Latest / Exit Algorithms / How to Structure Your Business to Sell for a Higher Multiple with Bobby Casey (#84)

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How to Structure Your Business to Sell for a Higher Multiple with Bobby Casey (#84) · Exit Algorithms

• Pete Vera, Exit Algorithms: Welcome to Exit Algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations, and prepare your business for a high-value exit. I'm your host, Pete Vera, and today I'm joined by Bobby Casey. He's a lifelong entrepreneur, international tax strategist, managing partner of Global Wealth Protection, and founder of Business Anywhere, an all-in-one platform that helps location-independent founders form US companies, get virtual mailboxes and manage compliance online. Over the past two decades, Bobby has started, bought, and sold multiple companies and helped thousands of clients legally reduce their tax burden, protect their assets, and build borderless businesses. Bobby, excited to have you here. Welcome to the podcast. Bobby Casey: Thanks for having me, Pete. How you doing today? Pete Vera, Exit Algorithms: Doing great. Yeah. I'm excited for this. I'd love to hear going in depth a little bit about your your background and how you ended up doing the work you do today. Bobby Casey: Sure, yeah. so I grew up in an entrepreneurial family. So I my my grandpa had a chain of restaurants. Actually before I was born, he retired by the time I was born. But he had a chain of restaurants, so he had that mindset. My dad had a construction company. and so I was raised kind of not in the path of like get good grades, get into a good school, get a good job, that kind of thing. I mean my parents, I mean The th they weren't pushy, but you know, of course they wanted me to go to college and do the traditional path that everyone's supposed to do, of course, but they weren't pushy about it at all. And just kind of by default, I just my my entire mindset growing up was never what kind of job am I gonna do, it's what kind of company am I gonna start. I went to school. I dropped out, went to university when I was 18, dropped out when I was nineteen to start a business. it failed pretty miserably. started another one, it failed pretty miserably. I started another one that did pretty well that I did end up exiting about twelve years later, I think, in my thirties. And so my entire mindset growing up like Just as a kid sitting around the dinner table with my dad, we would talk about like tax planning and tax you know, tax optimization and company structure and you know, I learned how to read like like P and L's and balance sheets and stuff like that when I was a teenager. I started investing in stock when I was fourteen. Like I had my own trading account when I was fourteen. So I was like I just was just in that mindset. Pete Vera, Exit Algorithms: Wow. Bobby Casey: from a pretty early age. I just grew up like that. Dropped out of school, started the businesses. I also in there I bought and sold a restaurant at one point. I had a real estate business as well, which I bought and sold. and I ended up selling that it was a service company. we did installations across the US and I ended up selling that company in my in my early thirties and well before I get into that to rewind for a second, you asked how I got into what I do now. So in my twenties I ended up hiring somebody like me to help me with like mainly asset protection and some structure planning and a little bit of tax planning. So I hired somebody basically that does like what I do now. because at that time I had a business that was doing pretty well. I had the real estate stuff. I had the restaurant and you know, I had a bunch of things going on. And I was late 20s and I felt I don't know. I felt like I had some risks on the table there. And So I hired somebody like me and through the process of working with him, I was really intrigued by the process. I really liked the like puzzle solving of it. And so when we kind of finished my project, so to speak, I went back to the guy and I said, Look, I got a bunch of friends that are in the same situation as me. So, like at that time, well actually still today also, all my friends are entrepreneurs. I don't really have any friends with jobs. And I say that because like for me, like one of my highest values has always been like freedom, freedom to do what I want, when I want. And I was always like I would call my friends up and like, hey, you want to go ride motorcycles today at like you know two o'clock on a Friday afternoon. And people with regular jobs can't do that, but people who have their own businesses can. I had only friends that had their own businesses, because I just I don't know, I just didn't associate people with regular jobs. And so I told the guy I was working with, I said, I got a bunch of friends kind of in the same boat as me, because everyone I know owns their own business. If we work with them together, maybe you can train me a little bit on how to do this and teach me and we can share some money on these clients. And he's he's like, Yeah, okay, sure, why not? So that's kind of how I started doing that. That was back in like two thousand one, I believe. Two thousand or two thousand one. Something like that. And that's kind of how I got into it as kind of like a side gig. And then over the next few years I ended up selling the restaurant, selling off the real estate stuff, selling the service company, and I just was like I don't know, I had one of these moments like what am I gonna do with my life kind of thing, and I said, actually I kind of like doing that consulting thing full time, so I kind of formalized that into a quote real business around two thousand eight or nine, so almost twenty years ago. And yeah, so that's kind of how I got into what I'm doing now. And then we talked a little bit on the pre-show. I have a couple of other companies too. one of them is a trust company in the Caribbean. we do offshore company formations, registered agent service and and trust we we do trust formations and trust service Pete Vera, Exit Algorithms: Nice. Bobby Casey: And private interest foundations. and then the other one is businessanywhere.io, where we are kind of the startup toolbox, like you mentioned, where we do the US company formations and registered agent service and virtual mailbox and helping with bank account openings and bookkeeping tax filings. So those were actually spin offs of the consulting business because I basically got tired of. of referring other partners out for things that my clients needed. So I just started those companies. So and then I guess somewhere in there around 2016 I also started with a partner. Actually well rewind to 2014 I was a partner in a cryptocurrency mine in the US I was one of the early investors in it and I sold out my share in 2016 took the money from that and started my own crypto mine with a with a friend in Europe and then about four years later, two thousand twenty, I think, or twenty one. It was either twenty or twenty one. I sold my share of that business