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Do you have an attorney you use in your business? If not, are you wondering how necessary it is and what value they could bring? Want an inside scoop from an attorney on things you should do today to protect your business?
In this podcast episode, Joe Sanok speaks with Scott Reib about how not to be sued, mistakes small business make and why it is in your best interest to have an attorney on your side.
Are you ready to get to the next level? Take the stress out of starting a private practice. Grow a practice and create the right systems to scale. Go to the next level so that you can multiply time and money.
Click here to apply to work with us!
Meet Scott Reib
Scott Reib (pronounced “Reeb”) is known as America’s Legal Coach. He’s the official Zig Ziglar Small Business Lawyer, a Ziglar Legacy Certified Trainer, and he has over 20 years of experience as an attorney. For the last two decades, Scott has been helping business owners, entrepreneurs, coaches, and service providers to “shatterproof” their businesses and succeed in the professional world.
Find out more about Scott on his website, Facebook, Twitter and LinkedIn.
Scott Reib’s Story
Over the last three years, Scott has been sharing these strategies with business owners and coaches, and watching them grow and succeed! Even with 20+ years of legal experience, Scott is a firm believer that legal advice doesn’t have to be expensive or intimidating. His passion lies in changing the way we view legal counsel: from “emergency” situations to “primary care provider” relationships. Scott is shifting this perspective via Access Plan, his groundbreaking subscription-model legal service, where he helps clients understand their legal questions before they find themselves in a legal emergency.
In This Podcast
In this podcast episode, Joe Sanok speaks Scott Reib about how to not be sued and the steps you can take today to shatterproof your business.
What Counselors Specifically need Attorneys For
You just don’t know what you don’t know.
- Support to evaluate documentation received by clients
- Employment agreements, independent contract agreements, paperwork to make sure vendors are HIPAA compliant, work on a business structure to make sure assets are protected
5 Proven Strategies to Shatterproof your Business
- Get the foundation of your business set up – you need to have at least 1 legal entity. Click here for some extra information on an LLC.
- Assemble a team of key advisors – a certified public accountant, banker, independent insurance broker, a lawyer
- Document everything, don’t do any handshake deals. Click here for some resources
- Intellectual property – have a trademark for your brand, have a copyright for your website, blog or training video. Also, make sure to have work for hire agreements if you are using freelancers.
- Don’t use other people’s intellectual property – be careful with downloading images and using content that is not yours without the right permission. We use Unsplash for free images and Jamendo for free music.
Get instant access to the secrets to protecting your business and setting yourself up for a Shatterproof business by clicking here!
Books Mentioned In This Episode
- Lori Gottlieb is a Current NYT Bestseller of Maybe You Should Talk to Someone | PoP 378
- Apply to work with us
- Killin’it Camp
- Killin’it Camp Tickets
Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
Thanks For Listening!
Feel free to leave a comment below or share this podcast on social media by clicking on one of the social media links below! Alternatively, leave a review on iTunes and subscribe!
This is The Practice of the Practice podcast with Joe Sanok, session number 379.
Welcome to The Practice of the Practice podcast. I’m Joe Sanok, your host here. Live in the Radio Center 2 building. The countdown is beginning to the end of July when we are no longer in this building.
So hey, it’s June. It’s almost the solstice. And you know, when I was in 10th grade, the solstice was my grandfather, my mom’s Dad’s, favorite day of the year. He would do lawn work until late at night. He was just a guy that would not stop moving. He loved the solstice because it was like summer and he could get his garden all ready. Well, that year I was down in Philmont, New Mexico, which is a Boy Scout backpacking place. And I just climbed this mountain called Mount Baldy, and we came down and my dad, he told me some bad news that my grandpa had died. And so, we had to fly back to Michigan in the middle of this thing. Well, the Jeep that had come out to get us, the battery died in the middle of the New Mexican desert. So, we had to sit there for hours till they could radio somebody to have another Jeep, come get us. And then we got to our lockers where we had kept our wallets and everything. And they were locked and the keys were back at the campsite with the rest of the troop. And my dad had no money, we didn’t have IDs, this was pre 911. So, somehow, we’re going to be able to get on an airplane. And the Boy Scouts just gave my dad a bunch of cash and said ‘you can pay us back and write us a check’. And we drove all the way to Albuquerque through the night and flew out and came home for the funeral in Detroit.
