Latest / Money And Wealth With John Hope Bryant / Contracts and Taxes

Transcript

Contracts and Taxes · Money And Wealth With John Hope Bryant

0:00
Speaker 1: Welcome the Money and Wealth with John O'Briant, a production
0:03
Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey, Hey,
0:14
Speaker 1: this is John Hope Brian and this is Money and Wealth.
0:18
Speaker 1: I am honored to bring to you a special segment
0:24
Speaker 1: breaking down contracts and taxes. This is something that is
0:28
Speaker 1: fundamental to your success in business, in life, even your
0:35
Speaker 1: personal life. I'll cover all of this over the next
0:39
Speaker 1: forty five minutes or so. This was inspired in part
0:43
Speaker 1: by the artist Jailly Roll and a clip that he
0:48
Speaker 1: did on social media, which I then turned into a
0:54
Speaker 1: piece of my straight Talk Live series on my platforms
0:59
Speaker 1: where he talked about contracts in the music business and
1:04
Speaker 1: he broke down how artists get in a bad spot.
1:09
Speaker 1: I'm not going to say taken advantage of, because as
1:11
Speaker 1: I will describe here, in most cases, they're not being
1:16
Speaker 1: actively taken advantage of. They're just not actively paying attention
1:21
Speaker 1: to the thing that matters most. It's the music business.
1:24
Speaker 1: In that example, it's the business of music, and to
1:29
Speaker 1: think about it in any other ways is not to
1:32
Speaker 1: understand what you're doing. Or to quote my dear friend,
1:36
Speaker 1: my duty departed friend, Quincy Jones, he says, if you
1:40
Speaker 1: think you're in the music business, and you don't own
1:43
Speaker 1: music rights, publishing rights, licensing rights, some kind of rights,
1:48
Speaker 1: writing rights. You're actually not in the music business. You're
1:52
Speaker 1: a temporary performer. Drop the mic. Statement by Quincy Jones.
2:00
Speaker 1: Jelly Row goes into this thing, and you can look
2:01
Speaker 1: at the foot clip on mind, social media platforms, at
2:06
Speaker 1: John Brian everywhere wherever you platform you Tuesday to focus
2:12
Speaker 1: on Instagram is probably easier. I break this down in
2:16
Speaker 1: great detail, but the key part of this is he
2:19
Speaker 1: explains that when you owe a million dollars, you've been
2:23
Speaker 1: given in advance. Make this clear. You've been given an
2:25
Speaker 1: advance for a million dollars. You don't realize that you
2:28
Speaker 1: owe that money back. It's not a payment and you know, oh,
2:36
Speaker 1: that's all good. Next item. It is an advance against revenue.
2:44
Speaker 1: And the way that works is you you extract things
2:47
Speaker 1: that give it a million dollars. It's supposed to pay
2:49
Speaker 1: for productions of your albums and your videos and your
2:53
Speaker 1: business expenses. Oftentimes people go start raving mad and start
2:57
Speaker 1: spending money on stuff, you know, cars for their friends
3:03
Speaker 1: and jewelry and travel and all of that, and then
3:10
Speaker 1: they run out of money. And they go back and
3:14
Speaker 1: they may ask for some more and that's you know,
3:17
Speaker 1: they think they're getting some more money in payment. Really
3:20
Speaker 1: you really just increasing your internal credit line. And the
3:23
Speaker 1: way that the record company gets a back is they've
3:28
Speaker 1: got a contract with you in this example and in
3:30
Speaker 1: his example was seventy thirty. He thought that was a
3:35
Speaker 1: really great deal. Some artists are eighty twenty. Some artists
3:38
Speaker 1: are ninety five to five mean meaning the record company
3:41
Speaker 1: in this example. And don't get mad. Then business as
3:44
Speaker 1: a capitalist is just a it's just not emotional. Business
3:50
Speaker 1: is a gladiator sport. It's a non emotional situation. It's
3:54
Speaker 1: not meant for it to be personal. They just it
3:58
Speaker 1: is what it is. So again, be careful of the
4:01
Speaker 1: contracts that you signed. But and this is in fair
4:03
Speaker 1: exchange is no robbery. So in this example, he owned
4:06
Speaker 1: thirty percent of his revenue. They owned seventy percent of
4:09
Speaker 1: every dollar that was made until he paid the advance back.
4:12
Speaker 1: Let's use a million dollars as an easy number. So
4:15
Speaker 1: until so they got for every dollar of new album sales.
4:20
Speaker 1: To make this easy, the record company got seventy cents
4:24
Speaker 1: and he got thirty cents. Are paid back at the
4:28
Speaker 1: rate of the deal, which means that out of his
4:31
Speaker 1: thirty cents, the million dollars he was advanced gets paid back,
4:36
Speaker 1: and he keeps paying that million dollars back from his
4:39
Speaker 1: thirty percent while the record company is getting there seventy
4:43
Speaker 1: percent until he repays the million dollars in total, in
4:47
Speaker 1: which case he then starts recouping thirty percent to his
4:51
Speaker 1: pocket paid back at the rate of the deal, which
4:55
Speaker 1: means that the record company, the fancier, the venture capitalist,
4:58
Speaker 1: the one who's backing you here, the one who's taking
5:01
Speaker 1: the most risk, may earn a million dollars before you
5:05
Speaker 1: even get your first cens of your thirty cents. In fact,
5:09
Speaker 1: they will make earn a million dollars the're gonna earn.
5:11
Speaker 1: They're gonn get their million dollars back, but they may
5:13
Speaker 1: own it, earn another million dollars or seven hundred thousand
5:16
Speaker 1: dollars or you know, it depends on how this gets calculated.
5:20
Speaker 1: But they may earn a million dollars back on top
5:26
Speaker 1: of your on top of your your million that you
5:30
Speaker 1: re imburse them before you make a dime, because they're
5:35
Speaker 1: making a seventy thirty split. It's actually they can actually
5:38
Speaker 1: do better than that in an example, and fair exchange
5:42
Speaker 1: is no robbery. So just just watch the contracts you signed,
5:45
Speaker 1: because if it's a ninety five to five contract, which
5:49
Speaker 1: some artists do sign, I mean, that's really painful. They
5:53
Speaker 1: make ninety five cents of every dollar that comes in,
5:55
Speaker 1: you make five cents, and you're going to pay them
6:00
Speaker 1: out of your five cents the million dollars back, right,
6:05
Speaker 1: And yeah, we don't want to do that calculation. So
6:09
Speaker 1: let's get into the positives here, because these contracts don't
6:14
Speaker 1: have to be ankles around your weights, around your angle
6:19
Speaker 1: or and you know, some kind of a negative situation
6:23
Speaker 1: that can be quite empowering. They've been for me in
6:26
Speaker 1: most of my business experience. But actually I've had some
6:29
Speaker 1: bad experiences too. I've written some bad countures, I've had
6:32
Speaker 1: some bad agreements. I've had run ins with the irs
6:35
Speaker 1: and franchise tax board in California. We'll get into that.
6:39
Speaker 1: But let's let's talk about contracts in taxes as a
6:43
Speaker 1: foundation for your financial success. Let's now start with my
6:49
Speaker 1: own personal story, and I described this in my book
6:53
Speaker 1: Financial Literacy for All, which is a bestseller, been a
6:56
Speaker 1: bestseller for the last year encourage you to go get
6:58
Speaker 1: your copy. And when I was in business, I wasn't
7:04
Speaker 1: paying attention to paying taxes because my view was the
7:09
Speaker 1: company wasn't making money, so why should I worry about it?
