Entrepreneurship Podcast post

Legal Protection with Scott Reib

George Grombacher February 6, 2022

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Legal Protection with Scott Reib

LifeBlood: We talked about having the proper legal protection for your business, the challenges and opportunities of the new creator economy, the importance of forming an entity for your business, and the right insurances to have with Scott Reib, America’s Legal Coach. 

Listen to learn the importance of working with proactive professionals you trust!

You can learn more about Scott at ReibLaw.com, Facebook, Twitter, Instagram and LinkedIn.

Thanks, as always for listening!  If you got some value and enjoyed the show, please leave us a review wherever you listen and subscribe as well. 

You can learn more about us at LifeBlood.Live, Twitter, LinkedIn, Instagram, YouTube and Facebook or you’d like to be a guest on the show, contact us at contact@LifeBlood.Live.

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Our Guests

George Grombacher

Scott Reib

Episode Transcript

Come on

one lead this is George G and the time is right welcome. Today’s guest is strong and powerful Scott Reed Scott, are you ready to do this? I am ready, George. Let’s let’s let’s go. Scott is America’s legal coach. He is a Zig Ziglar certified legacy trainer. He is senior attorney at Riblah helping business owners shatterproof their businesses. Scott, tell us a little about your personal life some more about your work and why you do what you do.

Scott Reib 0:41
Yeah, George, I’m 53 years young today. I’ve got I’ve been married for 30 years have two grown boys, one of those married. I’m at a really cool point in life, where I have a little less responsibility than I used to have have a little more time. And so I get to do things that I love. Like speaking at events, I get to travel some with my wife. And so life is pretty good here at the at the rib household. And I spent a lot of my time working because I really love what I do. And we focus on helping small business owners do what I call shatterproof their businesses. Nice. Well, hey, Scott, Happy Happy birthday. Thank you. What better way to spend a birthday than on the lifeblood podcast. So fantastic. So when you say shatterproof your business, what does that mean?

Well, most business owners just don’t really think about all the bad things that could happen their business because it’s unpleasant. And so they just keep driving their business vehicle down the road and things happen to them. They have flat tires, blow outs getting wrecks have emergencies. And then they go ask a lawyer, okay, and I helped me fix this, right. And we went through verse this and we want to become more like a primary care if you look at the medical world, versus an emergency room. And so to do that, you have to put legal structures, legal systems in place, and you have to be proactive, and be thinking, you know, in the future, how do we how do we prepare ourselves so that our business vehicle when it gets hit, and that windshield is shatterproof, the thing hits, it marks it, we keep going, then we when we get to our exit, then we can fix what’s what’s wrong with it. There’s no emergency because we’ve built it the right way. And we expected those things to come. But we’ve built it in a way that’s not going to derail us. As we’ve seen in the last, what 1824 months, things can pop up that no one really expected. And if you haven’t built a solid business structure and foundation, both from a legal standpoint, from a marketing standpoint, from a sales standpoint, and from an accounting standpoint, and cash flow, you could be in real trouble. And so you’ve got to have all those things in place to have a shatterproof business.

george grombacher 2:58
I think that that makes a lot of sense. And it’s certainly smart. Are there common things that you see that do end up in our windshields?

Scott Reib 3:07
Yeah, I mean, there’s there’s some real easy kind of basic things that a lot business owners kind of overlook. A lot of people in this world where if you look at tick tock for five minutes, you’ll find 10 side hustles that you could probably do. And so someone starts doing them. And very quickly, they’re making money, and they’ve skipped over some vital steps, like they didn’t form a corporation or a limited liability company. And suddenly they’re out there creating liability for themselves personally. Because what happens if you start a business, that’s what we call a sole proprietor, and everything you do comes right back on you personally. So if you already have some assets, investments, perhaps, then those things are all at risk because of this new side hustle that you jumped on because he saw Tik Tok. And suddenly, you have all this exposure. If you’ve taken that easy step of calling your lawyer, having them set up at least one legal entity to put separation between you and this new business enterprise, then you’re safe. But what we see is people skip that step, the jump into trying to make money, they make some money, and then years down the road, they come back and go, Okay, I guess it’s time to incorporate because I’ve got a problem. And usually that’s what happens if someone comes in and says, I’ve got this lawsuit. What do I do? And the first question we always ask is, well, what’s your company name? And when will you incorporate it? And when you get this deer in the headlight look that they haven’t incorporated. You know, there’s big problems, especially if it’s someone that has had some success. What kind

george grombacher 4:39
of problems are we talking about? Like how, how bad could it be?

