there's people and someone is either not having the voting rights that they thought they had or the money rights that they thought they had. And all of a sudden it's like, well, you've You've given up your decisions by not creating this document. And instead you're relying on the statute that the legislature created, which I know is another. I'll let you use your saying that you have for that. But, but yeah, I know you have that similar concern and observation and your on your side of things too. Yeah. So I actually want to ask you to define something, but I'm first going to ask Sarah to define it because it's fun. oh sarah
00:18:23
Speaker
what what the list inpi see What does piercing the corporate veil mean? Piercing the corporate veil? Yeah, yes.
00:18:35
Speaker
um I'm going to say it's exactly what it sounds like. Well, that's usually where you start. It's when you pierce the corporate veil.
00:18:48
Speaker
That's not your best work. I mean, that one's hard. You gotta admit that one's hard. Normally, Sarah defines things with the words that are in what you're actually doing. I mean, she did. But you usually rearrange them. You basically take it and rearrange the words. You would probably say it's when you have a veil, corporately piercing.
00:19:11
Speaker
yeah corporately piercing a You really, you really let me down there. So here's your chance for redemption, which absolutely will also fail. What do you think that looks like in the legal world? Any guesses? I do this to Sarah just because she's the only person in the office who who does not have anything to do with casework or clients. So it's always kind of fun to see. So what I think it means in the real world, it's a
00:19:47
Speaker
Oh, man. Okay. Wait, you're stressing out the corporate veil. Let's just let's take something like an LLC. And I'm not even gonna tell you I'm not even gonna ask what that stands for. Please don't. Okay. But do you do you know why people would set up a business entity like an LLC? Like what is that to accomplish? You might actually get this.
00:20:10
Speaker
I would presume it's to avoid liability on person. Sarah, that's so great. Okay. So if you set up an LLC or other business entity to avoid liability, which, when did you learn that word? I'm going to have to yeah come to terms with that right asset protection, right? What do you think piercing the corporate veil means? When you,
00:20:42
Speaker
When you got this like, so the, the veil, the veil is your corporation and you, you go through it.
00:20:58
Speaker
sam johnson goes through with See if you could do any better than that. What is piercing the corporate veil? I'm not even going to attempt. I thought that that hit the nail on the head for the most part.
00:21:10
Speaker
There we go. I'll clarify it a little further. so yeah okay but It's busting through the entity to get personal liability on the usually the owners of the entity for the entity's own liabilities and obligations. That's what I said. To your point,
00:21:35
Speaker
When people can just go to whatever online site or I don't know if you've dealt with this stuff, but we've started to see it like I mean maybe legal doom and all the other ones are like no low and all of that are better than like chat gpt because we've had people create documents through that and it's really entertaining But the the issue is that if they do that they think they have this protection But when they don't have these other pieces that is what allows somebody to be able to come in and say, well, you basically have a sham of a business, right? We can get right through that. Yeah, that that's what courts look at, right? That they're looking the kind of the term of art they use is are you ignoring the separateness of this entity? Right? Are you not not operating it with the formalities that an entity should be operated with? Are you
00:22:33
Speaker
paying your mortgage and taking your kids to Chuck E. Cheese on the company card, like that kind of stuff where you really stop distinguishing in practice between yourself and your entity. And part of that is looking at if you've made the effort to have all the right documents.
00:22:52
Speaker
And it that doesn't mean you have to create i ongoing work for yourself. Like when we have a single member or two spouses that are the only owners of an entity, an LLC in particular, because you can't do this with a corporation, but with an LLC, like the agreements we draft, they do away with the need for an annual meeting. So you don't have to have an annual meeting with yourself documented.
00:23:16
Speaker
But if you're... Hold on, what if I want to? That sounds kind of funny. Well, I think that you should. I think you should have meetings with yourself as often as you like to. What if I decide that I need to have a meeting with myself about my business and I decide, let me take myself to lunch?
00:23:35
Speaker
well you You're going to have to have a quorum, Cynthia. and We'll see if you... But it's just me. I don't know. Sometimes I do argue with myself. we You know where this forum is? No, it's awesome. not just a true It's not just a street in Dallas.