7:13
Speaker 1: And I worry about it when I become profitable. I
7:16
Speaker 1: actually made two mistakes. I hadn't paid I hadn't filed
7:19
Speaker 1: personal tax returns for about six years in a row. Yes, me,
7:23
Speaker 1: this is one of my teens. I was homeless during
7:26
Speaker 1: the time. I was homeless six months of my life,
7:27
Speaker 1: So I guess you'll understand some of that. I was
7:31
Speaker 1: just rolling really fast, trying to hustle. You can all
7:34
Speaker 1: relate to that. But no excuses I should have filed
7:36
Speaker 1: my taxes. Well, that wasn't the worst part, the fact
7:41
Speaker 1: that I hadn't paid my taxes, because that was not
7:43
Speaker 1: I didn't filed taxes or I didn't know any taxes,
7:45
Speaker 1: but I hadn't filed them. So once I did file them,
7:50
Speaker 1: I owe penalties. And the IRS is an extraordinarily punitive lender,
7:56
Speaker 1: so you don't you want to owe money to anybody
7:59
Speaker 1: but the IRS. And they didn't come after me, they
8:03
Speaker 1: didn't threaten me. I was a small fish not making
8:07
Speaker 1: a lot of money at the time. But I finally
8:11
Speaker 1: filed them all at one time before they came up
8:13
Speaker 1: to me. I came to them, which I'm encouraging you
8:15
Speaker 1: to do, and I just paid the penalty through a
8:18
Speaker 1: payment agreement over time. That way they hit me was
8:23
Speaker 1: later on, when I was making a little money through
8:25
Speaker 1: the business. Well, the business was not profitable. I had
8:30
Speaker 1: a lot of cash flowing through the business. I had
8:32
Speaker 1: employees I was paying. I was not paying with holdings
8:35
Speaker 1: out of the employees paycheck. So you when your employees
8:40
Speaker 1: are a W two employee, they're a salary or hourly employee,
8:44
Speaker 1: You've got to pay with holdings out of that. Well, again,
8:47
Speaker 1: I figured the business wasn't profitable. I wasn't profitable. Why
8:50
Speaker 1: should I do that. I just write them a straight
8:52
Speaker 1: check for what I owe them. The Franchise Tax Board
8:58
Speaker 1: the State of California out a wind of that, and
9:02
Speaker 1: they literally put up a cash register in my lobby
9:07
Speaker 1: and they wanted their pound of flesh. They would take
9:10
Speaker 1: every receipt, every check that came in that front door
9:14
Speaker 1: until they got their paid paid back the taxes plus
9:18
Speaker 1: the penalties and interest that I owed them from the
9:22
Speaker 1: from the employee with holdings that I stole from them.
9:28
Speaker 1: I didn't steal it, but I I burrowed it. And
9:33
Speaker 1: and it was very painful. We're talking about you know,
9:36
Speaker 1: it was, as I recalled, bout forty thousand dollars in total.
9:39
Speaker 1: And and back then that was a that was a
9:42
Speaker 1: that was a death nail for me. And I had
9:43
Speaker 1: to hustle and take care of them and take care
9:45
Speaker 1: of my responsibility at the same time. And I learned
9:47
Speaker 1: a very valuable lesson from that experience. Uh, those two experiences,
9:52
Speaker 1: which is just just treat the irs as your business
9:55
Speaker 1: partner and file your tax returns. Look, you cannot on
10:00
Speaker 1: your life without you know, this whole country runs on
10:05
Speaker 1: taxes being paid. Your police are being paid by taxes,
10:09
Speaker 1: Your schools are being paid by taxes. Your the roads
10:15
Speaker 1: and gutters and the maintenance, the building of bridges, uh lights,
10:21
Speaker 1: street lights, sanitation services. I mean, all the infrastructure for
10:28
Speaker 1: the city you live in and the country you live
10:30
Speaker 1: in is paid through taxes or as a to pay
10:35
Speaker 1: this really plane, even if you want to distribute money
10:39
Speaker 1: like a socialist, you have to first collect it like
10:42
Speaker 1: a capitalist. All this is connected and folks as well
10:47
Speaker 1: I don't you know, I don't want to be a capitalist.
10:49
Speaker 1: I want to work for nonprofit. Where nonprofits money comes from,
10:53
Speaker 1: and it's in this case the government in the government
10:57
Speaker 1: gets that money and money from taxes or if you
11:01
Speaker 1: get in your money from charitable contributions from wealthy individuals,
11:05
Speaker 1: those individuals are getting a tax break because of making
11:08
Speaker 1: a charitable contribution to you, which affects Hello, they're taxes.
11:15
Speaker 1: Al Capone, the famed gangster, did not get taken into prison, arrested,
11:23
Speaker 1: and then put ultimately into prison because of great murder mayhem,
11:28
Speaker 1: all of which he on some level was guilty of
11:30
Speaker 1: but was never convicted and dieded but never convicted. He
11:34
Speaker 1: just got away with it all. But when the IRS
11:38
Speaker 1: came up to him for tech, when the federal government
11:40
Speaker 1: came up to him for tax evasion, boom like. They're
11:43
Speaker 1: like the government was gangster. They're like, you can make
11:47
Speaker 1: all this money illegally if you want to, and we
11:49
Speaker 1: can't prove you made it illegally, but your lifestyle and
11:52
Speaker 1: such that you can't do that without making X kind
11:55
Speaker 1: of money and you didn't pay taxes on that, so
11:57
Speaker 1: it's ill gotten gains. We want to share, and they
12:00
Speaker 1: put him and they locked him up and he died
12:05
Speaker 1: a very painful death. After that, it was over. So
12:10
Speaker 1: pay your taxes. So you're going to understand the basis
12:14
Speaker 1: of contracts. In taxes, you're going to learn how to
12:16
Speaker 1: protect themselves, yourselves from unscrupulous people, and protect your businesses.
12:21
Speaker 1: You're going to get best practices for wealth safety and
12:27
Speaker 1: well building wealth safely and legally and sustaining it retaining it. Okay,
12:31
Speaker 1: So a contract is just simply an agreement, right to
12:35
Speaker 1: start with the basics. A contract is simply in agreement.
12:40
Speaker 1: But it's only as good as as it's enforceability, and
12:44
Speaker 1: it's only as good as a people. I might also
12:48
Speaker 1: add who are signing the contracts. If you have two
12:51
Speaker 1: unethical people on two sides of a signing of a contract,
12:56
Speaker 1: the contract is useless because it's only as good as
12:58
Speaker 1: a full faith and ability of the people signing it.
13:03
Speaker 1: But let's assume that people are honorable. So every major deal, partnership,
13:08
Speaker 1: or investment should have a contract. I love limited liability contracts.
13:14
Speaker 1: LLC's are simple or elegant, and they're easy for anybody
13:18
Speaker 1: to understand. I have a ton of LLC agreements. When
13:21
Speaker 1: I had the Promise Homes company, I since sold most
13:24
Speaker 1: of the company, But when I had that company, we
13:26
Speaker 1: had just I mean, I think it was hundreds of
13:31
Speaker 1: LLC agreements. The ideal situation, we owned seven hundred homes.
13:35
Speaker 1: Just under that, the ideal situation, which would have been
13:37
Speaker 1: to have each one of the seven hundred homes in
13:39
Speaker 1: its own limited liability corporation, its own LLC. I think
13:43
Speaker 1: we bought the homes in bunches, so we would have
13:45
Speaker 1: a group of homes in one limited liability corporation. So
13:49
Speaker 1: if somebody tripped fail of fake injury or whatever on
13:54
Speaker 1: a house, or wanted to sue because they realized I
13:57
Speaker 1: owned it, or whatever, you could only sue the asset
14:01
Speaker 1: or assets that are in that bucket of assets in
14:04
Speaker 1: that LLC Limited about ability corporation. You couldn't punch through
14:08
Speaker 1: the LLC and get to me or my family or
14:12
Speaker 1: you know, my other companies are all that kind of stuff,
14:14
Speaker 1: because you're greedy and unethical in that situation, not suggesting
14:19
Speaker 1: somebody's greedy and unethical, but limited liability for alcs really
14:24
Speaker 1: help in that regard. So key contract clauses in what
14:28
Speaker 1: they mean payment terms avoid getting paid late or being
14:33
Speaker 1: paid not at all by having payment terms. What's the
14:36
Speaker 1: scope of work? It prevents misunderstandings about the responsibilities that
14:42
Speaker 1: you have in a contract or someone else. What's a
14:45
Speaker 1: termination clause is what happens if things don't work out
14:50
Speaker 1: in an agreement. So so how do you basically how
14:52
Speaker 1: you get out of the agreement? By the way, I
14:54
Speaker 1: must just throw one in here. In perpetuity, right, that
14:57
Speaker 1: means that I just I love that frame. I was
15:00
Speaker 1: with Cam and Cam Newton, the NFL star, We did
15:07
Speaker 1: a podcast together on his show Funky Fridays. You'll be
15:11
Speaker 1: hearing that soon and it's a great, great interview with him.
