S5E9: New England Fog | Best State to Start a Business | Contractor or Employee, what makes sense?

Disclaimer: The information in this video does not constitute Financial Advice. Consult with a Financial Advisor before making any decisions regarding your finances.

This week, Pam and Francis dive into a hot topic: the real difference between being a 1099 contractor and a W-2 employee. They break down how each status affects your paycheck and taxes, plus what you need to know about the self-employment tax for contractors. They also tackle the question: if you're earning around $250K, when might it make sense to switch from contractor to employee?

In our beer segment, they’re cracking open a New England Fog IPA from Aristaeus Brewery. Pam and Francis share their thoughts on the flavors and chat about how IPAs have evolved over the years.

Plus, Pam highlights a recent article on the "Best States for Small Business," giving a shout-out to Florida and Texas—two standout states for entrepreneurs. 

📰 On this week's What's News:
https://smallbiztrends.com/lendio-best-place-to-start-a-small-business-2024/

Today's Brew🍺: New England Fog, Aristaeus Brewery

Check out Aristaeus Brewery: https://www.aristaeusbrewing.com/

🍻 The P.B.K.P.I (Pam's Beer KPI) Scale, for reference ⚖️: 
1. I'm NOT touching it
2. It's sippable...
3. I'd drink it again if you gave it to me
4. I'll order it from the menu
5. I'll scour the ends of the earth to find it

About the Brewery: 
Aristaeus Craft Brewing Co. is an open-concept nano-brewery in Langhorne, PA. Their taproom features indoor and outdoor seating with 12 taps that serve a variety of true-to-style beers and hand-crafted nitro cold brew coffees, as well as wine, hard seltzers, and specialty cocktails.