00:23:54
Speaker
and that's That was my first thought. I was like, it's down the road. I don't know. ah shes right There is a very good chance that we've already shared what I'm about to share on the podcast, but I don't know that I've ever shared it with you, Sam Johnson. But I may have actually. It's actually quite possible that I have, but please just allow me to indulge.
00:24:16
Speaker
We do this to Sarah I won't tell the full story about how it was originally about how many Supreme Court justices there are yeah so but i think Someone else that was mentioned earlier Jordan was talking about ah this was a ah while ago like Liz Cheney's new book So it wasn't it's not new now, but it was at the time. No, no, it's so good and So I'm like Sarah. Do you know who was Cheney dad? I And she's like, is it Dick Chaney? And I'm like, yes, yes, that's amazing. What is he known for? And she said, God is my witness. She said, it simmoncent tear ah did it he host that New Year's Rockin Eve show?
00:25:04
Speaker
i
00:25:08
Speaker
so good And when do you know who Dick Cheney actually is, that is one of the funniest images
Understanding Quorum in Business Decisions
00:25:18
Speaker
I could ever, ever have in my head. That is amazing. Oh my gosh, that's so fantastic. man but Good times. yeah yeah so sarah The answer is a quorum is whatever your company agreement says. it is okay
00:25:38
Speaker
it's It's the minimum. attendance that you need to have like an official act, right? So usually it's half plus one. So if you have 10 shareholders, you would need at least six people there to be able to have a shareholder, an official shareholder vote that counts for anything. Sorry, sorry. I know. I just took the fun out of it. um so its no no no I'm trying to figure out how many people need to bring with me from my own LLC. It's just me.
00:26:08
Speaker
Right. I can bring a friend is what you're saying. Myself. not guy Right. Yeah. Okay. We're good. in Myself and I. So I want i let the debate really taken down in the minutes and Tia, like I want to see who said what and what the argument was about. You will get it. Yeah.
00:26:27
Speaker
do mostly be deciding on lunch. this is This is actually what chat GPT is good for. You need to give it a prompt to put together ah minutes from a meeting and put in those facts and see what it comes up with.
00:26:43
Speaker
yeah know Anyway, so i're we're going to get to, speaking of filing, some other things that's real some other things that are really, really critical but this this year. But um I want to ask a few more questions of you. so where One place where we intersect, which there's so much intersection between Sam Johnson and Lori Burch, but this one is um
00:27:08
Speaker
business succession and so You know we deal with and that's kind of the whole point of that one um The one example I gave of the car or prayer place but You know that is something so I want I don't know if you want to speak to that as far as I don't get complicated with law firms because you know That's our that's gonna be our pet project here. You're on my 2025 business plan but when it comes to non-professional companies. oh You know, what are the types of things that people should be considering or doing because it's not I don't I'm probably the only one here that has seen the movie mommy dearest based on Joan Crawford's life.
00:27:53
Speaker
But the story was that Joan Crawford, actually, so like her 10th husband, I don't know, was a high up executive with Pepsi-Cola. And when he died, she inherited his interests because there was no other plan. So you can probably feel where I'm getting at, Sam. But anyway, there's a great scene. there All of that movie is, is great scenes.
00:28:17
Speaker
Is that the one where she really, did she like inherit too many wire hangers and just couldn't handle it anymore? That um that is a separate scene. Okay, got it. Got it. Yeah. But there is a scene with her in the Pepsi Cola boardroom.
00:28:34
Speaker
And you might have to believe this out, Sarah, but I'm pretty sure that one of her lines is, don't with me fellas.
00:28:45
Speaker
it I, you know, I might need an episode where I get five minutes to talk about mommy dearest, but anyway, it it may or may not be this one, but right now it won't be. But Sam, um so basically ideas, you know, you may not, you may have a business set up that you don't necessarily want.