15:14
Speaker 1: He's a great guy. And he learned the phrase in
15:20
Speaker 1: his contract negotiations in perpetuity in negotiating on his media
15:25
Speaker 1: company after his football crew career. He learned that lesson
15:28
Speaker 1: and it's stuck in his head. That means it goes
15:31
Speaker 1: on forever. Right, Whatever you're signing in perpetuity means you're
15:34
Speaker 1: giving rights forever in perpetuity. These things really matter. What's
15:50
Speaker 1: a non compete and confidentiality it's protecting your ideas and
15:54
Speaker 1: your businesses. Essentially, noncompete agreement and accomplished reality. Agree. Let
16:00
Speaker 1: me talk to you about a lesson I learned in
16:03
Speaker 1: a contract I had done a deal with. Well, let
16:08
Speaker 1: me tell you a bad situation first, and I'll take
16:10
Speaker 1: you a good one. So when I was coming up
16:13
Speaker 1: in business, Brian Group Companies, I believe it was w
16:18
Speaker 1: You know, if you got the name of the end
16:20
Speaker 1: of the evening, it was Brian New Companies and WCC
16:22
Speaker 1: Funding Corporation. I was like nineteen twenty one years old,
16:26
Speaker 1: and I ran this business in La Los Angeles, and
16:31
Speaker 1: we were in an office building, the Westwood gave Way
16:34
Speaker 1: Complex at Santa Monica in Los Yenaga, and my assistant
16:39
Speaker 1: now my chief of staff, Rachel daff I'd ask her
16:42
Speaker 1: to go downstairs every day pretty much and get myself
16:45
Speaker 1: a sandwich or whatever, and I would just work through lunch.
16:49
Speaker 1: And I was so focused on working and hustling whatever
16:52
Speaker 1: that I created my own terms for how I was
16:55
Speaker 1: going to pay that bill, I guess, and I had
16:57
Speaker 1: failed to pay the cafe bill downstairs. It wasn't much,
17:02
Speaker 1: it was eight hundred bucks or something, but even work,
17:06
Speaker 1: and that guy sued me. I have never been sued
17:08
Speaker 1: by anything important like no, no, anything important. I've taken
17:13
Speaker 1: care of all my big deals, all mortgages, contracts. My
17:16
Speaker 1: credit score is like cool, it's all. But this one situation,
17:20
Speaker 1: these small ones, I let these things slip. I didn't sign,
17:23
Speaker 1: I didn't have a contract with the cafe owner. They
17:27
Speaker 1: let me slide basically on you know, having an informal situation,
17:32
Speaker 1: and they took me to court, small claims court, and
17:34
Speaker 1: it was very easy for them to get a judgment
17:36
Speaker 1: against me. In that case, I didn't show up, so
17:40
Speaker 1: the judge hit me with a default judgment. It was
17:43
Speaker 1: a default judgment because you I didn't show up, So
17:46
Speaker 1: if you don't show up for court, you will get
17:47
Speaker 1: a default judgment against you. And it's very painful because
17:51
Speaker 1: there's a one sided conversation and you can't argue about it.
17:54
Speaker 1: And I ended up owing this guy. It wasn't a
17:56
Speaker 1: lot much with eight hundred thousand dollars, but back then
17:58
Speaker 1: there was a lot of money for me and the
18:01
Speaker 1: more painful ones. I had a guy, Jimmy was his name,
18:04
Speaker 1: and it was Jimmy's car detailing. I remember Jimmy and
18:07
Speaker 1: Jimmy would wash my car and it was a Mercedes.
18:11
Speaker 1: I think four to twenty sl Sel and I love
18:15
Speaker 1: the car, and he would have washed the car once
18:18
Speaker 1: a week. And Jimmy had a contract. Jimmy didn't have
18:22
Speaker 1: have a high school education, right, Jimmy didn't have good
18:25
Speaker 1: teach but Jimmy had a good sense. And Jimmy on
18:28
Speaker 1: his bill that I or my assistant would sign every
18:31
Speaker 1: time he finished the washing a car, we'd sign an
18:36
Speaker 1: invoice it said at the bottom ten percent fee compounded
18:43
Speaker 1: with penalties for all unpaid balances, where this whole thing
18:46
Speaker 1: was an unpaid balance. And this dude ultimately took me
18:50
Speaker 1: to court. I thought he was a friend. He was like, no,
18:53
Speaker 1: I'm I'm a businessman, or as as jay Z would say,
18:59
Speaker 1: I'm not a business man. I'm a business man. And
19:03
Speaker 1: Homeboy took Homeboy with no teeth oldofsiss who I thought
19:08
Speaker 1: was my buddy who was washing my car, oh and
19:13
Speaker 1: returning back to the hood while I was at Westwood
19:15
Speaker 1: Gateway Complex in West la and that marble office building
19:19
Speaker 1: trying to be important. He took me to court in
19:22
Speaker 1: one because he had contract agreement with me and I
19:27
Speaker 1: didn't pay attention, and he was right. He had me
19:31
Speaker 1: my signature and all these invoices, and it said clear
19:34
Speaker 1: as day that I would pay a ten percent feet
19:38
Speaker 1: on the unpaid balance. It was all an unpaid balance,
19:40
Speaker 1: and I'd paid penalties and interest on the top of that.
19:45
Speaker 1: I had no choice but to pay him, and I
19:48
Speaker 1: was honored to do it. He earned it all that,
19:50
Speaker 1: and I actually felt very bad about it. Lesson learned
19:55
Speaker 1: later on and later on, meaning like recently I signed. Recently,
20:01
Speaker 1: last ten years, I signed a major contract with a
20:06
Speaker 1: couple of friends to start a business. And it was
20:10
Speaker 1: a general partnership, and I had a majority of ownership,
20:16
Speaker 1: and my two partners investors had They owned forty percent
20:21
Speaker 1: and I owned sixty percent. And there was different kinds
20:24
Speaker 1: of shares. I had essentially common shares, and they had
20:28
Speaker 1: preferred shares. And it is what it sounds like. Their
20:31
Speaker 1: shares were preferred at a preferred position and a preferred
20:35
Speaker 1: in rights right than my shares, my common shares were
20:39
Speaker 1: as it sounds common and like I didn't have common
20:43
Speaker 1: sense to pay attention to this. It turned out just fine,
20:46
Speaker 1: by the way, there were great guys. But I thought
20:50
Speaker 1: I assumed because I owned sixty percent of the company
20:53
Speaker 1: that that just meant I had a majority vote, a
20:55
Speaker 1: majority of view, I'd run in the way I wanted
20:57
Speaker 1: want to. And I was naive because these were the
21:00
Speaker 1: money guys, and they knew what the heck they were
21:02
Speaker 1: talking about. I was a thousand there, but they were
21:05
Speaker 1: billionaires at least one hundred millionaires. And well I wasn't
21:10
Speaker 1: a thousand aire, but you get the point. I was
21:14
Speaker 1: outmatched on the finance understanding side of this equation. These
21:22
Speaker 1: guys were geniuses and in what they do. And even
21:28
Speaker 1: though I own a majority, their attorney explained to me
21:31
Speaker 1: one day when I was pushing a narrative, pushing what
21:33
Speaker 1: I wanted to do, John, you don't you own a
21:37
Speaker 1: majority of the ownership, but they control a majority of
21:41
Speaker 1: the company through their preferred shares. I'm gonna go off
21:46
Speaker 1: with a tangent here just time. I tell you. There
21:48
Speaker 1: are things like there's poison pills you can put in
21:51
Speaker 1: a stock agreement. Like I believe Mark Zuckerberg, who I
21:54
Speaker 1: know at Facebook now Meta, has a poison pill that
21:57
Speaker 1: no matter how much the stock gets deluded, he controls
22:01
Speaker 1: the company. There are there are founders who put these
22:04
Speaker 1: poison pills in there. I don't know that to be
22:06
Speaker 1: the absl case from that met up, but I'm pretty
22:09
Speaker 1: sure it is these contracts where they found a company
22:12
Speaker 1: and they will structure it through the goverferance agreement and
22:16
Speaker 1: the rights where their their shock their stock has outside
22:21
Speaker 1: weight to other shareholders irrespective of how much they get diluted.