And so, this time of year, really makes me think about appreciating what we have. Because we enter into the summer season, and it’s beautiful in northern Michigan. My grandpa, he actually died of a diabetic emergency. He had been mowing the lawn and didn’t keep track of his blood sugar. He was type two diabetic and insulin dependent. And so now as many of you know, I’m insulin dependent, diabetic. And so, when I have lows, it freaks me out, because that’s how my grandpa died.
But this time of year has that feeling of wow, there’s so much opportunity going on with summer and I want to savor it. But then also, you know, things sometimes slow down in people’s practices and we want to avoid that summer slump. There are so many things you can do to actually thrive in the summer and to reflect and plan and to do things differently. We’ll talk about some of that and opportunities that I want to share with you about how to avoid that summer slump. But there’s not really a point to the story other than life is short. Make sure you have those adventurous experiences this summer. Make sure you have time with your kids or by yourself out stand up paddleboarding. I know by now, I’m recording this ahead of time, but by the time this podcast rolls around, I know that I will have been paddle boarding quite a bit this summer, which I just love. I’m training for a mini-tri at the end of the summer. I stink… I almost said some naughty words there. I stink at swimming. I’m terrible at swimming. I took some swim lessons, and I’m just bad at swimming. But I’m figuring out what works for me to be able to complete this thing.
And so, what’s your thing? What are you going to do this summer, to make it epic, to make it awesome, to really like love it? You know, we only have so many summers when we have our health and so go after those things.
In a couple of weeks, we’ve got Slow Down School rolling around, where we’re going to have all these people flying into northern Michigan and hang out on the beach and help them work on their business and get to know each other and really go deeper to talk about why are we running these businesses? What’s the deeper meaning we’re going after? And it’s an amazing transformation to see people come in just thinking they’re going to start a business or not start a business, grow and scale a business and really have clarity around what their life purpose is. So, figure that stuff out this summer. Take some time for yourself to really reflect on those things.
Well, today on the podcast we have Scott Reib, who is a business attorney. And I know that transition from talking about adventure in the summer to a business attorney might seem kind of abrupt, but honestly, I want you to be thinking about how you make sure your business doesn’t screw up your life. And so, Scott is giving us some amazing tips today. So, without any further ado, I give you Scott Reib. [JOE SANOK] Well, welcome to The Practice of the Practice podcast. Today on the show we have Scott Reib. He is known as America’s Legal Coach. He’s the official Zig Ziglar small Business Lawyer, Ziglar Legacy Certified Trainer, and he has over 20 years of experience as an attorney. For the last two decades, Scott has been helping business owners, entrepreneurs, coaches and counselors to shatterproof their businesses, and succeed in the professional world. Scott, welcome to The Practice of the Practice podcast. [SCOTT REIB] Thanks, Joe. A pleasure to be here. [JOE SANOK] Yeah, I always love having attorneys, accountants, these kinds of ancillary services to running a business people on here, and especially someone that has the stamp of Zig Ziglar. I’ve just got to start with how’d you get that? [SCOTT REIB] You know, it’s a great story. I decided about five years ago that I wanted to work with people that were having a positive effect on the world because then my effect could be exponential. So, I started a path of working with coaches, speakers, trainers, counselors, and the only people I knew in Texas that were really doing live events for business owners was Ziglar. So, I googled Ziglar, ended up at a live event in Houston, and happened to meet Tom Ziglar, the proud son of Zig Ziglar at that event. He did a great job; I was really impressed with their content and everything they were teaching everyone. And then another one of the speakers found out, I didn’t have a ride to the airport and volunteered Tom to drive me to the airport in Houston. So, I spend an hour and a half in a car with Tom in Houston traffic, and we really got to know each other, he got to learn about my business model. And about a month and a half later, they came on board as clients. And then I started showing up on their stages and teaching the business owners at their quarterly meetings. It’s been a real great deal. [JOE SANOK] I think it shows you know, it’s interesting, you meet these people that you’ve heard about or that you look up to and when you get talking with them, so often you’re so similar and you have similar ideas, or you’re inspiring to each other. I got to meet Hal Elrod, he wrote the Miracle Morning, and also Jay Papasan, he wrote The One Thing, when I was down in Austin in late 2018.