Transcript

0:00

When you become an employee and say, I still pay you$3,000, now, that 15% gets split up, I pay you 3000, but I withhold seven and a half percent from what I give you, and you get the net of that. So I'm taking your tax out, half of your tax out of your pay. I have to pay an additional 7.5%. Oh, okay. Because now it's not self employment tax, it's employment tax. And what happens is, when you're a contractor, you're responsible for the whole 15% of this. This is what's known as Social Security tax, Medicare. Some people call it FICA. Gotcha. Okay. Those are the three names you'll hear. You'll hear tossed around. And the net, the total amount of it, is 15%. If you're a contractor, you're paying the whole 15%. If you're an employee, I'm paying 7.5% and you're paying 7.5%. So two things happen. Hey, welcome back to the Cash Flow podcast with me, Pam Pryor. Glad to have you here, where we talk about everything money related in your business. So without further ado, let's hop right in. And welcome back to Cash flow. We've got our three segments for you again today, and I'm glad to dive in. First, we're going to start with the news a little bit about where the best states are in the country to own a small business. Then we're going to dive into a beer that I have, I must tell you, already tasted. However, Francis has not. So we're going to dive into an IPA from our local brewery called Aristaias. And then last but not least, big question that we get anytime a small business is starting to hire. And when you start to pay yourself, do I pay myself as a contractor, do I pay myself as an employee? And how should I hire people as a contractor or an employee? Going to dive into that a little bit and answer some of the basic questions there. So, without further ado, let's jump right into the news. And here we are with the news. So, Lendio, which is a third party loan broker, has done a survey about what are the top for starting a business in the US. And I was actually surprised by a couple of these. And they ranked it with things relating to survival rates, access to business, financing, tax environments, cost of living, and also providing really comprehensive overview of the business climate across all 50 states. So we'll drop the link in here and you can look up your state and figure out kind of how, how things are compared to the others. But the top ten I thought was interesting. Apparently these have remained the top ten, but there was a big, big shift at the very top of the list. And coming in number one now is Florida, which edged out Texas. And we'll talk about why in a minute. But Florida's number one, Texas is number two. And then we have North Carolina, Colorado. We've seen a lot happen out there, so that makes sense to me. South Carolina, Ohio, Georgia, Massachusetts, Utah and Oklahoma. So that's our top ten. Now, some of the rankings have changed a little bit in the bottom ones, but the bottom three, one of them really surprises me, but I guess it makes sense. Hawaii, New Hampshire, and Nebraska. And Nebraska is interesting, actually. I have a client in Nebraska and I work with a bookkeeper in Nebraska, so that I find interesting. They're saying these states are generally lower because they have limited access to business funding, which is true, I know of all of them, and venture capital. But also there are fewer local incentive programs, higher tax rates and a higher cost of living. I know New Hampshire and Hawaii have a higher cost of living. I did not know that Nebraska did. So anyway, it's more challenging for smaller businesses to thrive there. And then just a number of things that I thought were interesting is they identified states that excelled in certain things. So I just want to kind of run through these because these are questions that come up a lot. Most notably, who's got the lowest corporate tax rate? And everybody, you know, jumps in and goes Delaware because that's where you're supposed to incorporate things. But the truth of the matter is it's Arkansas. Arkansas has the lowest corporate tax rate. Maryland has the most business incentives, which is kind of nice. The greatest population gain explains why Florida is now number one. Florida has the greatest increase in population then most educated workforce per hundred k population. Colorado, the lowest housing cost, West Virginia, and the greatest personal consumption expenditures. And I find this to be interesting. California, and then the most SBA loans approved per 100,000 population is in Utah. And then the big one, which to me is the metric of all metrics, is the five year survival rate of small businesses. And that state is, Drumroll. Minnesota. Minnesota. So there you have it. So the top ten states and then some of states as they are evaluated as far as sort of the key metrics go for small businesses. So get a lit, get a hit on this link and go look up your state and see the goods and bads about where your business is established and we are going to jump in and taste a beer that I already secretly know whether I like Orlando hate. And welcome to our bruise section. And I am going to tell you, I already know how I feel about this beer. So it's from Aristais Brewery, which is one that we've recently discovered nearby. This is our second sample from Aristais, and it is called New England Fog IPA. And it's made with. It's basically a double dry hop. So the two hops and it doubled up. And they are galaxy and citra hops. We've had the citra hop before. We've not had the galaxy hop before. Such a cool name. Yeah. And New England fog IPA. So I'm imagining it's going to be hazy, and, oh, Diego's doing his sit up, and I go, Paul, you must pet me. There you go. I like this beer. I like beer. So we're gonna give this a try. And the thing that's special about this to me is that the brewery is right around the corner, and this guy has there at least ten brews on the wall and another eight in the fridge at any point in time. So they're constantly inventing a little bit. And this one has been one that, well, I won't tell you yet, but we'll go ahead and give it a pour. What I will say is, when we pop the can open, I do know this. Yeah, it fuzzes really fast. Okay. It's very tricky to pour this without a big head. So we're going to cross my fingers that I pull it off, and if I don't, we're going to edit, because it's going to be. I have faith. Here we go. Actually, I manage that pretty well. Nice. There we're looking. That's a solid pour. There we go. There's that. That worked out very well. Does not usually work out that well, now that you obviously have figured out whether I like it or not, because I even know how this little sucker pours. Yeah. So let's see. This is a 7% alcohol per volume. There. One