22:24
Speaker 1: De looted means uh as deluted is the opposite of concentrated.
22:28
Speaker 1: Concentrated a strong and rigid and intense, and diluted is
22:33
Speaker 1: what it sounds like. You delute a drink at a club.
22:35
Speaker 1: You know what that means, right, they gave you some
22:37
Speaker 1: cheap drinks. You dilute your interests, You have less power.
22:42
Speaker 1: So so that's an aside. If you want me to
22:44
Speaker 1: go into that, put that in comments when you see
22:46
Speaker 1: this online. I'm happy to go into greater detail and
22:51
Speaker 1: explain what the poison pills and all that kind of
22:53
Speaker 1: stanf some means means and stands for. But I want
22:56
Speaker 1: to get through a lot of content here in a
22:57
Speaker 1: very short period of time. So back to the basic
23:00
Speaker 1: premise that I had basically synthetic equity at common shares,
23:07
Speaker 1: and they had preferred shares with rights and privileges that
23:10
Speaker 1: were brilliantly crafted and they didn't do me no wrong.
23:14
Speaker 1: It was all there for me to view. I was
23:17
Speaker 1: casual about it because I knew them, and although probably
23:23
Speaker 1: would have changed much. Actually they but the attorney explained
23:26
Speaker 1: to me, because they put up the money, they had
23:27
Speaker 1: more rights and they were right, and so I could
23:31
Speaker 1: not just do as I like. We ended up working
23:34
Speaker 1: it out where I did as I preferred, but I
23:37
Speaker 1: had to consult with my partners. I did not have
23:41
Speaker 1: the contractual right to do that. They had to give
23:43
Speaker 1: me the right to do that, and over time, as
23:46
Speaker 1: I proved myself, they loosened the grip on the contractual rights,
23:52
Speaker 1: and at the end of the term, at the end
23:54
Speaker 1: of the day, I was actually running exactly the way
23:56
Speaker 1: I wanted to. But I honored my agreement with my partners,
24:00
Speaker 1: and they left that deal very happy. We tell you
24:03
Speaker 1: about negotiations, which is not part of a contract per se.
24:07
Speaker 1: But if you leave a slight every good negotiation means
24:11
Speaker 1: you leave the negotiation, but everybody in it leaves slightly irritated. Okay,
24:17
Speaker 1: if you have a good negotiation, you leave the table.
24:20
Speaker 1: Everybody slightly irritated, slightly annoyed because no one got everything.
24:24
Speaker 1: They wanted, but you got what you needed. Let me
24:28
Speaker 1: tell you some high profile entertainers and athletes who signed
24:30
Speaker 1: bad contracts. Some examples. There's a group TLC love their music,
24:35
Speaker 1: they sign an unfair deal or some people some people
24:38
Speaker 1: might call an unfair deal with the Face Records. Now,
24:42
Speaker 1: I'm saying this in particular because there's a lot of
24:44
Speaker 1: people running around talking about my Jewish brothers and sisters
24:46
Speaker 1: and how somehow they've ruined the music business. And I
24:49
Speaker 1: don't know why people are picking on Jews. There are
24:51
Speaker 1: black people. This is in the Face Records, there's with
24:53
Speaker 1: Motown Records. There's a bunch of black people in music.
24:55
Speaker 1: There's a bunch of white people in music. There's a
24:57
Speaker 1: bunch of Asian people in music, a bunch of you know,
24:59
Speaker 1: everybody in music. I don't know either picking on one group.
25:02
Speaker 1: But it's just wrong to point out that, oh, this
25:07
Speaker 1: contract is unethical. No, the contract is a legal contract.
25:10
Speaker 1: You just don't like it because you don't like the
25:12
Speaker 1: terms and how they got better a better negotiation to
25:16
Speaker 1: you because they are paying attention to the dollars and
25:18
Speaker 1: you're paying attention to the music notes. And in this
25:22
Speaker 1: one example, it's the face wreck souse. We need to
25:24
Speaker 1: like knock that off, Like we need to stop all
25:27
Speaker 1: this hater aid and you know, hate his hate. We
25:31
Speaker 1: just need to stop it. And we need to stop
25:32
Speaker 1: blaming people because they're successful or more successful for us.
25:35
Speaker 1: Maybe we're jealous, and maybe we don't understand. Don't don't
25:38
Speaker 1: hate somebody. Try to learn from somebody. Try to understand
25:42
Speaker 1: how they've mastered the game, and you can master it too.
25:46
Speaker 1: They want to be a great singer, a great dancer
25:48
Speaker 1: in this example, and you are a great whatever ball
25:51
Speaker 1: player or whatever, and you want to be a better
25:53
Speaker 1: business person. Michael Jordan Michael Jordan's Magic Johnson used to
25:59
Speaker 1: use his celebrity status to go approach the folks on
26:04
Speaker 1: the front row of the basketball games at the Lakers
26:07
Speaker 1: and go to lunch with them. These are the people
26:09
Speaker 1: who bought the best seats, and he wanted to trade
26:13
Speaker 1: lunch for business knowledge. Really smart. What is Magic Johnson today?
26:17
Speaker 1: Not just an NBA great, He's a great businessman. So
26:20
Speaker 1: TLC signed a bad deal with the Face Records. They
26:23
Speaker 1: thought it was a bad deal. I wasn't in it.
26:26
Speaker 1: I'm sure the Face Record thought it was a great
26:28
Speaker 1: deal when they wrote it, and I'm sure they'd say
26:31
Speaker 1: whether people didn't pay attention, just like everybody else would
26:33
Speaker 1: say people didn't pay attention. And there by the way
26:36
Speaker 1: in a negotiation, at the table is the bartering place,
26:41
Speaker 1: and one person is trying to extract as much from
26:45
Speaker 1: you as they can while paying you the least, right,
26:47
Speaker 1: that's their job. The other person's job is to give
26:50
Speaker 1: you the least value and while getting the most money.
26:54
Speaker 1: So both folks in that example are getting what are
26:59
Speaker 1: doing their job. One person's trying to extract while giving
27:03
Speaker 1: you the least, the other person is trying to give
27:05
Speaker 1: you the lease while getting the most, and that is
27:08
Speaker 1: caught a negotiation. Hello, So capitalism is a glad eator sport.
27:12
Speaker 1: As I said, don't take it personal, which is business.
27:15
Speaker 1: Don't get mad, just get smart. And so with it's
27:20
Speaker 1: a face deal. They paid them only a fraction of
27:23
Speaker 1: album sales. So the lesson here is always understand your
27:25
Speaker 1: royalty structure and seek legal advice before signing a contract.
27:30
Speaker 1: Don't be cheap, and don't think that contracts don't matter.
27:34
Speaker 1: Contracts absolutely do matter, and I don't want you finding
27:37
Speaker 1: out the wrong way that they matter the most. In
27:40
Speaker 1: these situations is against the music business. In this example,
27:43
Speaker 1: Meghani Stallion filed a legal battle with fifteen oh one
27:47
Speaker 1: Entertainment over a restrictive contract. The lesson here is a
27:52
Speaker 1: new artist should get an independent legal counsel, not just
27:55
Speaker 1: a label provided lawyer. So if the lawyer that given
27:59
Speaker 1: you a from the label, they probably have an interest.
28:03
Speaker 1: Or as my friend President Bill Clinton would say, it's
28:05
Speaker 1: hard to get somebody to agree to the truth when
28:07
Speaker 1: the lie is paying their paycheck. Hello, I'll repeat that again.
28:11
Speaker 1: President Bill Clinton said, it's hard to get someone to
28:13
Speaker 1: agree to the truth when the lie is paying their paycheck.