They’re just great people, you know, people that are doing interesting things. And when you keep surrounding yourself with people that are doing good things, it’s amazing the doors that it opens. The thought that came to mind for me is proximity is power, that when you’re around those people, you never know what’s going to happen. [SCOTT REIB] That’s very true. Yeah, it was a really surreal experience. I got out of the car and called my dad and said ‘You’re not going to believe what I’ve been doing today. I just got out of Tom’s Ziglar’s car!’
Because you ride around with Tom and Tom is not Zig. But he when he talks, it’s just all of that Zig wisdom. And it’s just such a strange experience. Now for five years, I’ve been the Small Business lawyer for Ziglar Corporation, do all their work and then I’m the preferred provider to other coaching clients. [JOE SANOK] And for anyone who doesn’t know who Ziglar was, which I find that hard to believe, but I don’t want to make people that don’t know feel bad… Zig Ziglar, is, I don’t even think godfather is a strong enough term for him, he was kind of the first business development coach that….Was it the car university or something like that he had on tapes? [SCOOTT REIB] Automobile University, yeah, [JOE SANOK] Yeah, and so he branded it as you’re stuck in traffic, you might as well learn some stuff about business. And he’s the one that developed the know, like, and trust. He was so approachable, and really started this whole business development kind of genre of business. What else would you add just for people that don’t know who Ziglar was? What else would you add to that? Because you probably will know way more than I do. [SCOTT REIB] He would be really synonymous with positive thinking. He probably has written more books on positive thinking than anyone else. And positive thinking will not change your world, but you’re much better off thinking positively. And to kind of tie in the Automobile University, Zig would say that ‘You are, who you are, and where you are, because of what you put in your mind. And you can change who you are and where you are, by changing what you put into your mind’, which is exactly the kind of thing that you’re doing here on The Practice of the Practice, is giving people the opportunity to change that mental outlook. Because if taken in positive information, it just makes such a huge difference on your day, and then your week, and then your month, and eventually it’s years if you keep putting the right information in. [JOE SANOK] Yeah, and I think recently I’ve started to frame it around can we have all these triggers that make us think certain things? So, you know, you’re walking through your house, and you see your kids left the toys out, and you say, ‘Oh, I should put those toys away.’ And then you walk into the kitchen, and there’s no spinach when you want to make a spinach salad, you know, you’ll actually go grocery shopping and add this to my calendar. And it’s often these external triggers that define our day, that tell us where to spend our time. But when we have those positive thoughts, when we put things in our calendar that are intentional and what we want to achieve and get done, then those triggers, we’re defining those triggers. And then we’re saying kind of everything left over, we will give to the involuntary triggers outside of us. [SCOTT REIB] Sure, yep, and then take it a step further, not only do you want to take in things that I might say, in a podcast you might say in a podcast, but then you want to make sure that your self-talk and the things that you’re saying to yourself, are also positive and taking you in the direction you want to go. For instance, we talked before the show, I’m kind of on a weight loss journey right now trying to get smaller, so I can fit in my suits properly. And so, saying things to myself every day, like ‘I’m getting thinner and thinner, and fitter and fitter every day’, over and over in my head. And verbally, so that I can hear myself say those things, has a real effect on the kind of decisions I make subconsciously. You have to be intentional about what comes in and what you even say to yourself to get the kind of results that you want to have, if you’re going to be, especially if you’re in business on your own, because it can be a lonely world, and you can get down pretty easily. [JOE SANOK] I think sometimes it’s; you know, our thoughts are all around, I want to achieve whatever, you know, fill in the blank. But more and more, I feel like learning how to enjoy the journey… So, similar to you, I’ve been working out more over the last six months. And at first, it was kind of the opposite. You were talking about this where I want to build muscle mass because I’ve always been this lanky, kind of like running type, you know, body type. And I thought, well, you know, if I can build any muscle mass, that would just be frickin magical.