00:29:03
Speaker
Your family to inherit that but you would want them to benefit from your value in it And there are literally hundreds of examples. There's franchises there's even multi-level marketing. Sometimes they've got agreements in this and that um, we're in dallas the home of mary k and it's very like Very fascinating story too. Like they need um a movie about mary k. I don't think they've done that I actually remember before she passed her driving on the tollway seeing her pink Cadillac because it said Mary Kay on her license plate, but anyway was You know She hails from a time when when women could own businesses i'm not sure they can anymore So I guess we'll find out in January, but a very impressive very impressive person
00:29:50
Speaker
And so anyway, you don't have to give the one hundred examples there are but like the most common things that you see in most common conversations that you have With people when it comes to they set up this business What the heck do they do with it if they become? If they pass away or even and this doesn't come up and enough become incapacitated whether permanently or temporarily Yeah, and I think The biggest issue is people just don't think about that and try to address it in their company documents. So right now I'm thinking about someone who started their own business. And I'll probably keep using LLCs as the example, because LLCs are being formed at a rate of like 90 to one or something like that compared to corporations, for example. But like in the LLC... What is 9 to 1 or 90 to 10? What is 90 to 1?
00:30:46
Speaker
I would have to ask chat GPT. Okay. Proceed. Right.
00:30:56
Speaker
so like There's a couple of things. if you have For example, like let's say you're the only owner of your LLC and you want to make sure that someone can um manage it if something happens to you, whether it's death or incapacity. You really have to have something in place in your company agreement to to let that happen.
00:31:18
Speaker
So like for for an LLC, you would want someone else as either a designated temporary manager so that if they need to deal with a bank or deal with someone that owes money or that you owe money to, they have the legal authority to act on behalf of your entity. Because if you're the only one, then if so If you're not around, no one else can keep that business going or at least receive the benefits of the business. The other thing I see a lot is like when someone invests in an opportunity, let's say it's a real estate deal and there's multiple people putting money into buy a building, let's say, and those membership interests are going to be restricted.
00:32:08
Speaker
Only only the person who's bought in is really the one that can own it and you have to get authority to assign it or or give that to someone else and so What you could have trouble with is if somebody dies if the owner of that dies they may be prohibited from having their will pass that ownership interest on unless there's a special provision for that in their agreement. And that can be true even if you're the sole owner. So it's really a matter of thinking through and making sure that your documents allow for your or control or or for you to dispose of that asset through your estate plan the way you intend to. Because if you've got your great estate plan done with birch law,
00:32:56
Speaker
But you don't. Yeah, you like that. um Yeah, but shout out. some of But some of your assets, it's a sponsor. Yeah. Whatever we name a business, we usually say not a sponsor, but in this case, they will say is the sponsor is the sponsor. Yeah.
00:33:16
Speaker
So yeah, it's really pausing to think about that and saying, all right, I know I want this to happen with my assets when I'm gone, or i this is my concern of of what needs to happen if I'm not able to run my business.
Fun with 'Assets' and CYA Plans
00:33:29
Speaker
um Making sure that your documents actually track with that and allow that to happen. Yeah. So my next question is, your're you have the same experience we do. Do you ever sometimes giggle when you say the word assets?
00:33:47
Speaker
I will from now on. I i think it's been a while. so Yeah. Do you giggle when you say that word every time, Lori? Not when I say it, but when Sam was saying it, I was kind of oh, you Because as Sam knows, we have the CYA plan, trademarked, cover your assets. That's right. Where we help. yeah So speaking of assets,
00:34:16
Speaker
which I want Sam Anderson and Tia and Sarah to know that I think of all of you as assets to virtual. As you should. You should, thank you. She's going to make sure you're covered as a result. I feel appreciated, thank you. Yes, right? Yes, of course. Well, I did this morning, I did, but we the first time we convened because we have Monday, Wednesday, Friday meetings. And so in our Wednesday morning, I told them that look, I There are a lot of people who are of the mindset that the sky is falling and I don't want to neglect Anybody's feelings like don't don't do that. I spent a lot of my time before therapy bottling up my emotions And it doesn't lead to good things by the way, so feel them go through them but The approach I'm taking is then move through that and let's just hunker down and we're in this together and I know that you've got a safe place where I Have got your back and we'll get through this together
00:35:16
Speaker
ah Anyway, like it is a your day go and take you've got a friend in me, but then it didn't. No, no. Now I'm too nauseous to say things like that. Sarah, we can roll that. You can add that in later, right? yeah i can't We can't afford that, no.