28:17
Speaker 1: Or as I would say, to rationalize is to tell
28:20
Speaker 1: rational lies. So if you are getting paid by the
28:23
Speaker 1: record label to be an attorney, guess whose interests you're
28:27
Speaker 1: most interested in. It's not the artist that you're in
28:31
Speaker 1: the room with, it's the person that you're aligned with. Said,
28:35
Speaker 1: I did a deal recently where and I knew what
28:37
Speaker 1: was going on. I did deal recently where I had contracts.
28:42
Speaker 1: I let my partner draw up contracts, and it was
28:45
Speaker 1: sort of two against one, so to speak, And I
28:47
Speaker 1: knew that the contract would be imbalanced, as I would say,
28:52
Speaker 1: But I made sure that things that were most important
28:53
Speaker 1: to me were handled, and I let them get away
28:56
Speaker 1: with the things that were less important than me, because
28:58
Speaker 1: I didn't want to win the battle and lose the
28:59
Speaker 1: war or the spirit of that partnership and where we
29:02
Speaker 1: were going next was more important to me than fighting
29:05
Speaker 1: over the details that they were fighting over. That's another
29:08
Speaker 1: conversation as a more sophisticated situation. In order to play
29:11
Speaker 1: that game, you know the game you're playing, it's got
29:13
Speaker 1: to be chess and not. You know, some people are
29:15
Speaker 1: paying chess, some people are changing checkers. I'm playing chess.
29:19
Speaker 1: Lo Wayne. He struggled with the cash money records deal
29:23
Speaker 1: for years. The lesson was always have an exit clause
29:27
Speaker 1: and dispute resolution terms in your contract. Is easy to
29:32
Speaker 1: get married, it's hard to get divorced. Scottie Pippen, the
29:35
Speaker 1: NBA signed a long term deal with the Chicago Bulls
29:39
Speaker 1: that severely undervalued him. In his opinion, I sort of agree,
29:44
Speaker 1: but again, it's just business. That is not to Chicago
29:46
Speaker 1: Bulls job to pay you top dollar, pay you every
29:48
Speaker 1: dollar they can pay you. Their job is not to
29:50
Speaker 1: give you, to empty their pockets to give you everything
29:53
Speaker 1: they got their job is to give you at least
29:55
Speaker 1: that they can that they can get away with getting
29:58
Speaker 1: you with having without having you be unhappy. So what's
30:02
Speaker 1: the lesson here? Consider how contracts evolve over time and
30:06
Speaker 1: inflation is a factor in a long term contract, and
30:12
Speaker 1: consider all that before locking in long term deal terms.
30:15
Speaker 1: You can do contracts and phases or have them have
30:18
Speaker 1: renewal clauses and have you know, sort of check in
30:21
Speaker 1: points in a contract. So the best practice for smart
30:26
Speaker 1: smart contract and get it in writing. A handshake is
30:28
Speaker 1: not a contract. Hello, Hello, Hello. People are like, I
30:31
Speaker 1: don't remember that you remember that? I don't know. I
30:33
Speaker 1: don't know if people get get amnesia when they don't
30:37
Speaker 1: like a situation, right, uh, and read before you sign
30:41
Speaker 1: what is the fine print? And if you don't like
30:44
Speaker 1: fine print, get somebody with glasses who's an accountant and
30:47
Speaker 1: a lawyer who love fine print. By the way, you're
30:49
Speaker 1: a counting your lawyers should not be at the club
30:51
Speaker 1: hanging out with your people. If folks, if your if
30:53
Speaker 1: your professionals are hanging out with you the club, then
30:55
Speaker 1: may be the wrong people you want, boring people. You
30:57
Speaker 1: want people who don't want to go to bed at
30:59
Speaker 1: eight o'clock two, theoclock at night. Right, you know, if
31:01
Speaker 1: you want whose evening starts at one in the morning
31:05
Speaker 1: talking about the attorney, they are lawyer, they your account
31:08
Speaker 1: That is just not my suggestion. You want left brain
31:10
Speaker 1: analytical people who are absolutely is obsessed with accounting and
31:15
Speaker 1: numbers and all that stuff, as you're assessed with music
31:17
Speaker 1: and notes and all that stuff if you're in the
31:18
Speaker 1: music business, so the fine print is really really important.
31:21
Speaker 1: They can get you on the fine print, and somebody
31:24
Speaker 1: can get you on the interpretation of five words that
31:27
Speaker 1: look common sense to you. But an attorney will understand
31:30
Speaker 1: uh uh that gets you know that needs to be
31:33
Speaker 1: uh that that needs to be treated in a very
31:34
Speaker 1: special way. But only attorney would know that. Hire an
31:36
Speaker 1: attorney when it when it when it's serious. Don't do
31:39
Speaker 1: a d I Y contract when the stakes are high.
31:42
Speaker 1: In other words, don't do a do it yourself contract
31:45
Speaker 1: when the stakes are right. I mean going to YouTube
31:47
Speaker 1: talking about I'm a lawyer now, because I watched the
31:50
Speaker 1: YouTube video, you get clocked. So common mistakes that can
31:54
Speaker 1: cost you not defining clear payment terms, signing something without
31:58
Speaker 1: understanding all the terms. This is a common mistake. In
32:01
Speaker 1: the music business, not having a contract at all. Verbal
32:05
Speaker 1: agreements equal risk. Okay, how to play the game and win, right,
32:13
Speaker 1: And let's now talk about the tax system. Uh, tax
32:20
Speaker 1: laws favorite business owners and investors over employees. Uh, it's
32:25
Speaker 1: just the way a t I is. You know, tax
32:29
Speaker 1: business owners like me and investors have lobbyists, right, and
32:32
Speaker 1: they spent a lifetime in Washington, d C. Trying to
32:34
Speaker 1: get terms that benefit them. So don't don't get mad.
32:38
Speaker 1: The game is, understand it. But also business owners and
32:42
Speaker 1: investors take more risks and employees. So there you go,
32:44
Speaker 1: and an employee as a W two relationship, so the
32:48
Speaker 1: chances in sort of taxes are sort of pre defined
32:51
Speaker 1: in that situation. So you know, as long as you
32:53
Speaker 1: understand it, you should be. Okay, it's more dynamic for
32:56
Speaker 1: business owner entrepreneur like me, but understanding your tax strategy
33:01
Speaker 1: can help you legally and contractually more than more than
33:09
Speaker 1: you can truly appreciate. For instance, Warren Buffett said famously
33:18
Speaker 1: a secretary, he pays more taxes than I do. People
33:21
Speaker 1: got all upset about that. Well, it's true because Warren
33:25
Speaker 1: Buffett is not a W two employee, meaning he doesn't
33:28
Speaker 1: take a salary, or he doesn't a paycheck. He doesn't.
33:31
Speaker 1: If you don't have a paycheck every week, every month,
33:34
Speaker 1: then you don't have taxes taken out of it. His
33:37
Speaker 1: secretary was a W two employee. Warren Buffett was compensated
33:43
Speaker 1: through capital gains when he sold stock, when he sold
33:46
Speaker 1: a business, when he liquidated a business, then he got
33:49
Speaker 1: capital gains, a capital gains tax obligation. And the taxes
33:55
Speaker 1: from W two's are thirty thirty five, fty percent sometimes
34:00
Speaker 1: depending on federal state taxes and so forth. But capital
34:06
Speaker 1: gains taxes is twenty one percent, twenty percent, depending on
34:08
Speaker 1: where you are. Hello, So I love capital gains, and
34:13
Speaker 1: that's what happens when you take more risk and you
34:15
Speaker 1: you sell some real estate, or you sell a business,
34:17
Speaker 1: or you sell some stock. That's a capital gain, a
34:20
Speaker 1: gain on your capital. It's a different tax structure. So
34:23
Speaker 1: one Buffet paid out crapload of taxes. He doesn't pay
34:26
Speaker 1: any income tax. He paid capital gains tax. He didn't
34:29
Speaker 1: pay traditional income tax. Most of the taxes actually paid
34:32
Speaker 1: this country paid by the wealthy. So anybody no need
34:34
Speaker 1: to hate it on the wealthy. Y'all not paying your taxes.