pint cans. Love that. And cracks. 10: 7:51

00 a.m. right? What's

that? I love that it's 10:00 a.m. right. And it is 10: 7:55

00 a.m. we do record early in the day. And I like this one, so I won't throw the rest away. That's problematic. But, yeah. So if you're in Yardley area, big oak road is where this brewery is, and we're gonna give this thing up. Oh, yeah. You got the citrus in there. Nice and it feels grapefruity. Cheers. Cheers. Let's see what we got. That'S much hoppier than. That's an ipa. Yeah, that's a nice, solid ipa. And it's hazy, which makes sense. New England fog. Did you want a little sip, bud? They got to get me crazy animal cruelty here. What do you think? Do you like that one? Do you like that one, bud? A little hoppy for you? I love it. So, for me, what I like about this is the. Again, it's very bright hoppy. Like, it's. It hops on your tongue. I like the amount of fizz they put in this. There's a word for fizz. Carbonation. Thank you. Yes. I like the amount of carbonation they have in their beer. Cause I like a nice carbonated anything, really. And I like that it stays hoppy. Yeah, it stays hoppy. So now, this is not as, like, my favorite beer in the world, which I've already told you comes from the same brewery, Aristais. That's the rice saison. But this, on my PBKBi is definitely a four. This is a four. Yeah. For me, this is probably closer to a three, just because it is a little poppier than I typically like. But I will say, as we've been doing these tastings, you've kind of put me onto ipas a little bit more. I will tell you something. That's actually a cool story. I'm glad you said that. It's gonna get worse. Yeah. Okay, so it's like. It's like coffee. It's kind of like black coffee. How could you like black coffee? Well, you end up liking black coffee. Acquired taste. It's an acquired taste. And I used to drink always and only. What were they called? Well, Saison, but much lighter beers. Like nothing with a bite. Like, I would like the one that's the wheat beer, the blue bottle. Blue moon. Blue moon. I liked blue moon. I like orange peeler or something. Yeah. So corona, just lighter, kind of. Not as vibrantly tasty beers. And my friend Jeff started making me try beers when we went out, and you're like, oh, have a sip of this, have a sip of this, have a sip. And next thing I know, I was ordering them on the regular, and now I'm, like, an IPA snob, except my favorite beer is not an IPA. But that's just a fluke. That is a fluke. But I do think that, you know, ipas have so much depth of flavor, and it's more. Drinking an IPA is more of an experience. Like, I like whiskey a lot. Ah, there you go. It is more. There are layers of to the flavor. Like, you really get the hops right away. Yep. As it coats your tongue, but then as you continue to sip and drink it more and get a little bit more of the scent. Yep. You got a lot of, like, the bright summer kind of citrus flavors feels to it. It feels. This feels close, like, to almost like a shandy for me. Yeah, it's got a little bit of that in it. Like, it lays there at the end like that. It's kind of got, like, a flat, but that's not very. Doesn't sound very enticing, but it's a little bit of a flat there. That's like a shandy would

be at the end. Yeah. I mean, it works for the 10: 11:18

00 a.m. kind of. Yeah. Huh? Yeah. That's pretty big deal. I won't have trouble. I'll just sip it pre lunch.