So probably a week ago, I said to my wife ‘I’m just craving going to the gym now.’ And it’ll be great if I add a little muscle or you know, obviously get results. But the actual going to the gym and working out and feeling like I’m moving my body differently, and I’m getting stronger, that’s become almost more of the objective, than even the long-term results. And so being able to enjoy the journey as well… And I think that’s hard when you’re in private practice, especially when you’re first starting out and you’re getting things going. It feels like ‘I just want my perfect client to come in, I want to see people or I want to add clinicians to the practice’, it’s hard to not just focus on that end goal. And that journey as well. [SCOTT REIB] Sure, or you happen to start a practice with a lot of business, a lot of patients or clients and suddenly you’re too busy to spend any time on yourself. And that’s kind of what I can remember back in ‘05, when I started this practice, that in the first about eight or nine months of it, I quit going to the gym, I quit paying attention to what I was eating, because I was so busy just trying to service clients and make sure I’m providing value and that they’ll come back. And then suddenly I gained 25-30 pounds. [JOE SANOK] Yeah, I remember it was Mary Rogers…I still remember the moment interviewing her for the podcast two or three years ago. And she said and I know other people have said this, but she’s the one that kind of brought it to my attention. She said, ‘Are you building a business or you giving yourself a job?’ And that idea of if you’re just in the chair, and you’re doing billable hours, you’ve just given yourself a job. Maybe you’re making more, but you haven’t built necessarily a full business. And that idea has really stuck with me of, how do I have a CEO mindset, an owner mindset, maybe even an investor mindset where eventually I can pull myself out of the business versus, I’m keeping everything going. And that’s where I think bringing a team in is so important. And that’s probably a good transition to your work Scott. You’re an attorney, you help businesses to reduce the overall liability and all these different things. How would you explain just what you see small businesses typically doing? So, what’s the typical business doing probably wrong. And then we can dive into some of your view of these five proven strategies that I want to get to. But what do you see, paint the picture for us of what typically is happening in small business? [SCOTT REIB] What we see as small business owners doing are, they don’t want to use legal services. I think there’s a fear factor that it’s very expensive, the system is rigged against small business, you can’t really afford to play. And so, we see them using online services to try to fill in some of those gaps. They’re Googling if they have a legal question or something pops up, they may be asking a business coach, they may be asking a friend, anything but go to a lawyer until it gets really bad when the proverbial house is on fire. And then they want to come into a law firm and have someone fix it. And then they’re upset because it costs too much to fix it. And that’s kind of the cycle that I’ve seen over and over for the last 20 years. That’s what small business owners do because they don’t feel like there’s an alternative to that, because they can’t afford to pay $600 an hour to a lawyer to help them answer a question. [JOE SANOK] Recently I had emailed my attorney… And we’re in the midst of, probably by the time this goes live, it’ll be done, we’re in the midst of selling Mental Wellness Counseling, the counseling side of my business. And so, I just wanted to say ‘Hey, I want to just get a quote of how much you think would be to do the sale process paperwork.’ Basically, it was a sales call for him and he’s been amazing for years. He then brought this other attorney on also, and we talked for the first five or 10 minutes, just catching up. And then, I get this bill for two attorneys for half an hour when we talked for 20 minutes. And it was supposed to be more of like a sales call. I wasn’t looking for advice, I just wanted to know how much would it cost us to have this kind of paperwork drawn up. And so those surprises I think people are so scared of because they don’t know what they’re being charged. They don’t know the value of an attorney, it’s hard to figure out which ones are good, which ones are slimy.
How do you help people either through your business or what have you seen other attorneys do to address those things? And also, what should we as small business owners ask of an attorney ahead of time, so we don’t get screwed over like that? [SCOTT REIB] Those are several great questions. What we did, back in 2012, I realized I had this problem, this cycle over and over of business clients making bad decisions because they didn’t have the right information at the right time. And so, we flipped the legal model on its head and created a subscription model where our business clients pay for a specific bundle of services every month. They know what their legal bill is, they know what they get for it and they have unlimited access to me and my team so, that they can ask those questions in real time, knowing that there’s no one starting to clock and money’s not flying out their pocket, and then be able to be proactive about their business – we call it the access plan here at our firm.
And it really has changed the whole relationship. Because before, we were supposed to be on the same team with our clients, but they knew that I control the amount of time that we spent on a given project. And so subconsciously, they think that we’re taking advantage of them – there’s just this conflict. By flipping that and no longer charging by the hour, now we’re on the same side, I’m in business just like you’re in business, and I only make money if I can provide you a solution in a cost-effective way that allows me to make a profit, right?