Scott Reib 4:43
Yeah, let’s give you a really bad example. Guy a guy I have a guy I knew pretty well. I knew that he was a successful business owner. He ran a contracting company did remodeling family business in a business over 20 plus years. You know, not even a bad business. Business Bureau report. And then suddenly he meets the customer. He can’t make happy. And he’s in my office with a lawsuit. Well, I started asking these questions, same one, when we incorporated? Well, we really never got around to that. Well, okay, tell me about your personal assets. Well, we have about 10 rental houses. And we have these other little side businesses that we do. And all of those things that they had, were all exposed to this lawsuit, there’s about a $200,000 lawsuit, everything’s exposed to that they can’t refinance their houses. And this was in 2007 2008, when there was a credit crunch, so people needed to restructure things they couldn’t. And so in order to sell or refinance those properties, they had to settle a lawsuit that they did not need to settle, they could have won it, they had to settle it to get the flexibility, they needed to be able to survive. And then they incorporated their business. But it could have been catastrophic. They were in a good place, they’ve done a good job, and we could have won the case and they had the ability to settle, have they not been able to they would have ended up with a large personal judgment against them, that would have been a lien against all of those rental properties. And they would have had, there would have been no defense to that.

george grombacher 6:12
Got it? Well, yeah. So you sort of mentioned talk about tick tock, and you spend just a couple of minutes on there, like, wow, there’s all these different ways that we have the ability to make money, this creator economy has just exploded, and it’s an amazing thing. And, you know, really go get it Go Go be successful, go start helping people. But let’s, let’s let’s do some things first. So when he talks about creating an entity, what are we talking about?

Scott Reib 6:43
Yeah, my preference is the limited liability company, right. And so you’ve you file a Certificate of Formation with the state of your choice, saying who the members of this LLC are going to be members are the owners of LLCs. And then you need to do an operating agreement that says, These are the rules for how we’re going to run our LLC. You know, who gets to vote? How many votes you get, when can we vote? Where can we have meetings? How do you call a meeting, all those kind of things? How do we end this? If it’s not going well? How do we wrap it up, all those things are in this agreement, and then you held a meeting, to approve this formation and take minutes of that meeting. If you do those steps, now you’ve got a real legitimate LLC. And you could also do a corporation, people still do corporations, it’s just not my my preference. Most things LLC works best. And then once you’ve done that, now you’ve got this separation, you have this shield around you. Now you have to keep it there. And the way you keep it there is you make sure you always follow formal formalities. So if you’re doing a contract, you use your LLC name. And when you sign it, you sign it as the member or if or if you’re an officer of the company with your officer title, you never sign it without those because that would be your personal name. And we’re trying to avoid personal liability. And then you hold annual meetings at least, and you take minutes of those meetings. And so that you’ve, you know that you’re showing this as a total separate legal entity, it’s not a fiction, this is real. It’s a real company, and you document the major decisions that you’ve made. And if you have an access lawyer, like what we do here, that’s really easy to get done. And you’ve got that documented every year because one of the first things the IRS asked for in an audit is please send us your bylaws and your formation documents and your minutes. If you don’t have that, then they kind of know something’s wrong.

george grombacher 8:31
Got it? Okay. So while this isn’t the most complicated thing in the world, it does require that you are paying attention and following steps. How how do you work with people? Are you helping them to create these? Or are you helping them to maintain?

Scott Reib 8:54
Yes, all of that. Yeah, what we what we do here is we call it legal coaching. And so we have people from startup businesses to business 20 years and they’re trying to kind of fix things. But what we do is we help them form their LLC, the kind of the first step is that as we do kind of a discovery call with them for to understand their goals and dreams and where they really want to go in life with this, this business vehicle. And maybe they have some other ideas or visions that they want to do. And then we design what we call a shatterproof structure, that this is what your enterprise could look like. If we did all those things that you want to do. This is how we would grow this business. And then we start building it step by step block by block and setting up their their structure. And then those are included in we have our Access Legal coaching plan includes the formation of LLC that was paid to state filing fees, and then we start building that for them so we know it’s done right. And then every year they can fill out a an information form for us. We can can spit out the minutes for them. So they can have good compliance documents. And that’s that’s part of what we do we also review contracts, create custom contracts, and then just do the on demand, answering questions, because a lot of what we do is just, hey, this just came up, what what do I do? I’ve got this, I’ve got a an employee that’s doing this, how do I deal with it? Or I’ve got a contractor that isn’t behaving inappropriately, how do I get rid of them, you know, those things come up almost every day. And then that’s we coach them through it, sometimes we’ll even do it for them. If it’s a if it’s just, they just can’t, then I mean, I’ve showed up at boardrooms and fire people before, whatever needs to happen to make sure that they can follow the right, the right protocol to do it safely.

george grombacher 10:42
Got it. Now you use the term coach, is that different than your relationship as or your work as an attorney?