34:36
Speaker 1: They do. We I guess we do pay the majority
34:38
Speaker 1: of taxes in this country, so feel good about that.
34:41
Speaker 1: It's just a different kind of taxes. And maybe I'll come
34:43
Speaker 1: to do another if you want me to do another
34:44
Speaker 1: video on this, sorry, another podcast on this, to go deeper,
34:48
Speaker 1: I will be happy to just just just tell me
34:52
Speaker 1: in the comments when you see this on a video
34:55
Speaker 1: roll or on a social media clip, and I'll be
34:57
Speaker 1: happy to take note of that. And let me tell
34:59
Speaker 1: you some high profile entertainers and athletes who struggled with taxes.
35:05
Speaker 1: Wesley Snipes, actor, Sir time federal time for tax evasion. Yes,
35:11
Speaker 1: went to prison, the movie star. What's the lesson? Always
35:15
Speaker 1: file your taxes, even if you dispute the amount. A
35:18
Speaker 1: friend of mine called me recently because he was about
35:21
Speaker 1: to have his taxes, his income tax, of his income,
35:24
Speaker 1: his paycheck taken from him because the federal government had
35:34
Speaker 1: reached in his bank was an employer and garnished it.
35:38
Speaker 1: And he was days away from having a paycheck go
35:41
Speaker 1: from you know, twenty thousand dollars or ten thousand dollars whatever,
35:46
Speaker 1: it was down to literally one hundred and fifty bucks,
35:48
Speaker 1: he told me. And I was able to make a
35:52
Speaker 1: phone call get him connected with some folks and he
35:54
Speaker 1: was able to make payment arrangements with the irs. And
35:58
Speaker 1: you know, they don't want you to go to prison,
36:00
Speaker 1: and they don't want to take your money, want their money.
36:01
Speaker 1: So they made a painting arrangements and it was It
36:03
Speaker 1: was a fair changes, no robbery. Both people walked away
36:07
Speaker 1: slightly irritated but happy. Some entertainers, some creative people, don't
36:11
Speaker 1: think that taxes are legal or whatever. Look, don't don't
36:14
Speaker 1: make that. Don't do that. Don't do that. Don't start
36:18
Speaker 1: fighting with the federal government after you've made a lot
36:20
Speaker 1: of money talking about the federal government's not a real
36:23
Speaker 1: tax in structure is not real. No, no, no, that's
36:25
Speaker 1: a philosophical argument. You will lose it. Right again. I'd
36:29
Speaker 1: rather owe money to my mother, god, rest of a
36:32
Speaker 1: soul than the federal government. Pay your taxes, file your returns.
36:37
Speaker 1: If you wanted to fight a legal battle or philosophical battle,
36:40
Speaker 1: separate from that. Knock yourself out. But not after you
36:43
Speaker 1: owe some money, after you made some money, and then
36:45
Speaker 1: you decide you don't want to pay it. That is
36:47
Speaker 1: a bad move. Lauryn Hill, the singer when to prison
37:00
Speaker 1: for unpaid taxes. Did you hear me? Hello? Hello? Yeah?
37:05
Speaker 1: Lauren Hill and Wesley Snipes went to prison for unpaid taxes. Lesson,
37:12
Speaker 1: never ignore irs notices, work out a payment plan if needed,
37:17
Speaker 1: give them the respect of a partner of a general partner.
37:22
Speaker 1: Alan Irison NBA star blew through millions was saved by
37:27
Speaker 1: a trust fund. Lesson set aside money for taxes and
37:32
Speaker 1: long term security. Fat Joe the Rapper face jail time
37:37
Speaker 1: for failing to pay millions in taxes. Lesson, have a
37:41
Speaker 1: trusted CPA or tax attorney to keep you compliant. I
37:45
Speaker 1: have a tax pro here in Atlanta, one of the
37:49
Speaker 1: big four firms here in Atlanta, Big six firms Aprio.
37:54
Speaker 1: I use them. I think they're fantastic. And I have
37:57
Speaker 1: a I have a let me see. I have a accountant,
38:01
Speaker 1: I have a bookkeeper. I have a controller, I have
38:05
Speaker 1: a chief financial officer. I have an auditor, and I'm
38:10
Speaker 1: a chief accountant outside of countant, and then I have
38:13
Speaker 1: an auditor. All have different functions. I made sure that
38:18
Speaker 1: I take that. I make sure to make that money straight.
38:22
Speaker 1: I was born at night, not last night. You never
38:24
Speaker 1: kid me, catch me slipping, and if I can at
38:27
Speaker 1: all afford it. Avoid it. When you pay your taxes,
38:31
Speaker 1: by the way, you pay attention to public services. I
38:33
Speaker 1: was I paid thousand dollars in the state taxes one
38:37
Speaker 1: year in Georgia. Yes, the total tax bill was much
38:41
Speaker 1: much larger. And I drove down the street and ran
38:44
Speaker 1: over a pothole. Do you know I would like went
38:47
Speaker 1: back home and wrote a letter to the mayor and
38:51
Speaker 1: the city council people, and the county officials and the
38:53
Speaker 1: and the state transportation officials and the governor's office. Hey,
38:57
Speaker 1: you need to pay you need to fix these potholes
38:59
Speaker 1: like a meet Like I just paid eight hundred thousand
39:01
Speaker 1: of dollars in the state taxes. This is I'm literally
39:04
Speaker 1: that's literally my business. Right. You know they paid it paid?
39:08
Speaker 1: Do you know they they filled that pothole and quick.
39:12
Speaker 1: I'm a taxpayer. And conversely, nobody washes rental cars. Hello,
39:17
Speaker 1: if you drive a rental car around, you don't own it,
39:20
Speaker 1: what do you do? You drive it until the wheels
39:21
Speaker 1: fall off? The dirty is all all get up in
39:24
Speaker 1: two weeks, take it back. It's filthy. You can be
39:26
Speaker 1: a saint and you don't wash the car. It's a
39:29
Speaker 1: very rare person that washes a rental car because you
39:32
Speaker 1: don't own it. There is something that happens when you
39:34
Speaker 1: when you own something, when you own a house, it's
39:38
Speaker 1: amazing that when you rent the house, the lawn is
39:41
Speaker 1: up to your eyeballs. When you own the house, well,
39:43
Speaker 1: the lawn gets cut somehow. DMX the wrapper he owed
39:48
Speaker 1: millions to the irs. Lesson taxes are not optional. If
39:52
Speaker 1: you earn money, plan for what you owe. Understanding the
39:57
Speaker 1: basics income tax versus capital gains tax. So you know,
40:04
Speaker 1: as I've said, investments are taxed differently and you're taking
40:10
Speaker 1: more risk. It's a more complicated explanation, but essentially capital
40:14
Speaker 1: gains is a better deal if you ever get to
40:16
Speaker 1: a point where but you're again you're taking risk and
40:20
Speaker 1: lose everything. There's no guarantee with an investment that's going
40:24
Speaker 1: to pay off, and you're not getting a regular paycheck.
40:28
Speaker 1: So the American capitalist system rewards you a little bit
40:31
Speaker 1: by charging you a reduced tax amount, but it's still
40:37
Speaker 1: a lot of money if you're making If you're talking
40:39
Speaker 1: about over a million dollars somebot ten fifty million dollars,
40:42
Speaker 1: twenty percent a lot of money. Right write offs and deductions,
40:47
Speaker 1: the government wants businesses to reinvest, so use that to
40:52
Speaker 1: your advantage. If you have a business expense, a proper
40:55
Speaker 1: legitimate business expense, you can write it off. Check with
40:57
Speaker 1: your tax prone what those look like. Talk to my
40:59
Speaker 1: Hope financial coaches. They'll walk you through that. I'm going
41:03
Speaker 1: to just take a moment here just talk about earned
41:04
Speaker 1: income tax credit. If you have a tax pro or
41:07
Speaker 1: if you don't, I want you to look into the
41:09
Speaker 1: earned income tax credit. I've said this a million times.