The formula for a business that everyone kind of forgets is you have to charge more for your product or service than it costs to produce it. And so, lawyers have always traditionally had that problem because they could just use whatever time they needed to do the project to make up the money or they could raise the rates. They were controlling both sides of that. Well, now we’re in the same business that you are, whatever kind of business you have, we have to work on a profit margin, we need to know what it costs to produce the services. And so. it changed the whole parameter to where now my clients like to talk to me.
I had a client two weeks ago… I came in with a message that Jim wanted to talk to me. And Jim had been working with one of the other lawyers in my firm. And so, I hadn’t talked to him in a few months. He’s been a client for three years and I was concerned that maybe he thought I wasn’t delivering the same service as before because he wasn’t interacting with me. We get on the phone and it was really the opposite. He wanted to tell me how great his experiences been with the other lawyer, Nick, and but he just really wanted to catch up. And he was like, how are you, how’s your family, how’re your boys doing. And he just missed the relationship. Because now that we’re on the same team, everything is about the relationship for us not about billable hours. [JOE SANOK] I love that! To be able to then have that relationship with someone that’s looking out for your best interest of your business, not just you know, billable hours because you know, I don’t want to catch up and say, oh, here’s what I’m working on. Here’s how my family is if it’s like the clock’s ticking, and I’m paying $500 an hour to talk to this person about my family. I can do that to my friends over the weekend. [SCOTT REIB] Yes, so it’s very different. [JOE SANOK] So I know you have private practice counselors that you service, what are some unique needs that they have? And then I want to get into these five proven strategies to really shatterproof your business. But unique for counselors, what do you see are kind of those ongoing needs? Because my guess is most listeners are thinking, well, maybe if I’m adding a 1099 or W2 I want a contract or if I’m selling my business…. Maybe those are the ongoing needs of a private practice, but I don’t know that I need to have a subscription. What are the things that you see that counselors specifically need an attorney for on an ongoing basis? [SCOTT REIB] A lot of counselors are ending up in court – they’re working with people that are going through divorces, child custody cases, those sorts of things. And so, they end up getting subpoenas for their records or subpoenas to show up and testify. They need someone to kind of be on their side, to help them evaluate the document that they received – is it legitimate? Do we have to actually produce the things that they’re asking for? Is all the documentation in place to protect us if we do produce it? So that’s one part of what we do.
The other part is that most of the clients that we’re working with are trying to grow and scale a business. So, they’re not satisfied with just one practitioner and an office. They’re trying to grow a business; probably like you have where you’re able to sell it someday. So, we are dealing with a lot of the same traditional questions that other business owners do, where they’re adding, they’re trying to come up with compensation plans for their employees to make it so they so they have a rewarding job so that they’ll stay. We help them create those, we’re doing employment agreements, we’re doing independent contractor agreements. They may be working with vendors to do their IT work, they may have a VOIP system. Well, all those vendors, when they’re working in a counseling practice have to be in compliance with HIPAA. So, then we have to do special agreements with them, so that they’re signing off on the right language, that they’ll keep everything confidential, that they’ll comply. So that’s the second thing we do.
And then the other thing is that we work on their business structure to make sure that their assets are protected. Because it’s a high liability area, whenever you’re delivering advice in the way that you guys are, there’s a high liability area there and you end up being sued a lot. So, we want to make sure that the assets of the business are protected, which is phase one, and you want to make sure that the personal assets of the owner of this practice are insulated and protected from any kind of sue. So, kind of the three main things that we do with as practitioners, and not all of its really different from every other business, but some of it is. But we really see them a lot, a lot of subpoenas, a lot of requests for depositions, and that kind of thing. [JOE SANOK] So, when someone’s at the beginning phase of practice, like just getting going, is that the time to bring an attorney full on? Would you say that you’re just getting your LLC set up, get that setup. And then maybe when you want to scale, that’s when you start to bring in an attorney on? [SCOTT REIB] I think you should start at the very beginning. Now whether you have can flow the subscription model, if you don’t have any start-up capital, that may be a limiting factor there. But the truth is that you just don’t know what you don’t know. As a mental health practitioner, you may be the best at what you do. But you’re a technician, you’re really good at that, you don’t know the legal side, you may not know the management side. Gerber says that most people are having these entrepreneurial seizures because they decide that they’re really good at what they do, and that they can do this better than their boss and so, they take off and do it themselves. And then they find that’s not quite the truth, there are things they don’t know. And so, when you’re starting the business, that’s the time to make sure that you’re getting the foundations in place, that you have the right information to make the decisions that could have ripple effects going forward. If you don’t have that advice, sometimes you can go back and fix it, almost always you can go back and fix it. But it may be more costly to do that than if you set the relationship up, to begin with.