It's 05: 11:29

00 somewhere into that pretty. Well, I was gonna say it's

05: 11:32

00 somewhere. Yeah. Cheers. I do like it, though. It's not bad. I would like I said, it's probably a three for me. You said it's a four for you. Yeah, it's a four for me. Yeah. Definitely. Really good IPA, but definitely an IPA. I mean, there's no apology in that. Yeah, it's like I'm an IPA there. Yeah. But I, like I said, you know, the ipas are growing on me, so we'll see. I love to see how this goes. Fail or scale. Exactly. But the other thing that's really cool about our stay is. Is. I mean, you had sat down with their. I've been back a couple times. Yep. Seems like he just has a really, really cool approach to brewing. He is like. He is a hometown Philly guy, and he's built this from the ground up. His first year was in Covid. Oh, wow. And he. He just loves to brew. He's retired. He loves to brew. They're massive Eagles fans there. Yeah. So, like, the other night, I went and we were just sitting around. It was the night of the Friday game in Brazil. Opening game in Brazil. Yeah. So I don't know if I've mentioned this before, but he did a special brew for that game because he's got a connection with a guy in Brazil who's. Now they're growing hops. They've got a great region there for it. I may have already told this story. I'm not sure. I think you've told this story on the podcast. I know that you did a little. Thing with him, with him that we may show here someday, but there's a region in Brazil that mirrors the region up here in the northern hemisphere that's great for growing hops. So Brazil apparently is the most. More beer is sold in Brazil than any other company. Wow. Company country. The company of Brazil. However, they didn't grow their own hops until literally last year. And this guy who owns Aristais knows another guy who is a commodities guy, also Yardley based guy who works with Brazil to. Has worked in Brazil with producers to start growing hops there. Oh, wow. So this guy had the inside scoop to kind of one of the first batch of hops to come out of Brazil, and he created a beer probably about six or eight months ago from it. I didn't get to taste that. That was a short run. But then he got brazilian hops up, so that for the week that the Eagles were playing down there, he made a special brew called Eagle's Claw. Oh, that's too cool. So I went the other night to pick up my regular four pack or two or three, and sat down while I was there and tried the eagle's claw. How was that? It was really good. Yeah, really good. It was. It was. It had a quicker convert from hops to deeper taste, like, really fast. But I really, really liked it. I ended up having a hole one and staying and singing the eagles song with everybody there, so. Got a video of. I saw your video. Got a video of everybody singing for the Eagles. So it was. It was a. It's a lot of fun. So now they're like a whole bunch of reasons I love the. These people. Every single server behind the bar is friendly, local. Like, one was one's a teacher on sabbatical for a year. Oh, wow. And I found out Friday. Oh. Meant to tell you this. There's a thing you can get. And I've got the QR code. I took a picture of it. We need to show it somewhere. But there's a 17 brew trail in Bucks county. Oh, wow. 17 brewery trailhead. And if you get 30 stamps by the end of January, which sounds like nothing to me, that's like a beer every other day, then you can get a hoodie, and if you have less than that, you can get a t shirt. So I've got that QR code, and I want to. I want to trail the breweries. You should. You have to do the trail. I feel like if we'll. And we'll. Sample them here if they have takeout, which usually they do. Yeah. But we'll come back to this in January and see how many. See if I made it. And on that episode, you can wear. Your hoodie and it'll get me out of the house. We were just saying on the. She said. She said podcast. I need reasons to get out of my nest. Exactly. Beer is always a good reason to get out of my nest. It's one of the best reasons. There you go. Awesome. So we got a four and a three. That's not a bad. That's not a bad one. No. And it, like, a three is good. Yeah. I wonder, though, if, like, for the first one, you tasted back however many weeks ago, I started saying, hey, what do you think? Like, how much, like, if you would have liked it then would have been a total bleh. Like, yeah. Yeah. Because the first. I really remember the first one. It was the one that Leah, one of our team members. Oh, I didn't like. And I was not a fan of that one. It was. Was that the one that said tasted like feet? No. Yeah, we had, like, two duds in a row. It's like, oh, that one was the Philly fan I fanzone. That's it. Yep. And I just remember that that one, like, was so bitter. It was, like, really bitter. But then, like, at the same time, super in your face fruity. Yeah. This was not feeling it. She loved it. I think a lot of people. We love you, Leah. We do love you, Leah. I do think the hardcore IPA lovers don't like the fruity, but people who like the Weiss, the vice beers and all of that, that, like, orange taste are gonna like the fruitier IPA's. So does that mean I'm a hardcore IPA? I think you're becoming a Jeff generational hardcore IPA lover. Yep. What are you doing to me? I know he would be so proud. He's not with us anymore, bless his heart, but he would be so proud. Awesome. That we're carrying on the dream. I love it. Well, I'll continue to try these ipas. Beautiful. I'll keep expanding my palate and I'll. Pull one from every