I would love to hear the money guys talk about starting a business and what the boiling point is to set up an official LLC and give some similar advice, uh, for business financials, etc. So is there anything about starting a business that changes that, and then what is

that boiling point to when you're like setting up an LLC and really an official business? What do you think? Well, let me give you, uh, let me give you the appropriate compliance disclaimer here. Uh, we can't offer any sort of legal advice, so we can't speak to you about

when it makes sense or doesn't make sense to have some sort of entity formation or even what type of entity you should establish because you mentioned setting up an LLC, but in some places, uh, subchapter S corporation might make sense, or in some places it

might make sense to just remain a sole proprietor. Uh, here's what's really difficult about a question like this, Robert, is that every single business is kind of unique, and it's unique in terms of how it operates and the underpinnings

of it and what's required and what the boiling point in that business is for that business to thrive. But there are some common threads; there are some commonalities across what we see to be successful, uh, business startups that turn into legitimate businesses that turn into ongoing businesses, and I think

we can probably speak to some of those commonalities. Now, one of which is whenever we see someone start a business, think about starting a business. In our opinion, cash is king. It is your friend in terms of making sure that you've saved up enough operating capital to

allow you to be able to sustain the business, meaning if all of a sudden, you know, like I think it was Jerry Maguire—and man, it's been so many years since I saw the movie—but like he walked in and he just like had his

epiphany and he quit on the spot and then went on his own, right? Like, and Jerry, he did not quite plan the way that I would suggest you might want to plan for starting your own business. You might want to put some time into actually

preparing what this is going to look like and begin to save up capital so that you have a cushion in case things don't go the exact way that you thought they would. Because you want to make sure not only do you have an appropriate emergency reserve to cover your standard

living expenses over the course of 3 to 6 months, but you even have capital to carry you just in case the business itself takes longer to get off the ground than you thought it would. Yeah, I mean, Bo, you make a great point. I mean, I've I've walked this journey and I

know I always think about the visual I have in my head is: if you, if you don't know how far the diamonds are in the ground, and what if you dug 9 feet in the ground and the diamonds were 10 feet in the ground, but you didn't have enough

cash to where you could go that one extra foot? You did 90% of the work and you were at the success point, but you just didn't have enough resources or capital to make it there. And I think that's what gets a lot of businesses so

That's why I always say, put on your 3D glasses. That's the down-to-earth plan. What you think will really happen? Write that business plan out, get the spreadsheet out, and actually do the work. You know, there's, of course, the dream plan; this is

where you're like, "How fancy of a car am I going to be driving after this thing is rocking and rolling?" And then there's the "doomsday" plan. This is like, "If this thing goes bad, how am I going to recover and get my family back on track

because I made this knuckleheaded decision?" So, without a doubt, do the 3D glasses plan. We talk about that with a lot of things. And then I wrote down a whole list here. The first thing I see people do when they're considering

this: make sure you set up boundaries and separate accounts. The government's going to expect it, so go set up—and it doesn't have to be an entity account; you can just go set up a bank account—um, that you're not going to do anything

with this account other than business transactions. It can be the same thing. You go set up a separate credit card that is only for business transactions. At some point, we might turn this into where it's actually got the tax ID and all the other things that go with the

structure stuff, but go ahead and start creating the separation because that's going to help you from an accounting standpoint; that's going to help you from a liability standpoint; it's going to help you from a structure standpoint. So make sure you go ahead and

Start living that separate life with these assets because you don't want a bunch of commingling. I see so many small business owners that are running ragged businesses; they don't respect it, they don't treat it right, and it's setting

them up for a lot of mistakes in the future. Maybe, coming from an accounting background, that's just a pet peeve of mine. Also, then you're going to get into minimizing liability, and this is where the structure stuff comes in; that's why the threshold might be

very low if you're doing something that has risk. Um, and that doesn't have to mean like necessarily you falling off a ladder; it might mean risk of you're doing transactions, you're giving advice, you're doing something that somebody could sue you for because there's high

value to whatever you're giving advice or thoughts on. Um, and that's where, um, typically you start getting into the structure of like LLCs, S corps. And I will tell you that Bo Bo said it in a quick statement, but I'll tell you that

states are different. I mean, we come from the state of Georgia originally, where everybody loves their Subchapter S corporations. I mean, you typically go like single-member LLC, and then once your business starts cranking, you turn into a Subchapter S and you pay

yourself for what you're working in the business, but then you take the dividends or distributions out for being the owner of the business. So you do it as in that legal structure. You move to Tennessee, and you realize they don't really like Subchapter S corporations.