To have a relationship with us for a start-up package is less than $4,000 a year. So, it’s not a huge line item on your budget. But it can be huge because you’re talking to us every month. So, you got someone that you can ask questions to about your business. How do we grow the business? What’s the next step to take? Because maybe they don’t have a business coach. And so, we end up doing a lot of that with them. But it just gives them access to what I call the right information at the right time. Because the right information at the right time is often the difference between success and failure.
The story I tell is that if Joe, if you were driving by my house this afternoon, saw smoke coming out of my roof. And you called me and said, Scott, I just drove by your house there’s smoking coming out of your roof is everything okay? And I say no, please call the Fire Department, no one’s at the house. And you do that, they saved my house. If the same thing happens, you drive by see the smoke, and then call me the next day, the information is accurate, it’s just too late. Right? And in business, it’s very much that way, there are times where you need the information right now, if you get it tomorrow, it’s too late. You need it now. And the only way to be able to ensure you get the right information at the right time is to have the relationship nailed down, where you have the hotline to the people with the information. And traditional legal services don’t work that way, you would have to go find a lawyer schedule a consultation, which could be a week and a half, two weeks out. By that point it’s either too late or you or you’re going to have so much stress waiting to get that answer that it’s not worth it. If you take the time to set that relationship up in advance and use someone that offers a service like we do, then all you do is go online to our portal, schedule your 15-minute phone call, or send a text to one of the lawyers and say, hey, I need five minutes. You’re stepping out of the meeting and getting the answer and going back into the meeting, so that you’ve got that real time information. [JOE SANOK] I think about when one of our clinicians had some false accusations made against him, and it was a lady who had done this several times to other counselors, which we didn’t know that she dealt with borderline and a few other issues. When that flared up, right away, I engaged my attorney and made sure the way that I was communicating with her followed my own lack of law….I didn’t want liability, additional liability from what was already happening… Made sure that that clinician was communicating in a way that was kind of given, he got the advice from our attorney. And it all ended up shaking out that the state said we did everything proper, had everything documented, we didn’t get rid of anything we should have kept. You can make those mistakes because you just don’t know. It could just be as simple as deleting a text that was really important. And so, having our attorney jump in and say, ‘Joe is the business owner, I don’t see any outstanding liability here for the clinician, I don’t see any additional liability here.’ Luckily, it all landed fine because of the history. But as soon as I was made aware of that, to be able to reach out to my attorney, you’re right, it was the difference between us probably getting through that quickly and smoothly and documenting it all, versus having it be something that could really affect the business or affect that clinician. [SCOTT REIB] Right, and because you had a relationship set up in advance you were able to do that. [JOE SANOK] So take us through these five proven strategies to shatter proof our business? [SCOTT REIB] The first is to get the foundation of your business setup, right, you need to have a legal entity. I prefer the LLC, you can use a corporation, I just prefer the LLC. And so, you need to have at least one legal entity for your business. Probably more than that, but at least one. And it’s not hard to set one up. If you’re a mental health practitioner, you’re smart enough to set one up yourself. It’s just that you don’t know the ins and outs of it. My suggestion would be that that’s the point where you want to have that first contact with a lawyer to make sure that your entity is set up correctly. Check if it’s the right type of entity, do you need a professional limited liability company or just an LLC? Those are questions that you would go through with the lawyer get it set up right, which leads to the second and then I’d give a couple [JOE SANOK] Let me give a couple of resources there. Over at www.practiceofthepractice.com/LLC you’ll see some extra information about filing an LLC. I do have some follow up questions, you said you prefer an LLC, why [SCOTT REIB] It’s the most flexible legal entity. The LLC is what the IRS calls a check the box entity so it can be taxed in any way that a business can be taxed; you can make that selection. [JOE SANOK] Like LLC filing as an S corp, like that sort of thing? [SCOTT REIB] Sure! Out of the box an LLC is taxed as a sole practitioner, so everything passes straight through to your 1040. If you check the next box where you elect to be an S corporation, then you have to set up a payroll tax account, pay yourself and withhold taxes and then you can distribute the rest of your profit without having to withhold the taxes. And you avoid that self-employment tax, which can be huge – it can save you between 10 to 15% of your tax bill every year. When I made that switch, it made a big difference for me. Or if there’s two people or two entities involved, you can be taxed as a partnership. And some of my CPA partners really like the partnership and they can maximize the tax savings by using the partnership. You could even be taxed as a C corporation if for some reason that made sense to you and your tax person, then you have that flexibility. There’s not any other entity that allows you to do that. And so that’s one really good reason to use the LLC.