Scott Reib 10:52
It’s, it’s, it’s all encompassed in that relationship. Most lawyers from what, from my perspective of doing this 25 years, they will, they will tell you what your legal risks are, for a certain situation that you’ve put in front of them, and how to deal with it, they are looking at long range planning, they’re not trying to help you guide your ship, as you build the business they are most of them don’t understand small business. And so we’re here to kind of be that everyday contact, where we’re having regular conversations and coaching them through this growth of the business, so that they can build businesses that have what I call profits that will last. You know, the other thing a lot of business lawyers do is draft contracts that no one their right mind will sign. And so we try to make sure we’re doing friendly contracts, so that we can move business forward and not stop business. And let everyone know, if we’re reviewing an agreement, you get a memo back with a red line agreement, here’s the issues. Now, they may not be willing to change those things. But at least you know, going into this deal, here’s the here’s the hotspots I need to be looking for and looking out for. And sometimes it’s like, you know, I’m just not gonna do that deal. There’s just too many of them. But the client gets to make, you know, make an informed decision. And so that’s, I call it I call that legal coaching. Some of its lawyering, a lot of what I do is the coaching part. And then we have a team of lawyers behind me that will do all the documentation, make sure all the i’s are dotted, and T’s crossed.

george grombacher 12:18
Got it, that’s really makes a lot of sense. Nice. In terms of Alright, so making sure that we have the actual entity structure that we are following and holding minutes, we have our bylaws and robbing agreements, and we are signing agreements. And as an officer of the company, or member of the company, and all that good stuff. How does insurance plan? How do you what what kinds of insurance should people be thinking about?

Scott Reib 12:46
Yeah, one of the key advisors that every small business owner should have is they should have an insurance broker. And it needs to be a relationship, right? So they need to understand what you’re doing. So that you have spent time with you to understand your vision, what you actually do in your business, so they know what exposures you have, and probably your legal structure. And then they can make recommendations. Here’s the seven different policies that we think you should have to be shatterproof in your business. And then you’re like, Okay, I can’t afford all those, where do I start, so they prioritize them for you, you start taking those down, and then you’re having regular meetings that keep you updated on those coverages. Now, general liability, almost every business owner should have a general liability policy. If your business owns your vehicle, then you should have a commercial auto policy. If you don’t, you should probably consider having your company named at least as an additional insured, just in case you have someone from your company driving your vehicle to run errands or that kind of thing. And then you should look at some businesses need to have errors, omissions policies, if you’re a financial planner, or an accountant, or some kind of professional have that kind of policy, you should look at workers compensation policy, if you have anything, where you have employees that are at risk of getting hurt for sure. And Texas, you can be a non subscriber you don’t have it’s not legally required to carry it. But I highly recommend it for most, most places, you’ll just start. Start small. So when you start your business, you know have employees don’t have all independent contractors, that’s another huge mistake we see people make is they call everyone a contractor, when they’re really a W two employee, and that can really bite you later. If you don’t do it, right. So just just do it, it’s much easier to just have one employee and then to employees than to get to 10 and have to back up and start paying all that payroll tax. So just kind of ease yourself in right. It’s like you’re bored by boiling a frog, there’s a little bit of time. If you do that, you’ll be really safe. So get that insurance broker in place. And that means sitting down having a cup of coffee and making sure it’s someone you’re comfortable with because you’ve got to really explain to them what you do and how you do it so they can see where those risks are. And if they’re not interested in doing that, they just want to give you quotes over the phone. That’s Not to person, you need someone that really wants to form a relationship with you that’s going to last for your lifetime and in the lifetime of your business.

george grombacher 15:07
I love it. I think that that’s, those are great thoughts right there. As as, as you look out at this new creator, economy and people doing all the things we’ve been talking about, which is very exciting. Do you just see red flags everywhere, with, you know, people not disclosing things or just the way that they’re representing themselves?