because they charge you a franchise tax, or what is it? Franchise and excise tax—that's the other part of it. So they charge these things, so you don't see many subchapter S corporations here, so you

do need to do your research, figure out what is, you know, kind of accepted or reasonable in your state. You probably have to go talk to an attorney, and it's not that expensive, because you want to measure twice, cut once on getting your structure right. Um, and then once you

start having success, you might even need to go talk to that attorney or accountant again because your structure might need to evolve with your additional success. And then I put on here, accounting systems. You guys know, um, when we did our, when our—we did

our collaboration with Caleb Hammer—I picked on him pretty hard—and a lot of you guys asked, 'What's wrong with using a spreadsheet?' Maybe this is coming from an accounting background. I'm just telling you from running the business forward, because this is a—when you set up a

business, it's perpetual, and you're going to have to file annual tax returns; you're going to have to reconcile bank statements; you're going to have to really—let me go ahead and save you the heartache. When you start out, you're not going to be super busy from

an accounting standpoint, and keeping up with it will seem very simple. But success, like everything I've talked about on the show, comes at you fast and creates a lot of complexity. So the better you can set yourself up while you're simple, the better you'll be able

to grow in scale as you get complicated, and an accounting system is the backbone of all that. Because you're going to add in—you know, you start off with just a checking account for your business, and then eventually you add a credit card statement, and then eventually you're

going to have employees that you're going to give credit cards to, and they're all going to come into one account, and it just starts getting to be a mess. And then you've got loans, you've got retirement accounts, you've got funding, you've got obligations—all

that stuff. If you can set up an accounting system to start tracking that even while it's a simple business, it gets much, much easier as it gets complex. And that's why I do like those types of systems. They've gotten easier; I mean, I even—I saw QuickBooks is even adding

an artificial intelligence function, and I get nothing for sharing this. It's not like Intuit is a sponsor of the show, um, at this point, but it is one of those things where, like, I love that I connect all of my accounts directly to my software, and I can be at home and

in between a commercial break on a TV show and just sync up the accounts, go through the transactions. It can be that simple. Um, but you just have to begin with the end in mind, so start simple, but go through these things and find somebody. You know, both Bo and I

are part of what you call mastermind groups, where we get around other business owners, um, because it is kind of a unique thing, and it's a journey that you go on when you start a company and you're trying to figure out how to navigate this stuff. The only

Another thing I was going to mention about starting a small business is: don't major in the minors. I have some friends who come up with ideas, all "Oh, this!" and the first thing they immediately start doing is working on logos and branding, thinking about the website and figuring...

I'm like, "Guys, you don't have a business yet!" Make sure you actually have something that another human being will pay for. Don't get lost spending all your time on the website, marketing, brochures, and all that stuff if you don't...

actually have a minimum viable product to prove the business will work.  I feel like so many people get lost in that; they end up spending a lot of money, spinning their wheels, and it turns out to be nothing more than a quick hobby, a flash in...

the pan. And I'll add this because I remember being in one of my mastermind groups: once a company starts doing well—meaning it has consistent cash flow—I'm always amazed at how many entrepreneurs, because they've taken this risk and it's working, try to figure out how to do the next thing, whether it's real estate or whatever.  I'm always like, "Guys, you took a big risk..."

...because a lot of small businesses fail.

Failure is soon as one starts taking hold, for you don't skip actually doing the financial order of operations. I always tell people, you've got to make wealth and then get to where you can maintain or do all these crazy 'get-rich' behaviors that you hear people

doing, where they're using leverage, real estate, and all these other things. I'm like, you need to get a foundation underneath you so you don't make crazy, desperate decisions because you hit a lick and don't... I saw a saying, 'Don't assume you'll get rich twice.' I mean that

is something that I want everybody who... if you hit a lick, don't assume you'll get rich twice. Because I think a lot of people don't realize that lightning in a bottle... I get sentimental about memories that are lightning in a bottle. I get sentimental

about business ideas that we've gone on journeys with that you're like, 'Man, that was lightning in a bottle, and I can't believe that this all worked out.'

How To Start A Business The Money Guy Way!

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