00:35:33
Speaker
You're so sure. Sure. Absolutely. Okay. So I have a couple other things that I want to cover. We're definitely going to finally here. um But something that we encounter a lot, you and I, I don't know if you remember us having this conversation, but I remember having it with you, where with some regularity,
00:35:53
Speaker
We get people because they've googled or because they talked to a friend or because they went to a real estate seminar. Think that they can just put all their personal assets into an LLC to protect them. And there are, there are estate planning attorneys who ascribe to that. There are few and far between most estate planning attorneys in our firm is in this camp. Think that's a horrendous idea.
00:36:20
Speaker
But I guess, and and this is where I'm the one that doesn't know what I'm talking about, Sam. But I i think what my understanding is, is where that thought came from is that if you
Debate on Personal Assets in LLCs
00:36:34
Speaker
if you successfully are able to sue someone with, even if they have personal assets in an LLC, that you get what's called a charging order. And basically charging orders are unenforceable in Texas, so they can't really get to you.
00:36:47
Speaker
um I don't know that's kind of like some hubbub there but what what are your thoughts about people who come to us to say yeah I want to put they don't have any business there no business.
00:36:58
Speaker
whether they do or don't. Let's just say they don't for simplicity. They have a house, they have bank accounts, they have car, all of this. And they're like, I want to put everything, including my homestead into, we'll just use the LLC since people are doing that 90 to one, whatever that means. Um, they do that. What are, what are your thoughts about that, sir?
00:37:20
Speaker
I, I can't fathom why anyone would do that. I don't, I don't, that you may as well go form a general partnership. Or they went to a real estate seminar. Right. Yeah. Uh, it's like the people who want to form Wyoming entities because they saw it on a real real estate YouTube channel. Um, yes. Yeah. No, I think, I think you've got better tools that will better protect your assets.
00:37:49
Speaker
than an LLC could ever accomplish. So I don't understand why anyone who's ignoring these other sources as they should would yeah would ever do that. I mean, A, if you're not really operating your entity as a a going concern, as like a real business, then that's classic set up to pierce the corporate veil, first of all. Secondly, the homestead protection for anything you can get under the homestead law is the best you can get. yeah And thirdly, you have trust options. If you want to protect your personal assets,
00:38:29
Speaker
There are way in like, this is where I'm getting out of my depth and y'all know a lot better, but there's trust you can set up for this purpose that will much more easily align with your estate plan. But also if it's the right type of trust and set up correctly can help you protect against any creditors that you may have, not all creditors, but, but most.
00:38:54
Speaker
I just, not to mention then you've got to file a tax return for it and do your other compliance stuff. And again, going back to that bill piercing, I just, I don't think you'll get that protection in the first place. I yeah know, just know. I just always wonder, I don't ask people this, but this is what I wonder is like, what are you up to?
00:39:17
Speaker
Right yeah, like what shady stuff is happening and I will say sometimes and maybe there is something that i'm just it's more advanced planning than Than i've encountered but sometimes with doctors, but you know sam you and I know You could you have malpractice insurance, you know, oh, I hope I presume you have it But I mean I would see him johnson. He's the nicest lawyer in town need malpractice insurance. No one would dare But it's just a good idea to have malpractice insurance. But you know with doctors, you know certainly they have that. i think And then they have other protections that the only way to get them to be personally liable is if they do something really egregious and intentional. That's my understanding, but that could just be from Dateline.
00:40:02
Speaker
um yeah But I'm thinking, so when that comes up every once in a while, I'm just like, i I don't know, maybe this is just to ah too American of me. I think you should be held accountable for the, like, I think you should be able to be sued if you did something really harmful and negligent. What? You mean consequences? Yeah.