brewery on the 17 spot. I think we can use them for date night. It's a shame Deb doesn't drink. Well, I'm sure there's. I need a designated driver. There you go. There you are. There you go. Problem solved. Lucky deb. Awesome. Cool. So let's hop into our fail and scale segment, because this is fail or scale. Fail or fail. And scale. Wow, that was freudian. I mean, although to be fair, to succeed, you got to fail. This is true. Like, we're going to fail at a bunch of things. We try and we're going to succeed at others. I'd rather fail and learn a shitload. I just don't like the word fail. You're right away. You know what I mean? Yeah, it does have a negative connotation, but that could be a psychological thing. You're right. We need to change the name of this segment. Yeah, I don't know what. We have to get our creative person to come up with a new name for the segment. We keep throwing ideas over your way. When. Yeah, for when's, like, how can work be accumulating? You're recording the podcast. Okay, we'll workshop that a little. Good. But the topic is critical today. So for two reasons. We have to pay ourselves and we're going to hire people at some point. Yeah. And you asked, and I kind of gave you a roundabout answer that I just wanted to dive in a little more deeply. Well, how will I pay myself? Will I be a contractor or will I be an employee? And just to circle back what we covered on the last episode, and you can go back and listen to that episode, the one right before this one. I don't know the number, but it's right before this one. See? Episode eight. Okay. He knows them all. And we can drop it in the notes as well. But we were covering that when you have two partners in a business and one of them is very actively working in it, that person will also draw a salary on top of the half and half the distribution from the profits. So we're talking about that salary piece. Gotcha. And there's a. This is not tax advice. I'm saying that we'll put all the disclaimers, not legal advice on this topic. Right. This is me just a pining on what I've seen. And in the notes, we'll have all the disclaimers that we need to have. But there's a point at which you need up until a certain point being a 1099 employee of your own company makes the most sense. Gotcha. Okay. Now, up after a certain point of personal income, and that just doesn't mean from this company, means overall, but overall, like, so you get a salary from another company, say you have real estate properties, say your wife has properties because you'll be filing married jointly this year. I know. That's crazy. Yeah. So when you know that whole scenario, there's some point and I don't know this because I'm not a tax person. I just play one on my podcast. There's a figure, let's just call it$250,000. When you're taking in total personal income of $250,000 or more, it makes sense to convert to being a w two employee. All this has to do with employer taxes, payroll taxes. When you pay an employee. Let me back up. When you play a contractor, you don't pay. If I pay you as a contractor, $3,000, I pay you$3,000, and that's all it costs me. Okay. You get that$3,000, and you have to pay what's called self employment tax. Yes. Which is 15% of that. 15% NPA. Right. Or is that national? That's national. You also have to pay state tax, income tax, all that. Yeah, but this is another thing. This. I'm talking just the self employment tax. Right. So you have your 15%. You have to pay on that. When you become an employee and say, I still pay you$3,000. Now, that 15% gets split up. I pay you 3000, but I withhold seven and a half percent from what I give you, and you get the net of that. So I'm taking your tax out. Half of your tax out of your pay. I have to pay an additional 7.5% because now it's not self employment tax, it's employment tax. And what happens is, when you're a contractor, you're responsible for the whole 15% of this. This is what's known as Social Security tax. Medicare. Some people call it FICA. Gotcha. Okay. Those are the three names you'll hear tossed around. And the net, the total amount of it, is 15%. If you're a contractor, you're paying the whole 15%. If you're an employee, I'm paying 7.5% and you're paying 7.5%. Gotcha. So two things happen when we convert you to employee. One is your net paycheck goes up. Because now I'm not keeping 15% from you. I'm only keeping seven and a half percent. So that's good. Your net paycheck goes up. Love that flip side. The businesses expenses go up. Gotcha. Because now I'm paying an additional seven and a half percent that's not coming out of your pocket. Coming out of my pocket now because you're my employee. Gotcha. Right. So the reason there's a breakpoint is until. Since this is all one thing, it's you and the business. We want to get the money to you in the most tax effective way possible. And taking 15% from you up to a certain point is the best way to do it once you hit a certain point. And again, I'm not going to go through all the details of why it makes sense to pay the extra 7.5% in the business, because your income on this side, on the personal side, is such that we want less tax taken out of your paycheck. And again, I don't know all the details of the why. I just know that up to a certain point, and something's telling me it's around 250,000 of personal income. You'll want to take it as a 1099. Gotcha. Now, like with anything, there are bazillion tax reasons for this, and so everybody's situation is going to be different. So don't take that to the bank. One size fits all approach, but