41:11
Speaker 1: I'll say it again. Now, you make less than sixty
41:13
Speaker 1: five thousand dollars a year, the government owes you a
41:16
Speaker 1: check for working. It's not a handout, it's it's a
41:19
Speaker 1: bonus for working. You get a bonus on Wall Street
41:24
Speaker 1: from your employer. At the end of the day after
41:27
Speaker 1: a good year, you get a bonus from the government.
41:30
Speaker 1: This is bipartisan legislation. This has been around since the seventies.
41:34
Speaker 1: I believe it's the Earned Income Tax Credit is EIITC
41:37
Speaker 1: twenty billion dollars goes back to the federal government every year.
41:39
Speaker 1: Because we don't ask for the money that we're owed.
41:43
Speaker 1: Don't jump with some free games. Jay Z would say,
41:46
Speaker 1: I'm giving you a million dollars with a game of
41:48
Speaker 1: nine to ninety nine. This is no ninety nine because
41:50
Speaker 1: you're not even paying for the subscription of this podcast. So,
41:53
Speaker 1: if you're making less than sixty five thousand dollars a
41:55
Speaker 1: year and you earn money legitimately, the government owes you
41:58
Speaker 1: a check. Now I'm gonna do it, sweet spot. Here,
42:01
Speaker 1: you make thirty eight thousand dollars a year, you have
42:02
Speaker 1: three children, the government owes you approximately sixty five hundred
42:07
Speaker 1: seventy five hundred dollars, give or take. And if you
42:11
Speaker 1: never file or eiitc if you have no idea what
42:13
Speaker 1: I'm talking about, congratulations is retroactive for three years. So
42:17
Speaker 1: if you make thirty eight thousand dollars a year and
42:20
Speaker 1: you get a check for three times seven thousand dollars
42:23
Speaker 1: just doing average, that's about, give or take twenty thousand dollars.
42:28
Speaker 1: That's more money than you'd ever see at one time
42:29
Speaker 1: in your life. Pay off your car note, pay down
42:31
Speaker 1: your credit cards and pay them off. Put it down,
42:34
Speaker 1: payment for your a house, start a business, start an
42:38
Speaker 1: investment account. There's no restrictions on the money. It's your money,
42:42
Speaker 1: and it's not a tax break. It's a check. Like
42:45
Speaker 1: you get it wired to you when you modify or
42:48
Speaker 1: file your tax returns. Say and this is transformational in
42:52
Speaker 1: your life. So check with my people to obreas shop
42:55
Speaker 1: about the earned income tax credit. Back to understanding the
42:59
Speaker 1: basics LLC's, S corps and ten ninety nine income. And
43:04
Speaker 1: by the way, I talk about corporate entities on my
43:07
Speaker 1: season one podcast for a Money and for Money and Wealth,
43:10
Speaker 1: So go back and watch or listen to that podcast.
43:14
Speaker 1: Structuring yourself properly to minimize taxes is tied to which
43:19
Speaker 1: kind of entity you you select, So limited reliability corporations
43:23
Speaker 1: and S corpor C corp, all these different corporations, and
43:26
Speaker 1: ten ninety nine income, which is contract income versus W
43:31
Speaker 1: two income which is salary UH employee former employee income.
43:36
Speaker 1: I'm not going too fast, which covering a lot of time,
43:38
Speaker 1: and I've always hid in nine ninety nine. I will
43:41
Speaker 1: try to wrap like Jay z in one in one podcast,
43:44
Speaker 1: try and get a lot in in an hour. I
43:46
Speaker 1: said it's gonna be forty five minutes, but this is
43:47
Speaker 1: going to go over a little bit so I can
43:48
Speaker 1: cover everything. Keep your records. This is top top tax
43:52
Speaker 1: strategies for individuals and entrepreneurs. Keep receipts and track expenses right.
43:59
Speaker 1: This is why I book keeping really matters. Right and
44:03
Speaker 1: understand and understanding proper terms. My people at Operation can
44:06
Speaker 1: help you with this. I remember it was a farmer
44:08
Speaker 1: drug dealer who came to Operation no starting a restaurant
44:11
Speaker 1: and he'd already brought up the restaurant equipment, at least
44:13
Speaker 1: a building, all this stuff, and he came to us
44:16
Speaker 1: for some business coaching and I ran into him and
44:18
Speaker 1: I said, well, can you show me a balance sheet?
44:20
Speaker 1: And he said, what's that? He was a smart guy,
44:24
Speaker 1: but no one ever taught him the basics about a
44:26
Speaker 1: balance sheet and income statement and network statement. A budget.
44:29
Speaker 1: Everybody needs a budget. I have a budget. Everybody needs
44:32
Speaker 1: a budget. That's a different podcast for another day. I'll
44:35
Speaker 1: go through budgets for you, by the way. Tell me
44:37
Speaker 1: the topics that you want me to break down, and
44:39
Speaker 1: I'll be happy to break those down too. Keep receipts
44:42
Speaker 1: and track expenses. Use business deductions wisely what the I
44:47
Speaker 1: use basically get only what the IRS allows. If you overreach,
44:52
Speaker 1: if you play games, the IRS is going to slap
44:55
Speaker 1: you upside the head and it won't be nice and
44:57
Speaker 1: they'll hit you with penalties, so just use proper business deductions.
45:01
Speaker 1: By the way, if you have an office in your house,
45:03
Speaker 1: as I do, you can deduct expenses tied to that office. Hello,
45:09
Speaker 1: but talk to your tax pro about that. You can't
45:12
Speaker 1: deduct the whole house, just the part that you use
45:16
Speaker 1: for business. Plan for tax payments. Avoid the April surprise
45:21
Speaker 1: by setting aside money quarterly or at least have a
45:25
Speaker 1: plan for how you're going to pay these taxes or
45:27
Speaker 1: work out a payment arrangement. But just don't ignore it.
45:31
Speaker 1: Common tax pitfalls and how to avoid them. Not filing
45:36
Speaker 1: taxes on time is just the Again, that was my mistake,
45:39
Speaker 1: and penalties add up fast. I mean, the IRS charge
45:42
Speaker 1: is an incredible extruciating amount of interest because they don't
45:46
Speaker 1: want you owing them money. They want you to get
45:49
Speaker 1: out of debt from them as soon as you can,
45:51
Speaker 1: as fast as you can, and they don't care who you are.
45:53
Speaker 1: One of my famous friends, the womantioned his name, but
45:57
Speaker 1: he called me and he had this problem with the IRS,
45:58
Speaker 1: and he was a household name, and I called for
46:01
Speaker 1: him and got him connected with people, and it took
46:03
Speaker 1: months to get that. Such situation. There was this lady
46:05
Speaker 1: who made you know, I don't know, sixty two thousand
46:07
Speaker 1: dollars a year, who was completely in control of this
46:09
Speaker 1: guy's life, and she didn't care for his confidence, and
46:16
Speaker 1: she made it extraordinarily painful for him. But she was
46:20
Speaker 1: in charge of everything. We finally got her moved out
46:22
Speaker 1: of the way after months and months and months. But
46:24
Speaker 1: this guy couldn't sleep for a while because she basically
46:26
Speaker 1: could have She could have ruined his whole life. And so,
46:31
Speaker 1: you know, just be just do it right the first time.
46:36
Speaker 1: So following time, mixing personal and business expenses a no no.
46:40
Speaker 1: Get separate accounts, separate accounts for business, separate accounts for
46:44
Speaker 1: personal in my opinion, Ignoring tax planning another no no.
46:49
Speaker 1: The wealthy used tax strategies before tax season, not after,
46:53
Speaker 1: including me. I'm working on my tax strategy all year round.
46:58
Speaker 1: Here's some takeaways. Contracts are about protection. Never enter a
47:02
Speaker 1: business or a financial agreement without a contract. Someone in
47:06
Speaker 1: my life, a loved one, wanted to borrow some money
47:09
Speaker 1: recently for a business. People in my family not I
47:11
Speaker 1: had to come to John Brian sideways asking for money.