00:40:32
Speaker
ah i don't anyway i and so I think having insurance is a really good thing. Like a lot of the stuff that people come up with us, whether it's this or that or the other, it's not that you don't couple it with an estate plan or couple it with an irrevocable trust so or couple it with an LLC, depending on what fits you. But the important thing is to go to a qualified law firm, not a law firm and not online. So make sure you understand when I say qualified law from what I'm talking about,
00:41:03
Speaker
But I always feel like making sure that you're you have the right kind of insurance and those policies are up to date is always a supplemental and sometimes an instead of scenario when it comes to protecting your assets. Yeah.
00:41:20
Speaker
Yeah, the insurance is a no brainer, right? And I'm, I'm no fan of but there's lots of people with no brains. Correct, correct. Even see what's the latest account up to let me tell you how many approximately there are.
00:41:33
Speaker
that's That's actually isn't that one of the best lines from Wizard of Oz, though, where ah Dorothy says to the scarecrow, but if you don't have a brain, how can you talk? And he's like, well, there are an awful lot of people who go around talking with no brains.
00:41:50
Speaker
I'm just amazed you have that quote at the ready, just like that. If you have not noticed, all I am are movies. All she is is like a repository of, you you name it, she'll tell you. Movies are music. i hear means I can find a quote. to Okay. All right. So we are, I want to get to the Sam Sarah segment, but I have a couple more things. um One,
00:42:17
Speaker
How, what percentage of your business would you say is made up of Birch Law referrals?
00:42:25
Speaker
A lot. Let me do it by sales calls. I'll bet at least half of my sales calls are referrals from Birch Law.
00:42:37
Speaker
Whoo. Listen, so in the past, we even sent you stuff we weren't even sure you could do. We were just like, try Sam Johnson. Almost exclusive. That was only during the campaign. exclusively to him nothing that Keep busy with that. yeah last year That sounds good. Okay, I do one last serious thing. And then Sam and Sarah. Well, we'll just get to that. It's good. It's good.
00:42:59
Speaker
um but But I'm sure that at least Sam um Johnson has other things to go do. ah tell us This is critical. so i wanted I thought maybe we'd start here, but we're actually going to end here besides the Sam Sarah part. Tell us what the heck is this BOI, which by the way, if you're in the LGBTQ community, BOI means a whole other thing.
00:43:23
Speaker
Sarah's like, huh? They didn't give me that memo. Did they not use that with your with your toaster?
00:43:33
Speaker
Boy, second it's like a way to spell boy. Oh, oh I got that. Okay. Yeah, it also, it theres there's a huge cross section of other people who will use up anyway, that's not what it is. Although now Sam's gonna pronounce it that way. And the Corporate Transparency Act, Sam, tell us what the heck is this?
Corporate Transparency Act Overview
00:43:51
Speaker
Yeah, boy.
00:43:53
Speaker
yeah my long scar boy yeah So the Corporate Transparency Act is a ah federal law that went into effect at the beginning of 2024 that requires almost every business entity in the United States to report certain information to the federal government.
00:44:16
Speaker
about who their beneficial owners are. So that's where BOI comes from. It's beneficial ownership information. And so anyone who owns 25% or more of the entity, or anyone else who exercises substantial control like a CEO, for example, has to file information like their name, date of birth, where they live,
00:44:43
Speaker
and like a driver's license number. And it's to help the federal government basically track who's doing business in the United States. It's mostly for anti-money laundering and anti-terrorism efforts, allegedly. But any entity that was formed before this year has until the end of this year to file this report.
00:45:10
Speaker
And so a lot of people have not even heard of this. A lot of like firm owners, I know, have not even heard of it before. ah But it's got some pretty hefty penalties if you don't do the filing timely and accurately.
00:45:26
Speaker
But in short, that's what it is. There there are some exceptions. you know The ones that apply so mostly to our clients that do have an exception is nonprofits or banks or securities, brokers. Basically, people who have other reporting requirements usually don't have to do this if they're already pretty highly regulated.
00:45:51
Speaker
That's scary that there is not a better way to communicate this. And I guess good news, bad news for people like us law firms is that we're under no obligation to inform people about this. Like there's no, Sarity is your word, liability.