just. Be aware for a good bit of time. It's 1099 is just fine. Yeah. So I think what, a few things come to my mind immediately for a lot of people that are in the types of situation that I'm in. Right. I'm an employee. Yep. And then I'm also an owner of a business, and then I'm also doing contracted work. So, like, when it comes to all of that, do you factor in kind of every aspect of that, or do you kind of only factor in the contracted work and the business that I own into that kind of mindset since, you know, the employee kind of stuff is coming out. Yeah. Yeah. So another little subtlety to this. So we've talked about the FICA tax. Yeah. Also, when you're paid as an employee, we go ahead and take out your income tax, an estimate of your income tax for both federal and state. Yeah. So when you get a net paycheck on the whole, you can assume, oh, I can spend all this money because everything that needs to go to the tax man's already been taken out and gone to the tax man. The whole idea being at the end of the year, you're like, oh, I don't owe them anything. They don't owe me anything. When we file your tax return in April, gotcha. With anything that's paid to you really is a 1099. Like, so if we pay you as a contractor from Forward press, you have some personal work you do as a contractor. Nothing's coming out of those. When you get that money, you're getting our $3,000 example. You're gonna, you know, you're gonna have to put 15% aside no matter what. And then depending on how much income you have in total, there'll be taxes on that income as well. But you don't know exactly what that is. People try and guess at it, but you don't know what it is. We are putting way too much aside because we know we want to. And what the 30% aside. So I forget what the original question was now. It was just that, you know, considering the, you know, how do you think about this stuff? Yeah. So now, for people that you hire is a little bit different. How you pay yourself as an owner is one thing, but how. How do you hire people? Right. Contractors or w two s. And every single state has different rules on this. The feds kind of piggyback on the state rules. The caution I'll give you is that if you hire 1099 and any audit determines that it should have been w two, then for up to three years of how long that person's worked for you, you become liable for that entire 15% we talked about for however much you've paid them. Plus, they're withholding for income tax. Gotcha. So even if it was on their responsibility to pay it, you still become. Liable even if they said, hey, it should have been an employee. And, yes, you just hit a nail on the head. Even if you've properly paid your taxes for those three years. Yeah, I can be charged your taxes again based on the state for those three years. So they can double dip. Okay, so this is a gold mine for the treasury of every state, and they know it. Yeah. So they quickly, they make a lot of adjustments to their legislation around 1099. Who can be a 1099 or contractor? 1099. Employees synonymous with a contractor. Yeah. W two employee is synonymous with a paid employee. So I suggest one thing right off the bat. Hack number one, never call a contractor an employee. Not tax advice, ever. Not tax advice, but life advice. Just don't ever call a contractor an employee. Call them a contractor, call them a business partner, call them anything you want, but don't call them an employee. Gotcha. On most every state, one of the qualifiers to whether somebody's an employee or not is, are they treated like an employee? Well, one way to show they're treated like an employee is to call them an employee and put them in salary on your financial statements. One way to argue that you truly think of them differently is to have that carved out and talk about them as contractors. Gotcha. But outside of that, every state's laws are different, and every state's laws change, so. And it's not just the state you own the business in, it's the state they work in. Yes. And I will tell you, the most restrictive I found is California. Yeah. And the most likely to jump on you for. To get. To get this money out of you to do these audits. That's why there's so much money in California. That's why there's so much money in California. You know, there are some general rules you can follow, but every state is specific. So I'll talk general rules that are more based in Pennsylvania, but again, not legal and tax advice. Yeah. Ways to make sure you're not. I always err on the side of caution. Yeah. Ways to make sure you're erring on the side of caution. Have an independent contractor agreement that clearly states you're not an employee and you're responsible for your taxes. Excuse me. Hits that New England fog beer. Every. Every single AI contract creator knows how to write that language, so that's number one. Number two, they should have other clients. Gotcha. Okay. So they're not totally reliant on just you. So you really want to know that you're not 100% of their income or 90% of their income. A third thing and I. This is kind of. This is still gray, but it's less gray than everything else. If you have, like, full company meetings, you need to somehow distinguish between employee participation and contractor participation. Gotcha. They can't be required to do all the same things your employees are required to do. They can't have the same standing meeting schedule and all that kind of stuff. Now, that's where it starts to get gray. And it varies state to state. And then there's just a list of other things. Like some