back to my partner. So yeah, I've had a I've had a couple of exits. I guess if you look at it like that, technically speaking I've had like three exits, although like the restaurant, I don't know if I consider that an exit. That was just like a small restaurant that I sold, but if you want to call it an exit I guess. funny thing is too, Pete Vera, Exit Algorithms: I'd like to focus first on, you know, your the business sales that you that you've done. were there any things, you know, now looking back and having Bobby Casey: Sure. Pete Vera, Exit Algorithms: you know, advised people on their business exits. what would you have done differently now? Bobby Casey: Mm. Yeah. So the restaurant was the first business I sold. so my advice there is don't buy a restaurant so that way you don't have to deal with selling one or owning one. You don't have to deal with buying it, owning it, or selling it if you never do it, right? So that would be my my first advice. I say that jokingly. Obviously, there are some exceptional restaurant owners that do amazing jobs. and I think it is possible to run a very successful restaurant. But like a lot of things, I th a restaurant is such a time consuming endeavor. It's gotta be your life. And I had three other or two other in addition to that. I had two other businesses going on and one of them was a pretty not let's say midsized business at that point. So it it just ate a lot of time and it's just too distracting. So Probably one of my big lessons there is stay focused on the things that are giving you your biggest return. but again this just but I have to say for me personally I would I wouldn't change a thing. Like one of my biggest core philosophies is maybe my biggest core philosophy of life is you never Regret the things you do, only the things you don't do. And so I wouldn't change a thing because while owning, buying, selling the restaurant was not the most lucrative endeavor for me. I mean, it did okay actually. We made money and I sold it for double what I paid for it. So it that was okay. But it wasn't the most lucrative thing, but man, I learned so much. I met a lot of really great people being in the community. You just meet so many people. because, you know, you just got people coming in and you're the guy who runs the restaurant and so, you know, you make a lot of friends. So I like I wouldn't change a thing. I w I wouldn't change anything about it. my my view on that is like I said, you you never regret the things you do, only the things you don't do. Pete Vera, Exit Algorithms: Mm. Yeah. Bobby Casey: I never regret the things I do, even if they weren't the most lucrative, even if they were the biggest mistake ever. I just consider them to be learning experiences and educational moments. to me the only thing I ever regret are the things I look back on and I think, man, I wish I would have X, you know. I wish I would have started that business. I would I I wish I would have invested in I wish I would have bought Bitcoin in two thousand nine, you know. Pete Vera, Exit Algorithms: yeah. Bobby Casey: I wish I would have bought NVIDIA stock twelve years ago, right? like stuff like that. Like you only regret the things you don't do. it's always the things you don't do that you regret, and I never regret anything I do because I look at everything I do as like who I am today, who you are today, who everyone is today, is a compilation of every choice we've made up until this point, right? And for me to say I regret something I did years ago fundamentally means I don't like who I am today because I am exactly who I am because of those choices I made in the past. And I love who I am. So I there's no way I can regret things I did in the past. Pete Vera, Exit Algorithms: Yeah. That's a how couldn't business owners in your opinion and your experience prepare for a sale to you know to maximize their their value at exit and just satisfaction with the with the outcome? Bobby Casey: Right. So looking back on that from my own experience and from a several other clients I've seen that have had this experience. I think one of the most important things if if you are building a business, when you start the business you need to think about what your end goal is. Like are you starting this business to be a lifestyle business that you're going to do for twenty, thirty, forty years, pass it down to your kids, or are you building this business for the purpose of selling? If you're building the business for the purpose of selling, you've got to treat it just like you are buying NVIDIA stock or Apple stock or Home Depot stock. you you've got to treat it like an asset. that you are maximizing value of that asset. So you you need to have a super clean bookkeeping records. Your your comp legal compliance needs to be perfect. every step of the way needs to be perfect. You need to be build systems in your business because i if if the business relies on your hourly input or it collapses, you don't have a business, you've got an expensive job. you If if you can't take a two-month vacation from your business with no negative consequence, you don't have a business. You've got a job full stop. Okay? And if you're building a business to sell, you've got to look at it like that. I need to be able to take a two-month vacation with no negative consequence because that means I have all the systems in place. I've got the right team doing the right things in the right places. And even if I take two months off. Pete Vera, Exit Algorithms: Yeah. Bobby Casey: Will my team and someone quits, will my team step up to the plate and hire the right person based on the systems that we have in place? if you're building a business for a lifestyle business, those things aren't super critical. People like the restaurant, people come in the door and they're like, you know, hey Pete, how's it going today? Good to see you. 'Cause 'cause you're the guy, right? You're the guy. You're the reason people come to that restaurant or the reason people come to your plumbing business or the reason people, you know, come to your whatever business. Like you're the guy. So if it's a lifestyle business, that stuff's not that important. I mean, it's helpful, but it's not critically important for the purpose of selling. as an entrepreneur, you, me and every other entrepreneur on the planet, what do we care about? The next thing, right? All we care about's the next thing. The next sale, the next hire, the next deal, the next trade show, the next product launch, whatever, the next thing. We don't think about we don't wanna think about things like bookkeeping and legal compliance and putting systems in place and creating SOPs. I mean What entrepreneur wants to sit down and write an SOP? Holy shit. That's like pulling out my fingernails. Like I don't ever want to sit down and write an SOP. Like, fortunately we are probably in the greatest time in history for getting these things done, right? Because I mean we can just like tell Chat GPT to write us an SOP using our company knowledge database and like that that stuff happens like automagically now. Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: But still, nobody wants to sit down and write an SOP. Nobody wants to sit down and write an employment manual or a hiring manual or all these things. But if you want to build a business for longevity and a business to sell, you have to have those things in place because number one, your buyer wants to see them, but number two, it drives your multiple. Like it definitely drives your multiple. Like If if I have a business w that I run by the seat of my pants and everybody has to come to me to figure out how to do something, and the buyer comes in and figures that out, I may get a multiple of two or three, maybe, you know. If I have a whole team in place and systems in place and everything is built out, even with the same revenue number, I might get a multiple of six or eight. I mean Pete Vera, Exit Algorithms: Mm-hmm. Yeah. Yep. It's an asset that'll continue to run without you know, without barely any involvement at at that point, right? Bobby Casey: Right, but but this point like deserves a little bit I I think a little bit more attention because people who want to sell their business forget about this key factor is the systems in place drives your multiple because your buyers don't want to step into a shit show. Your buyers want to step into a turnkey business they they can drop a manager in place who can replicate you because they have SOPs and manuals to read. So like if you're talking about a business with let's say an EBIT of a million bucks and you have nothing in place, you're talking about maybe a two or three million dollar valuation versus maybe up to an eight million dollar valuation with systems in place. I mean you're leaving an enormous amount of money on the table by not putting systems in place. like Pete Vera, Exit Algorithms: Yep. Not to mention it also makes it a an enjoyer more enjoyable business to run when you do have those in place as well, right? Bobby Casey: You do once you get all of those things done. But it makes it an ungodly unenjoyable business to run when every day all you're doing is writing SOPs, right? But you know, you have to get over that hump and get the system built so that everything is there. So it's pain in the beginning to have the pleasure later on, I guess, if you want to look at it from that perspective. and but other things I've seen like people that have done is selling the business too late. I'm sure you've probably seen that. Maybe you know what I'm talking about. But you know, you're on this growth ch I I'll give you an example. I had a good friend of mine, I won't name any names, but she had a business, a service related business, but it was quite a big business. I mean it was doing a few million a year Pete Vera, Exit Algorithms: Mm. Bobby Casey: I remember she was doing, I don't know, like smaller two, three million a year or something like that. And she started talking about how she wants to sell the business eventually and cash out and do something different. And she had these other dreams. And I'm okay, when are you gonna do it? She goes, you know what? I'm I'm I'm gonna start the process next year because we're growing really fast right now. And when we hit my numbers next year. That's what I'm gonna sell. So then I would talk to her a year later. I'm like, okay, it you ready to sell? And she'd say, Well, we hit all of our numbers, we blew everything out of the water, everything's amazing. but we're still growing super fast. So I'm gonna wait one more year to sell. Well, I'm sure you know kind of where this is going, right? Like and this went on for a couple of years to she got to the point where I don't exactly remember the revenue, but I think it was a little over ten million. and the business was quite profitable, it at least she thought it was. And all of a sudden, she went out of business. Like she completely went out of business. Now what what happened was she ended up she had a CFO that she had hired who ended up embezzling a bunch of money and basically just wiped all the cash out of the bank accounts, maxed out credit cards and credit lines and literally vanished into thin air. so so she didn't have checks and balances in place or systems, right, in place to protect those sorts of things. And she lost interest in the business herself, which is ultimately the problem, is she no longer cared about the business. All she saw was a number that was growing a little bit, or or in some years a lot each year. And From a an ego perspective or agreed perspective, ultimately, a greed perspective, she's growing and she goes, But if I wait one more year, I'll get a like my re my revenue and profit numbers are gonna be higher and that's gonna make my multiple higher and I'm gonna get so much more money if I wait one more year. And it one more year became one more year, became one more year. But in that time she lost interest in the business, which is why she lost control over it, because she didn't care anymore. So That is a thing I've seen multiple, multiple times is when you don't really care about your business anymore. like honestly, you should sell while you still love it. But if you get to the point where you don't care anymore, look that is the very day you need to call the business broker and the CPA and the tax lawyer. Like you need to have those meetings same day. Like, get out of that business now. Like because it it's a ticking time bomb the moment you don't care about it anymore. No no one cares about your business like the owner. and at that point, yeah, maybe you have like some systems in place and that's why it's doing well autonomously. But if if you as the owner don't care, you're also losing sight. And that's exactly what happened to her. Like she had gotten married second Pete Vera, Exit Algorithms: Yeah. Yeah. Bobby Casey: marriage and th the other guy had a really successful business and they were traveling all over the world all the time and she was just like on like Zoom calls every other week with the team and she yeah, she just didn't know what was going on in the business and the CFO literally vanished with a few million bucks and it and she had like she had a lot of employees and she couldn't pay Literally couldn't pay Pete Vera, Exit Algorithms: man. Bobby Casey: Like everyone got fired, everyone basically got laid off with no salary for whatever the pac previous month or whatever it was and vendors didn't get paid and all that stuff and what do you do? So I like a big thing there is if you're growing the business and you know you want to sell it, don't be so damn greedy. Sell it when you're on the upswing. Like, sure, maybe you can wait one more year to get that higher multiple and so on. Pete Vera, Exit Algorithms: Disaster. Bobby Casey: But also that next year COVID could happen too, right? Pete Vera, Exit Algorithms: Right. Bobby Casey: Like that next year, what what's the new virus they're talking about now? I don't know. Whatever this new one is, it's probably gonna shut the economy down next year. whatever the next pandemic is, we could have that and your business gets crushed by the pandemic. I mean it depends on your business. Like I had I had one one good friend of mine and a client who was in the Actually, he's another good example of somebody who should have sold his business sooner. During COVID, he's in the sports sports equipment business. Outdoor outdoor sports equipment. And during the pandemic, his business exploded, you know, because people couldn't go to the gym anymore and you know, they couldn't do a lot of like activities. So people started buying outdoor sports equipment to go. Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: in the nature like mountain biking and kayaking and paddleboarding and all that stuff and his business exploded during COVID. And he was like, I'm gonna sell my business. I'm like, Great, get it sold. And he got same thing. He's like, but it's growing. I wanna wait till next year. Well he had an artificial spike because of COVID. Well when all the lockdowns, you know, ceased, his business tanked. Like he went back to normal. But like Pete Vera, Exit Algorithms: Yeah. Mm-hmm. Bobby Casey: it was kind of worse than that because he had also ramped up inventory for the preparation of the anticipated growth but then the demand for his product kind of went back down to normal and he had way too much inventory and no cash. I mean he survived but like he ended up having to fire sell a bunch of inventory he started The process to sell the business, it was like Spring of like two thousand twenty three, think. Pete Vera, Exit Algorithms: Okay. It was ending at that point, yeah. Bobby Casey: It was like the very end of w when everything kind of quote went back to normal. And when it went back to normal, his demand went back to normal. So his revenue just tanked. And the buyers, you know, started asking for updated monthly financial state PLs and financial statements. And they're like, Whoa, your revenue's falling off a cliff. Like and so that they they pulled out. They pulled out of the sale. So like if he would have sold Pete Vera, Exit Algorithms: Yeah. Pulled out. Bobby Casey: one year earlier, man, he would have cashed out, you know, a solid solid low eight figure number. but he waited just a little bit too long. So I t timing is everything in you know, like most things in life and of course there's no way to predict the future. if your business is growing and you know you want to sell it and and Pete Vera, Exit Algorithms: Yeah. Bobby Casey: That number looks like a good number for you. Don't be greedy if that's your goal is to sell. Don't be greedy. Just make it happen. Like don't and don't look back. If it sells and then next year you see the business doubled in value, don't be like, my God, I could have got double the money. Don't don't do that. Move on with your life. Like like you you made a you made good money, you made your choice, you know, stick with it and move on. But I think a lot of people I've seen that. Pete Vera, Exit Algorithms: Yeah. Bobby Casey: Way too often where they sell too late. Pete Vera, Exit Algorithms: Yeah. Yeah, no, great great war stories. Thank you. I think that that is a crucial element, right, is the the timing. yeah, and I know you focus a lot on structuring, a lot of give a lot of you know consulting around it and and do helping businesses. I'm curious with exit planning, you know, how does say international structuring affect the the exit and you know what do you have any recommendations Bobby Casey: Mm. Pete Vera, Exit Algorithms: say a business has a few years before they they wanna exit, what would what would you recommend? Bobby Casey: So the exit kind of also depends on who your buyer is. so if for example y you're raising money from like VCs or big big money investors, the structure almost always and this really is almost anywhere in the world, basically if you're raising money from VCs, of course VC the goal of a VC is to come in Give you a bunch of money and cash out in five years or something like that. And they want whatever, a ten X, a hundred X, multiple, whatever whatever their their goal is. But you almost always are gonna need to be a Delaware C Corp if if you're chasing V C money. And if you're not the Delaware C Corp now, you're gonna find out the hard way that you're gonna have to be a Delaware C Corp. Like I had a client, actually a German guy living in Europe. think he was living in Uzbekistan at the time with a healthcare like device healthcare device startup and we had originally started his company as a Wyoming C Corp and he had a like in his second year he had a VC come in and and want to give him two million bucks and they just straight up said we'll give you the money if you're a Delaware C Corp. If you're not a Delaware C Corp we're not interested. so Pete Vera, Exit Algorithms: Wow, it makes that much of a difference. Bobby Casey: It's it's a huge difference. Yeah, it's a huge difference. So we we ended up just moving the company from Wyoming to Delaware. I mean it wasn't that big of a deal th to move it, like but if if you're chasing V C money, I don't care if you're a German living in Uzbekistan, a Chinese person living in Australia, or you know, a an American living in Des Moines, Iowa, it needs to be a Delaware C Corp if you're chasing V C money. 'Cause they they don't They don't care. So the reason being the reason for that is Delaware has a specific court system for business disputes. It's called the Chancery court system. They're the only state in the US that has a very specific court system only for business disputes. and for you as the owner, like it doesn't make that much of a difference to you, but for your investor. They want you to be a Delaware sea court because then your jurisdiction is gonna be Delaware. So if there's ever a conflict and they need to sue you, you know, I don't know, you you didn't pay them the money or whatever, something happened and they need to sue you. They don't wanna have to sue you in Iowa where like y you're you're in the regular court system where you could be sitting in court behind, you know, like a traffic ticket and domestic abuse and like somebody shoplifting and all these things. Whereas the Delaware court system it's strictly for business disputes and it happened like the the you get court dates really quickly, disputes resolve really, really quickly there. So that's why investors want it to be in Delaware because any future dispute, potential future dispute They don't they don't want to wait six months or a year or two years for a dispute to resolve. They want it within six months. Done and out. Right? So Pete Vera, Exit Algorithms: Got it. Yeah, that makes makes a lot of sense. Is that the same then philosophy if you're trying to sell to private equity? Bobby Casey: Most likely, yes. Most likely private equity, but it depends. Private equity might be doing a roll up, so they may not care too much about your company structure because they're probably going to create their own structure and roll your assets into that business anyway. So it