Wes Carter Answers Legal Questions from the Thrive Nation

Show Notes

Wes Carter answers: How to protect your LLC, the most common legal mistakes he sees entrepreneurs make, what are the most common kinds of lawsuits small businesses get into, are non-compete agreements enforceable, etc.

  1. How to protect your LLC?
    1. Once you’ve set up your LLC, you have to treat it with respect
    2. You can’t mix personal money with company money
    3. You have to limit the access and flow between personal and business
    4. You have to file an annual report and if you don’t file it, the state can remove your LLC.
    5. You don’t have to put “, LLC” on your marketing.
    6. There are ways you can structure your LLCs in a silo format for beneficial reasons but you have to be very careful and do it properly.
  2. Most common legal mistake you see entrepreneurs make?
    1. Mistake 1 – Employees versus Contractors
      1. When you misclassify a worker you can have huge problems.
      2. The IRS has very specific definitions of what a contractor is and what an employee is.
        1. Employee – 
          1. Only working for you
          2. Using your gear
          3. Managed by you
        2. Contractor – 
          1. Working on their schedule
          2. Using their gear
          3. Has more income besides you
    2. Mistake 2 – Using a “DBA” is an alternative for an LLC
      1. An LLC is under $1,000
    3. Mistake 3 – Signing contracts without reading them
      1. Leases – Everything is negotiable. You can go back and ask for changes because they want your money.
    4. Mistake 4 – Not doing any research into the name you are going to use
      1. If you are not careful and don’t deep dive into your name, it can be very costly in the long run.
      2. $500 now versus $500,000 problem in the future
  3. Are non-competes actually enforceable?
    1. Sometimes… Every state has different rules. Some states say yes. Some states say no. Some states say maybe.
    2. Employees today only stay at a job for 4.6 years
  4. How do I protect myself as a business owner with an LLC if I have no partners? It’s my understanding that as the sole member I am still vulnerable to lawsuits against my personal property. Are there any options to add protection?
  5. What is Piercing the corporate veil?
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