states, the checklist is 30 things long. Golly. But they also don't tell you when you're going to be guilty and when you're not going to be guilty. So. Because they don't want you to know. Could be five things. You know, if you check five things, you're fine. Could be if you check all 30, you're fine. Could be if you check one or two, you're fine. But the bottom line is, know your state's requirements. If you're truly using people in a contractor role, they're not, you know, doing all the work in your. One person's not doing all the work in your business and nothing for anybody else, and that you've got a contract in place that clearly identifies them. Generally. Up till now, showing those things has been enough to win, kind of win the audit. Gotcha. Okay, well, and then the other thing that you can really do is partner with somebody like you that knows people or knows enough about this kind of. Situation to say, you know, here's this caution, or have a lawyer run over it with you for your state, somebody that's very, very familiar. This happened a lot, and shamefully, New York, to artists groups, artist groups. So, for example, there was a group that did Shakespeare plays together, and that's all they did. They did Shakespeare plays together. And when they got the proceeds of, they distributed them to all the players. And these aren't people that make a lot of money. These are actors and they act. And unfortunately, we know the arts are not well paid. New York decided to come after this organization for that. These people should have been employees, and therefore all these taxes needed to be withheld. Well, this company has no money because everything they make on their shows, they distribute to their players after the cost. So these guys are walking away, you know, for a three week run, say, with maybe$2,000, but you have 16 actors, dirty $2,000, and boom, the company now is being hit with a bill for like $30,000 for the last three years of stuff. Unfortunately for New York, the guy who ran it was a lawyer, a New York state lawyer, and he went after him with a vengeance. But not everybody has that opportunity. Yeah, but the point is the states are taking advantage of this, and they're taking advantageous, in my opinion, on the weakest in the economy that most likely can't afford to fight it, and that can tend to close doors. So, you know, just be aware what your state does in this particular area. Yeah. And it's. So it's such an important topic, I think, to talk about because, you know, if you're in a position like me or in some of my friends who do business as contractors, who do business as, you know, their business entities, but then, you know, tax time comes around and they just don't know the best way to structure it or how to plan for this or anything along those lines, you're becoming an easy target. Yes. For your state to come after big go and they're hitting you, you know, with penalties continuously. They can put you out of business. Exactly. And they can put. They can put you into bankruptcy, too. Yeah, it's wild. This is why, you know, and I'm not tooting our CFO horn here, but I am kind of. It's important to have the right professionals in your corner. Yeah. You need to be talking to a lawyer, a tax accountant, and sort of a CFO type person, an insurance broker. You need these administrative functions as your business grows because the more money you make, the more at risk you are of any of these regulatory things kind of coming in and tripping you up and innocently, like, you'd have no idea you were doing anything wrong because we don't really teach this stuff. Yeah. So I guess another question that comes to mind is, you know, things that people can do, you know, that might not necessarily be at the income level yet in their contracting business or in their personal business to afford, you know, a full team of CFO's lawyers and might not be in the opportunity that I'm in where I have people like you that I'm working with that are helping me make sure that all this is set up the right way. You know, things that people can do besides just listen to the podcast. Right? Listen to the podcast, yeah. You know, what are some recommendations that you would say to do to kind of make sure that people that might be listening can do to make sure they're setting themselves up. Yeah. To be in the right area of success. This particular topic, it is worth going to your state's labor website. There's going to be a labor and industry or, you know, state labor website, and they will very clearly have laid out what the distinctions are between contractor and w two. Gotcha. So, you know, know that and, you know, protect yourself. There's no reason not to go read a website and they'll tell you that when they come after you. It's like you own a business. You're grown up enough to go read a website and find out what you're required to do so you don't have to have a lawyer in your corner. But there are also things like, for example, rocket lawyer and rocket lawyer. You generates contract templates. There are things like quickbooks for the bookkeeping, which literally, even if you don't want to have a bookkeeper, you just attach your bank accounts to it. You press go, and at least, you know, you're capturing all your transactions and you won't miss anything. So there are non, like, I have to pay $5,000 retainer type things you can do to make sure you're kind of covered in these areas. And one thing for sure, if you haven't, call an insurance broker and get insurance. That actually reminds me, we need to