00:46:16
Speaker
really for us. um Right. Yeah. It's super, it's super simple. It's really, really easy. Like we've, I think you did the same thing, right? We sent our clients, even though we didn't, you're right. There's no obligation to do it or to remind them as the deadline approaches, like we sent all of our clients some information and the link to go do it for themselves. They can also pay us to do it, but It's so easy. We're like, here, go, go forth and file your BOI information. Yeah. Well, you sent me your letter and we copied it and made it better. So that's why I wasn't going to say that. But, but yes, that's exactly what happened. And I'm honored. What is, what is being besties, if not sharing, right? Exactly. You know, your knowledge and resources, right? Right.
00:47:07
Speaker
I agree. Although instead of a form that they have to fill out, we used something online where they just fill out the data and automatically submits it to us. It was, so we kind of took it to another level, but it's okay. that's where I appreciate it. Thank you. That's okay. I appreciate you doing it and not even telling me. That's really nice. Yeah. I mean, I could have shared it with you, but it would have gone to us.
00:47:29
Speaker
rat Which, would it pay us to buy a BMI? That seems like a missed opportunity. But no, I do sincerely appreciate all the help.
00:47:41
Speaker
that you provide And um you're definitely I mean, we have a handful of those you've got quite a lot but we actually Ended up because you know, our bread and butter is not business law It's estate planning we ended up the ones that we knew where we filed we said specialized messages to and then we ended up doing a mass email to all our clients and I I grappled with it, you know, nobody Nobody wants to be spammed, right? um right Maybe they want to be saved but not spammed and But we said, like if you don't have a business, this doesn't apply to you. But we don't know. like we don't know you know We have clients from 15 years ago. How do we know if they didn't set up a business? And I mean i definitely wasn't... ah
00:48:23
Speaker
i you know it It seems to be more of a conversation people will bring up now, but that hasn't always been a conversation that people will bring up when we're talking about wills and trusts and stuff, whether they have businesses. like I don't know why people don't think to tell their estate planning attorneys all their assets, because that's kind of the point, but look, it happens with some fair regularity that we just go with it.
00:48:47
Speaker
ah Anyway, I want to be respectful of time, I mean a little bit, but I was kind of late to start this because I had computer issues. But Sam, if you can stick around for another few minutes. um Sam and Sarah but would like to pitch some business ideas
Pitching and Evaluating Business Ideas
00:49:05
Speaker
to you. Yeah. Yeah. I'm ready.
00:49:08
Speaker
And to get your feedback. Do we want to do the business name first and explain or other way, Sarah? You know, I'm going to take this opportunity to say at some point, maybe in episode 32, you all are going to have figured this out before we get to the report. No, this is part of the bit. They can't do that. This is part of the bit. Well, you all describe it and then say it's going to be called this. OK. OK. Yeah. Yeah.
00:49:36
Speaker
yeah Do you want to go first? Do you want to go first? Oh my God. Okay. I'll go first. Okay. So the first business idea we have is a mattress store, speaking of money laundering, a mattress store to hide money laundering. Um, because obviously me and Sam would be really good at that and it wouldn't be suspicious at all. It's going to be called mattress.
00:49:58
Speaker
That's it. That's the that's the company name. That's it. Is it going to be properly spelled or is it going to be modern where you like take out all the vowels? oh No, they just put M-A-T-T-R-E-S-S. oh i think I think with no vowels would be cooler though. But see, this is why you have to go to an expert. yeah Do you see the mines explode?
00:50:21
Speaker
Okay. so what's my my role in Can I just say, I think the two S's should be money signs. people Yes. Yeah. To make it less suspicious. Well, I guess sam your, your role here is, do you think that is a good business idea and model?
00:50:40
Speaker
I'm sure financially that could be successful. However, lawyers are ethically prohibited from encouraging or aiding anyone in any scheme involving fraud or death. So I have to say no. That's a downer. I know, right? I think every time.