47:14
Speaker 1: I covered this with Cam again, Cam Newton when I
47:18
Speaker 1: was with him on my podcast with him. We had
47:21
Speaker 1: a lot of fun together talking about family coming to
47:24
Speaker 1: us asking us crazy stuff. People don't come to me
47:26
Speaker 1: asking crazy stuff anymore because they know I'm going to respond,
47:30
Speaker 1: so they're prepared. So somebody had a business idea and
47:33
Speaker 1: they knew the revenue was coming in, so they knew
47:36
Speaker 1: they could say, Hey, this money, this check's coming in,
47:38
Speaker 1: it's just delayed. Can I get can you basically factor this?
47:41
Speaker 1: Can you, as they call it, factory, can you bridge
47:44
Speaker 1: this for me? So I gave them a small loan
47:46
Speaker 1: and they were going to pay me back in thirty days.
47:51
Speaker 1: They signed a contract. It was a simple contract, one pager,
47:55
Speaker 1: but they signed it. And I know these people very well.
47:58
Speaker 1: I love them, but this is business and they needed
48:01
Speaker 1: a thirty day extension, which I gave them. But I
48:03
Speaker 1: got my money. Hello, people get amnesia, particularly with it.
48:06
Speaker 1: You know them. They're really nice when they want to
48:09
Speaker 1: borrow the money. When you want to back Wait, what
48:10
Speaker 1: you sweating me about that for? Because it's my money
48:13
Speaker 1: and you wanted you weren't pay You know, an attitude
48:15
Speaker 1: when you borrow the money from me? Right, People were funny. Okay.
48:20
Speaker 1: Taxes are part of the game. People learn how to
48:24
Speaker 1: play it legally and to maximize your wealth. Be proactive,
48:28
Speaker 1: not reactive. By the way, I had one investment that
48:32
Speaker 1: wasn't paying off for me the way I thought, and
48:36
Speaker 1: I was sort of upset about that until those losses
48:40
Speaker 1: from that investment help to defer a tax obligation. Turn
48:45
Speaker 1: a tax obligation to a tax refund. So even though
48:49
Speaker 1: I lost money on the business on revenue. There's two
48:53
Speaker 1: ways to make money, make more or spend less. And again,
48:56
Speaker 1: once you gain some wealth, gain some traction, you're going
48:59
Speaker 1: to have a tax obligation every year, and legitimate business
49:03
Speaker 1: expenses and legitimate tax write offs all qualify you have
49:07
Speaker 1: a commercial real estate building. This doesn't work for your
49:10
Speaker 1: primary residence or commercial real estate as an example, or
49:12
Speaker 1: income producing real estate. You can have depreciation, which is
49:17
Speaker 1: a tax write off a tax benefit. Anyway, I want
49:21
Speaker 1: you to learn all this stuff, but step by step,
49:24
Speaker 1: be proactive, not react. Of a smart contract and tax
49:27
Speaker 1: strategies can save you money stress and legal trouble and
49:32
Speaker 1: jail time. Wealth is not just about making money, it's
49:35
Speaker 1: about keeping it and protecting it. Take a step today,
49:40
Speaker 1: review a contract you've got, talk to a tax professional
49:44
Speaker 1: that you know, find a pro, find build a team
49:47
Speaker 1: right and set up a financial system for your future
49:50
Speaker 1: like get quick Quicken or quick books, or get an
49:54
Speaker 1: Excel spreadsheet or money. I think I think Apple calls
49:58
Speaker 1: it mac iOS calls there is money or numbers. I
50:01
Speaker 1: think they call it numbers, which is the and Mac
50:04
Speaker 1: and Microsoft calls and Excel, use a use a spreadsheet,
50:08
Speaker 1: or use a financial app. There's no excuse in this
50:10
Speaker 1: technology world not to get it right right. And I
50:16
Speaker 1: want you to follow me on money and wealth and
50:18
Speaker 1: tell your friends to do the same, and get the
50:20
Speaker 1: book Financial Literacy for All and tell go to Operation
50:23
Speaker 1: Hope and tell them I sent you. They'll give you
50:25
Speaker 1: because I sent you, they'll give you a one thousand
50:27
Speaker 1: dollars financial coaching and scholarship and Operation Hope good for
50:31
Speaker 1: a year to help you get through your credit score
50:34
Speaker 1: and get through your initial budgeting and review where you
50:39
Speaker 1: are on all your books and your records, and talk
50:40
Speaker 1: to them about textas and talk to them about your contracting.
50:44
Speaker 1: And then and then from there you might graduate to
50:48
Speaker 1: our business courses and in a more detailed financial coaching
50:52
Speaker 1: opportunity through Operational But we're going to give you this
50:55
Speaker 1: thousand dollars scholarship on me for coaching and counseling. That's
50:58
Speaker 1: the value of it. It be does you listen to money
51:01
Speaker 1: and wealth and you're part of the silver rights movement?
51:06
Speaker 1: From civil rights to silver rights, from the streets to
51:11
Speaker 1: cutting deals in the suites, from protesting in the suites
51:15
Speaker 1: to getting a seat in the business suite. This is
51:19
Speaker 1: the new movement. This is real world transformational change. Because
51:25
Speaker 1: you get in game, you are gaining your financial literacy,
51:29
Speaker 1: which I believe is a silver rights issue of degeneration.
51:32
Speaker 1: Actually think it's a civil rights issue of degeneration. I
51:34
Speaker 1: think that AI literacy is a silver rights issue degeneration.
51:38
Speaker 1: And I want you to follow all of Operation Hope's work,
51:40
Speaker 1: follow all of John O'Briant my work on all accounts.
51:43
Speaker 1: Get the book Financial Literacy for All. Tell your friends
51:46
Speaker 1: to listen to this podcast, have a meeting with your friends,
51:50
Speaker 1: meeting with your family. On contract. By the way, I
51:56
Speaker 1: hate to break this to you, but marriage is a
51:58
Speaker 1: form of a contract. You don't think it's a contract.
52:00
Speaker 1: Try to get divorced and see what happens. Right in
52:04
Speaker 1: California's a community property state, which is different from Georgia.
52:08
Speaker 1: That's a fairness state. And you know, you got to
52:10
Speaker 1: know all this stuff because it affects you. Like seriously,
52:14
Speaker 1: I was talking to Cam Newton and he he was like,
52:16
Speaker 1: do you realize that when you're working for the NFL,
52:19
Speaker 1: you're an employee. You're a W two employee, So you
52:21
Speaker 1: can't be signing though talking about I want to just
52:23
Speaker 1: pay me and pay my ALLC and I'll pay my
52:25
Speaker 1: own taxes. You are an employee. They're giving you health
52:27
Speaker 1: and benefits and they're taking the entrepreneurial risk, and you
52:30
Speaker 1: pay taxes per game, per city, per state if you're
52:34
Speaker 1: in the NFL. Now get that one, all right? This
52:38
Speaker 1: is dropping the mic with John O'Brien. I hope you
52:40
Speaker 1: love the light. I hope you saw the light. I
52:42
Speaker 1: hope that you get some light and don't think light
52:45
Speaker 1: and think lightly of this and end up having to
52:48
Speaker 1: stare down the desk of an IRS agent who is
52:53
Speaker 1: not so friendly. I want you, or a legal contractor
52:57
Speaker 1: a court because you didn't pay attention to a contract
53:00
Speaker 1: you sign, or arguing with somebody over who got you
53:03
Speaker 1: good because they've paid attention to a contract and you didn't.
53:06
Speaker 1: And again don't be emotional about this. This is just business.
53:10
Speaker 1: Capitalism is a gladiator sport, and you can master it.
53:13
Speaker 1: You've been doing so much with so little for so long.
53:15
Speaker 1: You can almost do anything with nothing. God made you
53:19
Speaker 1: to succeed. He made you great. Now go find your greatness.
53:23
Speaker 1: This is John O'Brien, and this has been money and Wealth.
53:40
Speaker 1: Money and Wealth with John O'Brien is a production of
53:43
Speaker 1: the Black Effect Podcast Network. For more podcasts from the
53:46
Speaker 1: Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts,
53:51
Speaker 1: or wherever you listen to your favorite shows.