do that for a forward press. And the insurance we need to get is what's called general business liability. And it's not very expensive. Now, if you're somebody like me who also gives professional advice, you have to also get a special kind of consulting, or what's it called? Certification consulting, insurance on top of it. So know again what your business is. What are the requirements for insurance? If, or what do I want to have for insurance if somebody, you know, all of a sudden says, you know, I messed up their website forever or something. Yeah. And then the other thing that's critical around that is in your contracts. And I know in the rocket lawyer template, I think they have this, you want to limit the amount that people can get from business damage. So, like, what'll happen sometimes? Like, I don't know if you remember the famous McDonald's thing with somebody walked. In, burned their mouth on hot coffee. And they didn't say, this is hot on the thing. So they got sued for just huge amounts of money. In a contract, you can say, you know, you're limited to three times whatever fees I've collected kind of thing so that, you know, they're not going to, they can't come back if they sign that contract and say, but you've cost me $20 million. Yeah. You know, and then when you do that, when you have contracts with every customer, then the insurance folks give you a better rate. Gotcha, too. Because then they know, oh, you're protected by contract. We're just the backup. So that's another little hack that's good to know to throw in there. That's really good to know. And, you know, the reason I'm asking is just because I know that there are so many people that are kind of in a similar position to me where they're trying to build something to support their families, to support themselves, and they might not, you know, have somebody like you that. Yeah, good point. And, oh, speaking of which, because we have equipment in for press, media, we'll get some property insurance as well. Gotcha. So loss and damage type insurance. Now you probably got the cameras insured with there when we bought them, but this, you know, would be around theft or whatever it might be the case. And on those, you need to decide what your deductible is going to be. And the deductible is basically if there was a loss, how much you would have to pay before theirs would kick in. So if a camera costs$700 and your deductible $700. Well, no need to get the insurance. But if your equipment costs$5,000. Yeah, like what we're shooting on. Yeah. And then we may need to go get some extra insurance so that if anything happens, we might have a 700 deductible, but they'll pay the rest of of it. So just like car insurance, if you do have any equipment that needs to. Be protected, all really important things. We should actually do an episode on insurance because there are a couple other things to really dive in on. There do just people have on their list and then they, as they grow, they'll know when they need to do these insurances. Yeah. Awesome. I think that'll be a good one for like in the next two, three weeks. That will be our next logical move. In fact, our assignment this week, our assignment this week is to go out to our insurance broker and get a policy. Gotcha. Or two depending on what we think we need. Awesome. Well, we'll have another good business meeting. In the upcoming, in the upcoming weeks. That's exactly right. I can't wait. Me neither. All right. Good deal. So that's it for this episode of Cash Flow. Really thrilled to have you here. We hope you come next week. I don't know if it's next week. We'll dive into insurance. We've got a whole schedule checklist of going from nothing but an idea to an established business and soon to be growing and scaling business. So join us every week as we work through this and give you the hacks, tips, and tricks. Awesome. That we learn along the way. Hacks, tips, and tricks, but not financial advice. But not financial advice. However, if you want financial advice, there might be a link somewhere in here to click for a blueprint call with me. Yes, exactly. And I, you know, speaking just to that, there's so many people that we've talk to on these blueprint calls you talk to on these finance blueprint calls I've talked to on marketing blueprint calls. And, you know, it's just information that's out there that not every entrepreneur, because they might be older, they might be younger, they might be a little bit more green. They just don't, aren't aware of things. They're being able to run things by people that have a little bit of knowledge in this area. Have a lot of knowledge in this area. It makes all the difference. Yeah, I agree. And you could for each one we make a blueprint checklist type thing. Oh, here are the things you want to look at so that all those bases are covered for you. You don't have to worry about it. And we don't do sales pitches. No. If you decide you want to work with us, we'll talk about it. But it's not a sales pitch. It's literally, hey, here's the next few things you need to do, and here's how to do them. Yeah, it goes back to, you know, your, one of your big sayings, the rising tide lifts all ships. Rising tide. That's the mentality behind these calls. Yep, absolutely. Good deal. Awesome. Well, we will see you all next week. We'll see you next week. Take care. Bye. Thanks so much for watching the Cash Flow podcast with us. We want to bring more and more of this to you. So please, like share, subscribe, comment so that we can keep bringing more of this content to.