00:51:01
Speaker
Okay. Next one then. All right. So maybe this one. Okay. So we would demolish a Starbucks that's downstairs and we would open a business. That's not Dutch bros, but it is. And we call they're going to call it weeds. This no, Sam, come on. Say it. We we would call it Swede says like this.
00:51:26
Speaker
and think properly I mean dead was just kind of a dead guy and do have a question though. How are you going to acquire the property from the Starbucks? You're just going to go downstairs and just demolish yeah but you know we're the house but but bunch po side demolish a business structure that you didn't want to take over. why don't you just yeah books out I mean, I think I would suspect the type of connections they'll make in the money laundering business, they'll find some people who can muscle Starbucks out of the space. And it's also, Sam, did you not think this through? It's attached to your Chipotle. Yeah, it's downstairs. Oh, just to mosh up. We want to mosh it. Right. Just to make sure that the load bearing rolls. Be really careful. Sam, it is the load bearing joker.
00:52:17
Speaker
Yeah. I'm glad you're not in the construction business. Me too. All I can say is, I can't wait to go get ah i can't wait to get a snack at Swede Sis. I think that sounds fantastic. Do you know what is very coincidental about this? Is that Dutch bros, not a sponsor. A drink and it's one of my favorites called the flapjack. I didn't know that. That's funny. Okay.
00:52:46
Speaker
um so Sam, your verdict is maybe? Yeah, I'd say go for it. like yeah Even with Heather acquiring the real estate? He doesn't, we'll pretend he doesn't know. You know, that hasn't, I feel like that hasn't been fully nailed down. So I'll say once you figure that part out, then it's a great, great plan. The way Sarah, Sarah really likes corporate jargon. So the way she'd like you to say it is put a pin in that and circle back. Yeah. Put a pin in that for now. Okay. All right. All right. Our next business.
00:53:22
Speaker
It's going to be a friendship bracelet making store for the Swifties, and it's going to be called Swift Gifts for You.
00:53:32
Speaker
And the four is the number four and then the letter U. I feel like that needs to be distinguished. Yeah, that is important. Yeah, I think that's appropriate. So I have a question. Is this would be like the Swift part? Are you going to make it quickly or is that just quick? Okay, it's both. Yeah. Right. Okay.
00:53:52
Speaker
We're doing it right as her tour in, you know? Sam, here you go. I'm just curious, have you run a knockout search to make sure there's no trademark infringement going on? There might be. I don't know what that means. I don't know what that means. Okay, okay. That won't stop us. I would say IP related concerns aside, intellectual property, I think that that would probably be more lucrative than Swedesys and mattress.
00:54:23
Speaker
Okay. So, so far that's the winner. There are. care passion projects Okay. yeah right theres There's a couple more. There's a couple more. yeah Let's go. Let's go. Okay. So a bit of business where we do DIY wills, but psych it's under virtual PLC. So they're getting their estate planning done, right. It got, uh, and it's online wills.com. But the, but the O N online is a zero.
00:54:50
Speaker
The I, oh, I think I did this wrong. but The owls are just normal owls. The eyes are supposed to be ones. I put it in the chat for you Sam, just so you can look at it. And then the S is a dog. Sorry. I've been doing this for a number of reasons. Can you have symbols in the URL?
00:55:14
Speaker
That will stop us. maybe Just write money sign instead of if we can't. What what will stop you? Not a whole lot. But psych, it's under Birch Law PLC.
00:55:31
Speaker
yeah Do you think we have to trick people into doing business with us? Well, um that my main reason for vetoing is I don't want my good friend Lori Birch to lose her law license. I like being employed, thank you.
00:55:46
Speaker
yeah yeah Yeah, that's fair. All right, two more. two more Sarah. The next business we got is a dog petting service, and it's just called, please let us pet your dog.
00:55:58
Speaker
see but but um I think there's a lot of promise in that. Who's paying who for this? That was my question. Yeah, we pay you.
00:56:14
Speaker
yeah That's a terrible business proposition, by the way. We're hoping they tip us really well. I would come we i would come work with you guys on that one. you but All right. I feel like you kind of ripped off an idea I floated a while ago, which actually could be profitable.