Scott Reib 15:27
Yeah, I mean, I do. But more than that, I, it’s exciting to me to see all the different ways that you can make money I mentioned earlier that I’ve got to, I’ve got, I’ve got three kids, I’ve got a new daughter in law. And then and my son is 23, and my 19 year old son, and I just think it’s amazing. The opportunity and possibility in front of them that I didn’t have 30 years ago, it just didn’t exist. I mean, there was possibility, but not like this, that there’s so many things you can do the there’s I mean, there’s, we always talked about thinking outside the box, there is no box anymore. Everyone’s outside the box, the thing that you’ve got to watch out for and like one of my favorite books is Michael Gerber’s, the E Myth revisited. And he talks about the entrepreneurial seizure, and he needs to revisit it again. Because now these seizures are happening in a very different way. It used to be that it was technicians like me, where I was really good lawyer, and I was tired of making money for everyone else. So I start my own law firm. And then I suddenly figured out that I’m not just a lawyer anymore. Now I’m also a manager, I’m an accountant, I’m in a marketing, I’m a salesperson, and it’s too many hats. And how do I do that? Well, now the seizure is can happen momentarily, because you see something on a real or a tick tock, and then suddenly, you follow to that website, and you’re in business. And so we got to kind of back up. And yes, you can do that, you can jump into a business quickly. And that’s okay. But as soon as you see that this is more than a hobby, that this is something that could work, you need to then you need to go get your ducks in a row, and make sure that you’re forming your business properly. And if you’re already an entrepreneur, and doing other things, and this is an add on, it’s a side hustle, it’s a new thing. Just Just treat it like it’s going to be successful. Statistics show that people that form entities for their companies are much, far more successful than people that don’t, there’s something that happens in your head, when you take it seriously enough to form a legal entity that just drives you to be more successful. So just take those steps, it’s not super expensive. Take those steps just as soon as possible. And then you know, so that’s the corporate entity side. And then yeah, you mentioned, you know, some compliance issues, make sure that you have the right disclaimers and things on your website, that you’re being FTC compliant. Because you could make a bunch of money quickly, and then get a big penalty or lawsuit and lose it all. So yeah, act quickly make decisions quickly to move forward on something. But put the things in place that will protect you, and protect you from yourself. Because there’s just, there’s just so many opportunities out there, and you could really hurt yourself accidentally.

george grombacher 18:12
Start as you mean to go. That’s fascinating. I never thought about folks that actually take the step of incorporating or setting up an LLC, just creating some kind of an entity, that they are exponentially some factor more successful than folks that don’t, but it makes sense. Cool. Well, Scott, people are ready for difference making tip do you have for them?

Scott Reib 18:35
Well, we’ve kind of touched on it, but I want to reiterate it, you have to be proactive with your business. And from the legal side, you’ve got to be thinking, what problems could I have? And get someone to coach you through? How do I build my business so that I can avoid most of them. And when the big ones come, they don’t knock me off track. And so get with a lawyer that will form a relationship with you, that will spend time with you and charge you a reasonable rate for that time, and set that relationships up so that you’re not fearful of contacting them with questions. Because what I see too many entrepreneurs do is wait until there’s trouble because they’re fearful of the billable hour and don’t want to call a lawyer they’ll flip a coin dial a friend google it before they ever do that. So right now, find a lawyer for next year. And get them on speed dial to where you know, if you call them it’s gonna be a set. It’s a set number. It’s a set price. You can live with it. And it’s worth it to you to make sure that you have the best information so that you can move forward because having the right information at the right time. It’s often the difference between success and failure.

george grombacher 19:47
I think that is great stuff that definitely gets cut. Scott, thank you so much for coming on. Where can people learn more about you? How can they engage with you?

Scott Reib 19:57
Yeah, the best place to go is going to be to our website. www dot read la REIB la w.com forward slash lifeblood if you go there we have a special page set up just for the listeners of this show. And they can can schedule a laser legal coaching session with me for free. And they can download my the version of my book, make legal simple, and I think that it will be a good follow up from what we’ve talked about and launch people out for next year. Have it?

george grombacher 20:26
Well, if you enjoyed this as much as I did, just get your appreciation and share today’s show with a friend who also appreciates good ideas go to read law calm that’s our EIB la w.com/lifeblood. And get on Scott’s calendar for a no cost consultation and download a copy of Make legal simple as well. Just make sure that you are protecting yourself as you are getting started or if you’ve already gotten started and make sure that you are doing all the things that you need to be doing. Thanks. Good Scott. Thanks, George. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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