might be less significant for private equity. I'd I've seen it a lot. Private equity very often is they're buying you and three others just like you to roll you into like a bigger company. So Pete Vera, Exit Algorithms: Makes sense. Yeah. How long does it take? Bobby Casey: but it it won't hurt you. It won't hurt you with private equity to be a Delaware C Corp at all. it might help you a little bit just from like the perception perspective, is they think you've done the right things from the beginning. so they might see your business as a bit more attractive because they're Delaware C Corp. Good. Pete Vera, Exit Algorithms: I see. Yeah. How long does that that process take? Like w would you be able to do it in the same year that you're trying to sell or is it to take some advanced planning? Bobby Casey: To you mean to change your structure over to a Delaware C corp so if you're already let me clarify one point on company structure. So we're talking about the US perspective right now. So in the US you've got corporations and you've got LLCs and you've got a few other things like LPs, LLPs, partnerships, stuff like that. But for this purpose we're gonna stick with LLCs and corporations. When I say a C corporation I do want to clarify a point. So from a legal structure, a corporation is a corporation. A C corp is a is the default tax status of a corporation. S corp S Corp is a a an elected tax status of a corporation or an LLC. a lot of people think I register a C corporation or I register an S Corporation. That's not really what you're doing. You go to the Secretary of State and you register a corporation. By default, the tax selection is C Corp. You can file a tax form and change the default tax election over to S-Corp tax selection by filing a tax form. But C Corp and S-Corp is a tax status whereas corporation is a legal structure in the state. So A in the US entities are not formed at the federal level. They're all formed at the state level. So there's a Delaware corporation, a Florida corporation, a Wyoming LLC, a California LLC. There's no such thing as a federal corporation or a federal LLC. They're formed at the state level. So you do have a lot of nuances in the states themselves on the entity structure and how they're dealt with and fees and legal issues. Depending on each one. so I just wanted to clarify that point. So you've got a corporation, a corporation has shareholders. a corporation is its own separate legal person, meaning it files its own tax return, a corporate tax return. whereas an LLC, the default status of an LLC, a single member LLC, it's a disregarded entity for tax purposes. It does not file its own tax return. Pete Vera, Exit Algorithms: Mm. Bobby Casey: the owner files a personal tax return based on the income derived from the LLC. If you have a multi-member LLC, it's treated like a partnership. And then the LLC does file a partnership tax return, but all that does is issue a tax form out to the individual owner. The individual still pays the tax at the individual level. So partnership tax return, you file a 1065 and then you issue a K1 to the owners or members. And then the member pays the tax based on the income derived off that K one. corporations are usually more favorable looked favorably upon for bigger sales. So if you're talking like again like VCs, they're pretty much gonna most VCs are gonna require you to be a s a a corporation with a C tax election and almost Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: All of them are going to require you to be a Delaware C corporation. I mean, there could be some that don't require that, but it doesn't necessarily hurt you to start with a Delaware to begin with. from a legal perspective too, I want to make a note because for sure somebody's watching this going or listening to this going, Yeah, but I live in Texas, why don't I just register the corporation in Texas? Well, you can. And it it again it depends on your ultimate goal of what you're trying to accomplish. If it's a lifestyle type business, you probably don't want a corporation anyway. You probably want it to be an LLC. and in that case, you probably if you live in Texas and operate in Texas, you probably do want a Texas LLC. If you're creating a company for the purpose of selling later on down the road. You probably want it to be a Delaware corporation with a C status, the default C corp status. But because you actually live and operate in Texas, you're probably gonna have to register it as a foreign entity doing business in Texas, which does increase your compliance cost. But again, it depends on your long-term goal. If you want to be short-sighted and registered in Texas. Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: And then two years later you get a VC wanting to give you two million dollars. It's gonna be much more of a pain in the ass to move that to Delaware than if you just started in Delaware to begin with. And it's gonna cost you a lot more money to move it than it would have been just to have it in Delaware to begin with with a foreign ta with a foreign filing in Texas. So begin with the end in mind when Pete Vera, Exit Algorithms: Gotcha. Bobby Casey: there's a place for LLCs too. so don't don't get I'm not pro corporation. To be honest, with business anywhere, we we register way more LLCs than we do corporations. Way, way more. They're much more flexible. very often for asset protection, they're very good for asset protection. Like you might even want to have like an operating business, but then your assets are owned by LLCs. Like a really good strategy that a lot of people use that we do recommend, especially if you have some valuable intellectual property or equipment or buildings or like resources, stuff like that, is you wanna what I recommend is creating LLCs to own the the assets and have your operating business a separate company. Pete Vera, Exit Algorithms: Mm. Bobby Casey: That separate company might be a corporation if your end goal is to sell the business to a VC or maybe a private equity. It could also be an LLC, depending on, like I said, keeping the end in the end in mind and what you're trying to accomplish. But it's still a good idea to separate out the assets from the operational side of the I'll give you an example. Pete Vera, Exit Algorithms: Liability purposes, reducing risk. Bobby Casey: Yep, de-risking. So, like I have a a a good friend of mine, he's a client who has a big landscaping company. And we created an L two he has three LLCs for his business. one LLC owns all of his equipment. So all of his like trucks, his trailers, his tractors, all his heavy equipment is owned by one LLC. His building, so he owns the building where his shop is located. that is owned by another LLC and then he has a third LLC that owns the operational side of the business. So if if there's ever a liability issue, they're going to sue the responsible party. Well the responsible party is going to be the operational business, you know. I mean, it's a terrible example, but you know, he's his guys are out mowing and it throws a