00:56:35
Speaker
and that is like I like there's certain kind of dogs I want to just sort of have for maybe a weekend like to rent but I don't want the whole like a mastiff like I really want one for like a weekend so can you do like a rented dog where I can just like hang out with one and then give it back because I really don't want the responsibility of a dog like that Well, I bet we could do we could do like a dot like a matching people who need a dog sitter with people who want a temporary dog. Kind of like momentmatizing for the in the holiday when they switch houses for the holidays. Sam, you're just wonderful because you know that movie. It's one of my favorites. It's awesome. Switching pets.
00:57:25
Speaker
That would be interesting. hu Okay. All right. ah So maybe not the dog petting service. cause It's not right. Yeah, but yeah I it can be both. but Can you say this? You could offer the dog to people who want to pet it. It can be called come pet my dog. Well, there's already a podcast and I'm pretty sure they have a lot of IP. It's can I pet your dog? So be careful.
00:57:50
Speaker
See, this is please let us pet your dog. yeah's aware But just completely different. careful All right. ah Last one. I hope hu I'm not I'm not gonna be with his face. I'm an interior designers, but we dress as people. And the only thing we say is but way it yeah um And we we hide a framed picture of Pitbull himself, of Pitbull himself in every place we design, and it's called worldwide interior design.
00:58:28
Speaker
There is this stuff as Pitbull for Halloween. That's our context. I feel like it's twice. Yeah. Twice. Good job. Do you do other interior design or are you really just going in and hanging a picture? That's correct. This is the synopsis. Sam, if you need to read it, this is what they wrote.
00:58:51
Speaker
Yeah. um Well, I don't. Does he say Dolly? He does. He does. Sam thought it was Dale. Stop. i'm My friend calls him Dale, is drunk and I thought that was his actual name. My head is saying no, but my heart is saying yes to this. i Thank you. I got some more IP issues there. i Yeah, I feel like Pitbull himself would really like this idea. I like ideal and do like the idea of hiding a picture of Pitbull. Yeah, yeah exactly. And I do like the business name, finally.
00:59:29
Speaker
Right. There we go. Is it you probably couldn't get away with Mr. Worldwide? No. Yeah. I feel like he's got that locked down. but I don't know. Could you? I don't know that you could trade. You can't trade more before area or region. world Well, but but I'm talking about the name Mr. Worldwide. and that Seems too general to be able to trademark, but I don't know.
00:59:56
Speaker
Sam Johnson, not Andrew. I think you could trademark it as long as you're not just like a worldwide related business. Oh, hold on. Apparently, yes. The name Mr. Worldwide is a trademark of American rapper, singer, and songwriter Pitbull. He sees it. and So many songs. There's our answer. Right. Yeah. All right. Well, um Sam Johnson and not Sam Anderson, I want to thank you so much for joining us today.
Conclusion and Listener Engagement
01:00:26
Speaker
Well, Sam Anderson, i I thank you for joining us every day. Thank you. But yes, but thank you. And contrary to how we started, I did have to carry this episode.
01:00:37
Speaker
Sorry. i i and Just me, no. but Yeah, you always choose to. No, I've got to. It's a choice. I got to. ah But anyway, yes, thank you. Thank you for inviting me. Sarah, I have to go watch my children. ah So stop the recording. I thought Sarah was going to say something. I didn't want to cut him off. Thank you.
01:01:05
Speaker
I was just saying thank you for inviting me, my dear friend, and it was great to see all of you today. Thank you. It's good to see you. Thanks for listening. And just to cover all our bases about what you just heard, I'm sorry and you're welcome. Make sure you subscribe so you never miss an episode and tell your friends about us. We do webinars and live events.
01:01:32
Speaker
The best way to stay up to date is to follow us on Instagram, Facebook, TikTok, and YouTube. Links are in the show notes. If there's a topic you'd like us to cover, maybe you have a question you'd like us to answer, or maybe you just wanna say hi, hit the link in the show notes or go to birch-law.com forward slash podcast and fill out the contact form.
01:02:01
Speaker
much better. Yeah I thought that had a lot of energy.