259 - Stop Paying for Bullshit - 2022 Edition
On today's bonus episode of the podcast I'm talking about the bullshit I see business owners paying for that you don't need to be.
Next Tuesday, December 13, I'm hosting two free masterclasses titled "7 Legal & Tax Myths: Busting Through the B.S. That's Costing You Money" to help ease your nerves before tax season whether it's the end of year stress around bookkeeping, filing your LLC or S Corp in the New Year, and overall transitioning your business into a new year. We'll be talking about bad advice, overhyped tax strategies, and common misconceptions. It's a lot of what not to do because oftentimes the "should do list" is actually much simpler than we assume. AND you'll get access to new bonus resources. Register to join at www.bradendrake.com/masterclass
1. A fee from [insert name of well-known company I won't mention here]
Helping a client with their bookkeeping I noticed fishy charges on her books. I called the company to ask about the $300 fee and they said it was their Registered Agent Fee. A registered agent is the person who's responsible for receiving service of process if you're ever sued. You can be your own RA if you live in the state where your business is formed and organized, but you have to put your work address (which may be your home office address) on the forms so if you don't feel comfortable doing that or you travel a lot, you might want to hire a RA. You can typically get one in most states for about $50/year. I tried to look, and there didn't seem to be an added benefits for the extra $250 for this company.
2. Similar companies are charging $80 to file your EIN.
Like what? It's free. Your EIN stands for Employee Identification Number, it's like a social security number for your business. Any time a form asks for your TIN (Tax Payer Identification Number) they're asking for your EIN or Social Security Number. They ask for your TIN on W9s. You can do this for free on the IRS website by Googling "IRS EIN Application." Go ONLY to the IRS.gov link, you have to do it during IRS business hours despite being online. The questions you ask you may be difficult, but these websites that are charging you are asking you the exact same questions and charging you for nothing that you aren't already answering yourself.
3. Bad contract templates → don't buy ones that aren't for your industry
A lot of companies out there are offering very generic templates and you'll end up with like wording for a construction project in your wedding planning contract. You don't need to be paying hundreds of dollars for these templates so maybe don't spend $100-$300 for literally every single contract you need and the issue of going to a local attorney is that they won't know the nuance of your industry to include. This is why we have the Contract Vault which has all the contracts you need for $30. Ethically I could charge $500 for this because there are contracts in there that every business owner needs i.e. a client contract, a contractor agreement and a privacy policy and then we have our cancellation, postponement and release agreements that are good to have on hand. If you need a template, buy my templates then if you want to have it reviewed then you can take it to a local lawyer and spend the money on that instead of more expensive templates.
4. You can form your LLC through the state website. Using an online service has little benefit, like the EIN.
Again, paying a third party is silly because they're asking you the same questions your state website will ask. On the flip side, a lot of people think that an LLC formation is like an EIN, that it's just a form online. Yes, true, but it's all the things that go into it after forming an LLC like a new EIN, a new bank account, having an operating agreement, updating your business license, have meeting minutes, etc. These are a handful of the things you need to do. We walked through these steps in episode 257.
A third party company should be giving you these resources along with the filing, but I've seen from experience that's not always the case and a lot of it can fall through the cracks. I also don't believe it's the responsibility of the companies to notify you about your annual fees and annual filings, and I've seen students have their LLCs dissolved because they did not keep up with these annual things because these third party companies did not educate them on what they needed to keep up with.
Most of the filing steps you can do on your own and for those you can't our ProfitRx membership can walk you through them for $100/month. While we want you to stay for months and months, you could join for one month, form your LLC with our trainings, and then be done.
5. Trademarks → online services are generally a no.
For some context, I hired an attorney for my Unf*ck Your Biz. That went through with no issues. I did my own for Profit Rx and had a couple minor hiccups that if I had hired a trademark attorney these would not have happened. I got an Office Action which is a letter you get back that says you have x,y,z issues to be corrected and sent back. Mine were only minor corrections I should be able to correct. Some Office Actions are much harder and would require you to hire an attorney, for example Likelihood of Confusion is a common one and you need to prove why there wouldn't be confusion, an attorney could tell you if this is a red, yellow or green on likelihood of proving this. Major hiccups can cost you major money.
What I recommend to my ProfitRx students is that they do a general search for their business name. If they see nothing, you can file on your own but if you see something remotely similar or competitive, I would recommend hiring an attorney.
Don't forget to sign up for "7 Legal & Tax Myths: Busting Through the B.S. That's Costing You Money" at www.bradendrake.com/masterclass AND you'll get access to new bonus resources. I'll see you Tuesday, December 13.