rock and hits a three year old in the head, you know. Right. I mean, I know, awful example, but whatever, it happens. And so if he wants to protect his other assets so he's not like immediately at risk of getting shut down, they're gonna sue his operating business, but his operating business doesn't own any assets. He does have insurance, of course, that protects against those things, but at least he's probably his his financial liability is probably gonna be limited to the limits of his insurance. Because the operational business itself doesn't really have any money other than what operational cash is in the bank account in that moment, right? or a big one is people who have intellectual property, patents, trademarks, copyrights, they've written books, they've got high value websites, they've got brand names, stuff like that. they've got high value domains. Pete Vera, Exit Algorithms: Thank you. Bobby Casey: I definitely recommend intellectual property being kept in a separate LLC outside of the operational side of your business. Whether the operational side is a corporation or an LLC, I think the the those assets should be owned by an LLC. LLCs actually offer you a greater level of liability protection than a corporation. Most people don't really understand that, but they do. Pete Vera, Exit Algorithms: Mm. Bobby Casey: if the LLC is properly created, like with a proper operating agreement and it's done in the correct way and maybe even in the right state, you have a lot of built-in liability protects like a Wyoming LLC, for example, has very clear asset protection statutes that protect the assets separately from the owner of the business. You have two different types of liability. You've got inside creditor liability and outside creditor liability. A corporation and an LLC are equivalent when it comes roughly equivalent when it comes to inside creditor liability. And what that means is a liability that occurred due to the the activity of the entity itself. Okay, so using the landscaper, for example, his guy is out mowing, throws a rock, hits a three-year-old kid in the head. Pete Vera, Exit Algorithms: Mm. Bobby Casey: That's an inside creditor liability because it happened from the operational activity of that business. And so generally you personally are shielded from that activity within the operational activity of the business. Generally. Not always. I mean, unless there is a personal negligence issue. but if it's a normal operational business thing, like like I don't know, if the owner of the business was driving the tractor and he was drunk, then you could have he could have personal liability. But normal operational activity, he would be shielded from that that personal liability. But you have the other side of it, which which I call outside creditor liability. And that is things that happen to you personally, where the creditor comes after your personal assets. Pete Vera, Exit Algorithms: Mm. Bobby Casey: So that could be I mean anything. Like you know, Pete, maybe you have a Super Bowl party at your house and one of your buddies drinks too much beer at your house, drives home drunk, and kills somebody on the way home. Well, the family of that injured person is going to sue all the way up the line, they're gonna sue you because you served your buddy too much beer, right? Well, if they sue you, they're gonna come after you and your personal assets. Pete Vera, Exit Algorithms: Mm. Bobby Casey: So if your assets are in an LLC, if done correctly, creditors can't attack your LLC. They're limited to, you know, if done correctly, they're limited to what's called charging order, getting a charging order, which protects the assets within the LLC. So that's a longer discussion about charging order protection. whereas if all of your assets were in a corporation, the judge can actually award them the shares of your company to satisfy the judgment. So basically if all of your assets are in a corporation and you, you know, had the Super Bowl incident and they sue you and they win and the judge gives them all the shares of your corporation. Well whatever your corporation owns becomes their assets. Like you just lost it. But if all of your assets were in that LL C then it's Pete Vera, Exit Algorithms: Interesting. Bobby Casey: Extremely difficult, not impossible, because nothing's completely impossible, but it's extremely difficult legally for the creditor to touch those assets. Pete Vera, Exit Algorithms: All right, ne next box to open is AI and technology. I know we talked a little bit on the pre show, you know, your team built a AI tool for you recently. I'm curious, how how are you leveraging AI today? And yeah, and where do you see it affecting your industry? Bobby Casey: Ha ha Yeah. I mean we use AI in every every step of our business. Like if if you go to our website, businessanyware.io, just for fun, like I I'm I'm actually asking you not right now obviously, but when we get off the call, if you have like ten minutes to do this, I'd I'd love to hear your feedback. But we use AI every step of the process through our own our client onboarding. So if you go to our website, like just to register an LLC, you'll go to our business registration page. It'll ask you like what name do you want, entity type, check availability, it does a quick search. And then it'll you have to create your login. And then from there, you'll see every single page. We have AI videos on every single page that are interactive, answering your questions based on like What the like for example, do you want us to do your EIN application? So there's a video there that answers your questions. What is an EIN? Why do I need an EIN? What does it do? How do I do it? You know, these types of things. And then also on every step of our process, we have an AI chatbot, people absolutely hated AI chatbots, but they've gotten really ridiculously good now. so our AI chatbot is pretty pretty darn good. And and we also have the thing there like, hey, look let me talk to a human, then it'll send a support ticket to a human who'll get back to you. But our AI chat bot. Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: We trained it with all of our training materials for our company so that it can answer like if you're like how much does it cost to register an LLC in Missouri and how long does it take? Like our AI chatbot can answer that question for you. Like so we're using AI like in every step of the process. We even have an AI texting tool. So when you go through the order process, if you exit the system, like if you don't complete your order. Pete Vera, Exit Algorithms: Next. Bobby Casey: You'll get a text message from us, you know, hey Pete, I see you started the process of registering that I don't know, Missouri LLC. Did you have any questions? And then you can actually have a conversation with our AI tool and text message. and same thing, it's trained on our our internal knowledge base. we have an internal AI knowledge base for our own team, so we use it for training. so like instead of like a team member having to go into Slack and how do I do X? Right, they can actually just ask our our internal AI chatbot, how do I do X? And it's already trained to answer that question for them. like from a training perspective, it's been incredible. I mean we use AI videos for training, like all of our new hire onboarding, like Pete Vera, Exit Algorithms: Wow. Bobby Casey: The first week when we hire somebody, all they do is watch videos because we have like training videos for everything and they're all like AI stuff. I mean basically we built all of our a SOPs and like employment manuals and all that stuff. We have written, but we also have out in videos where people can sit there and watch videos. You can do both, it depends on what you like. Maybe you like reading, maybe you like watching videos. Doesn't matter. You You you can read the transcript if you want. we have human endpoint touch, but almost all of our marketing up to final click the button to finalize is AI from start to finish. like everything from the content we need to publish to Pete Vera, Exit Algorithms: Mm-hmm. Wow. Bobby Casey: To generate the right kind of traffic to our website, the videos that we need to create to answer clients' questions, all of it like comes it it's all AI use. I mean, I'd probably have to have double the team that I have now if it weren't for AI. Like like when we do product launches now, my developers use cloud code to do the initial like product rollout. Pete Vera, Exit Algorithms: Wow. Mm-hmm. Bobby Casey: not rollout but the creation initial product creation. So like two years ago if we created a new product it would take at least like a month or more to create. Now it takes like three days. I mean we we do everything. I don't i in my opinion it now if you're not using AI in business I don't like I don't know how much longer you're gonna be in business to be honest. Like I don't it you can hate it. is you can hate it t t till your fingertips bleed. It doesn't matter because if you're not using it, you're going to be at a competitive disadvantage. so you better learn to deal with the hate because like you're you better you better you better dive in. my my operations manager built me an AI tool I I didn't even know I needed this tool. Like it wasn't even something I was it wasn't a concept I even thought about. And she just said, you need this thing. and so she built this AI tool for me. And I'm like, wow, that's that's actually really ridiculously cool. Like, we use we use AI for everything. My entire team, so we use Google Workspace for everything. So, you know, we have the paid account for Google Workspace. Pete Vera, Exit Algorithms: Mm-hmm. Bobby Casey: So we have like the the full version of Gemini AI. My entire team is in Gemini AI every day and our own internal like knowledge base AI every day. Pete Vera, Exit Algorithms: Yeah. Okay. It's like a custom GPT kind of deal. What'd she what did she build you? Bobby Casey: Yeah. Yeah. the thing she built me is a I'm the face for like our YouTube channel. so she created me a tool for content creation for our YouTube channel. it uses like our Google Search Console to see what the most search keywords are. and then it searches our competitors' websites to see like their highest ranking pages and YouTube channeled, YouTube videos, and then it tells me what YouTube videos I need to make. based on what people are looking for. here's the next five YouTube videos you need to make. And then it'll tell me the the like the subject line or the title of the video and then it'll give me a like a step by step outline on what I need to talk about in the video. So basically, I mean, I it's not s exactly scripted because I'm not reading a script, but it gives me an outline. So I'll put the camera up and then I'll put the outline beside it and I'll just basically walk you know, walk through the talking points and I'll expand on each talking point. Pete Vera, Exit Algorithms: Yeah, that's great. Bobby Casey: but I had no idea we needed that. I mean we do YouTube videos now and usually what we do is, you know, we j we'll just look on our own YouTube channel and see which things get the most traffic and the most comments or whatever. And like which of our blog posts get the most traffic and stuff like that. And that's kind of how but it's kind of seat of the pants. Like, okay, here's the these ten videos or these ten blog posts got the most interest. Let's do something about this. But she just created an AI tool that pulls it not only from our own YouTube, our own blog post, but it pulls it like from Google Search Console and Reddit and other competitors and stuff like that to tell to narrow down exactly what we need to create content wise, video content wise. Pete Vera, Exit Algorithms: Yeah. No, that's awesome. It's a great use case as well. Yeah, I I think you hit the nail on the head earlier, you know, it it really no matter what type of business, AI's only getting only improving, only getting better and if you're up against a competitor that's using it, it's you know, it's gonna be tough to compete. Bobby Casey: Yeah, I mean, like maybe you don't think you need it. Just like I didn't think I needed this this tool, but now I'm like, man, that saves us so much time and gives us better data to make our videos. So it's more focused on giving us better content that our audience is actually looking for, right? So I didn't know I even needed that, and now I'm like, how did we live without it? You know? And so like so I I know people out there running businesses that don't like use AI and they're like, Yeah, but I don't need it. I don't I don't even have a use case. I can't even think of a use case I would even use it. But like there's so many things you could be doing. Like d even basic things like using like an AI agent kind of like as a personal assistant to manage your calendar and respond to emails and stuff like that. Like that thing alone could take ten hours out of your week. Like, maybe it doesn't make you more profitable, but it would increase your quality of life by you working less. You know? Pete Vera, Exit Algorithms: Hundred percent. Awesome. Okay, I got Bobby, I got one last question for you. What is one practical tip for business owners who want to start legally reducing their taxes right now? Bobby Casey: Yeah? it depends on where you live. Like it depends on where you live. Like my most of my clients that come to me for like company structure and tax planning, those types of strategy related consulting things. Most of my clients are location independent entrepreneurs that live outside of their home country. you know, they're the digital nomad or the expat type, If you are that person, the most important thing you can do in that case is to hire somebody who deals with cross border. tax issues. That's the number one biggest tip I can give you. You know, like like somebody that does like what I do, hire somebody like me to do this because if you don't, those are complex issues. Let's say you're an American an American, you know, with a I don't know, let's say a software company living half a year in Thailand, three months in Mexico and three months in Argentina. You're an American with Thailand Argentina, Mexico, and then wherever your company is structured. So you got five different jurisdictions potentially as part of your your planning structure. That creates a whole world of complications for you on how to best optimize to make sure you are the most tax optimized for your business structure. And if you think you can get that question answered on ChatGPT or Claude or by asking that question on Facebook, you're not you're you're not gonna get that done because the problem is you don't even know the right questions to ask in that situation. Like if you knew the right questions to ask, you may be able to get a reasonable response from a from an LLM. Maybe but there's so many nuances in there about how to do planning for that type of situation. Like everything matters. Your citizenship, your physical residency, your tax residency, and they're not the same necessarily. do you have kids? Are you married? Are you married? Is your spouse a mash from the same country as you? how old are your kids? the nature of your business, where are your clients? How do you get paid? do you have an office anywhere? All these things are huge variables that factor into all of that. Pete Vera, Exit Algorithms: Mm. Bobby Casey: And if you think you're gonna sort that out on your own w without talking to somebody who's been doing this for a while, good luck, man. Good luck. So my biggest advice if you're in that scenario, hire a professional. like I had a client a few years ago, Swedish guy who who basically wanted to move to Southeast Asia, had a good sized business, wanted to move to Southeast Asia, and he literally went on Facebook to ask the question in a couple of Facebook groups. And somebody told him, you should do what I did, register a company in Hong Kong and then just travel around as a tourist in Southeast Asia, and you won't have to ever pay tax. And that's what he did. And he was fined for 10 years. But 10 years later, he moved back to Sweden and re-registered and found out he did everything the wrong way. And he owed he owed over a million bucks in tax when he went home. So for 10 years he thought he was doing everything perfect. Right? And if you would have asked him on that year eight, year nine, what should I do, he might tell you, you should just do this. Like travel as a tourist and register your company in Hong Kong and and you won't have to pay any tax. Because he hadn't gotten to the point yet where he realized the how big of a mistake that was. actually the funny thing was he came to me and he said, you know. Pete Vera, Exit Algorithms: Yeah. Yeah. Bobby Casey: I I'm like, why didn't you just like hire somebody in the beginning to help you with the structure? And he goes, it was too expensive. I'm like, well, how much was it? And he goes, Man, it was probably like five grand. I'm like, okay. So five grand is way better than the over a million you owe now, right? And he goes, Yeah, I get your point. You know. Pete Vera, Exit Algorithms: Yeah. Bobby Casey: depending on the size of your business, at a minimum you need a really good CPA. If the business is big enough, you need a really good tax lawyer. so like honestly most of my advice is gonna be around Finding professionals who know what they're doing because I look at it like this. I know how to change the oil in my car. Like I can do it. It's not that hard to do. But is that the best use of my time? No, of course not. Do I really need to be crawling around under my car in the garage, getting dirty, using regular hand tools, and it takes me two hours to do it? Or should I take it? To the garage and let a professional do it that takes him 20 minutes with the right tools. And I can focus on the things that I'm good at and let him focus on the things that he's good at. Right? Like to me, it's the same thing like mowing my I don't have a yard, I live in a condo, but it's like mowing my grass. Do I know how to drive a lawnmower? Of course I do. But should I mow my grass? No, that's stupid. That's an absolute, complete, total waste of my time. I mean Of course, unless I love mowing grass if it's my stress release, like some people have that, like it's their way to de stress and great, go for it. But for you for most people, it's a waste of your time to do things you're not an expert at. Hire the expert to do the thing so that you can do the thing that you're good at, or spend time doing things you want to do. Hang out with your kids, your wife, go ride motorcycles, go play golf, whatever you want to do. Don't crawl around for two hours changing your oil just like you shouldn't be sitting around on Facebook and ChatGPT and Claude for half a day or a day trying to figure out your tax planning. Like that's stupid. Like hire somebody who knows what they're doing. So same thing, if you're location based, go hire a professional because like I hear this sometimes, like people say, I can't afford you. Like you you cost Whatever the number is. Like you cost five thousand dollars to do this for me. I can't afford you. And my first question is, Well, how much do you pay in tax? And they're like, Well, I paid a hundred thousand dollars in tax last year. And my response is you can't afford not to have me. Like that's you can't afford to not have me because I might be able to get your tax to zero. If I charge you five thousand dollars and you save a hundred K in tax. Pete Vera, Exit Algorithms: Yeah. Bobby Casey: Like not hiring me may be the dumbest thing you've ever done in your life. it's the best ROI you're gonna get is to hire a professional. Like if if you live in Des Moines, Iowa, hiring that CPA that costs you five or ten grand a year to do your taxes but saves you fifty grand a year, it's all about perception. So yeah, my my advice there, hire professionals, don't try to do things you're not good at. That's just a waste of time. Pete Vera, Exit Algorithms: Yeah. Well said. Yeah, good philosophy too on on sticking Bobby Casey: I did by the way eventually go back to university for fun. and I got a degree in economics, but that's like macroeconomics one one, right? Like focus on the thing you're good at and let the the other people focus on the thing they're good at. Pete Vera, Exit Algorithms: Yep. awesome. Man, I really enjoyed this this conversation, Bobby. I learned a lot myself. this has been great. If if listeners enjoyed as much as I have, where can they they find you and and learn more about you and your and your business? Businesses. Bobby Casey: Yeah, sure. The easiest way to find us is businessanyware dot IO. you can find us on the website there. We have a contact form if you wanna reach out. You can schedule a consultation if that's what you want to do. BusinessAnywhere IO is our YouTube channel. Easy to find. Pete Vera, Exit Algorithms: Awesome. I'll be that in the show notes. Thanks so much for your time today, Bobby. I really enjoyed this conversation. Bobby Casey: Thanks for having me, Pete. Cheers.