The other is that there’s unlimited flexibility in how you set up the LLC. It’s set up with a contract, you have an operating agreement that is just a contract between the members. And so, you can set up multiple classes of membership, you can have as many members as you want, there’s no limit. And you can be as creative as you want to with how that structured. You can limit the duties to each other. It’s just a really flexible entity from that standpoint.
From a liability standpoint, the corporation can sometimes be vulnerable too, if someone had a judgment against you, they can seize your shares in the corporation. They can’t do that with the LLC, the best they can get is what’s called a charging order where they would be entitled to any distribution of profits that would come out. But as business owners, we all know that there’s ways to manipulate how much profit comes out of a business, because you can increase salaries, you can spend the money… There are just ways to make sure there’s no profit. So, you could starve out a creditor pretty easily that way. So that’s another real advantage to the LLC. And there’s a few more, but to me it just doesn’t compare to what the corporation can do. [JOE SANOK] And you said one LLC, probably more. Why probably more? [SCOTT REIB] There’s a real common problem where I’m seeing that business owners have all of their eggs in one basket. So, you have an LLC that is your operating business. It’s what I would call customer or public facing. Anything that is customer or public facing has liability associated with it. So, you don’t want to have any assets in something that’s too doing business with the public. So, you should have another entity LLC that owns your assets, and your assets really should not be grouped all together, either. So, if you own the building that your practice is in, well, that should be its own LLC being leased to your practice. If you have a website, a brand name for your practice, that should be in an LLC that is your intellectual property holding company, and those assets should be licensed to your public facing company. You don’t want anything in the company other than just the cash flow. You know, office equipment, laptop computers and things that are only good for two or three years anyway. Those can be in your operating business, but any kind of assets that you wouldn’t be able to work without then or replace easily you’d want to have in other entities. I’ve just seen too many of our clients come in where they’re in the middle of a lawsuit, they had everything in one basket, everything’s tied down. If you’re in a lawsuit and you have multiple assets, they’re tied up, you can’t refinance them, you can’t sell them, you can’t transfer them to another entity to start over. You’re really stuck. And I’ve seen clients have to pull money out of IRA’s to settle cases that they wouldn’t have had to do had they’ve been set up right and had their assets out of their operating company. [JOE SANOK] Okay, that’s super helpful. Yeah, so what’s number two? [SCOTT REIB] Number two is to assemble, assemble a team of key advisors. And there’s four that I recommend, and other people could come up with some more. But one is that you should have a Certified Public Accountant. Could you use someone who’s not a CPA? Sure, but generally speaking, you need to have someone that really understands the ins and outs of business accounting. Someone that can help you set up your QuickBooks, or Xero or whatever platform you want to use. They setup the chart of accounts, show you how to understand financial reports, show you what you should be looking at on a regular basis for your business, so that you can make sure that you’re actually making money. And then they can help you control your tax bill, because at the end of the day, it’s not how much money you make, it’s how much you take home. And that’s what they’re experts at. So, you need to have that person on your team.
The next advisor you need is a banker, not a bank, there’s a bank on every corner, you need a banker, that’s someone that you’ve got their cell number, they have your cell phone number. If you needed to write a check this afternoon, but knew that you’re not going to have the deposit until the morning, you’d want to be able to call them and say ‘I’ve got a business opportunity that if I write the check today, I can get I can take advantage of it. If I don’t, it’s going to be gone.’ And they say ‘great, I trust you, I will see in the morning with the deposit.’ The bank is not going to do that, you have to have a banker that knows you, trusts you, that you spent time developing a relationship with. And so, you’ve got to have that key person on your team.
The next thing you need is an insurance broker. Preferably an independent broker, someone that could really make sure that you have the best possible insurance product, and that they’re looking at your business and basically giving you a report that says ‘here are the different coverages that you need Mr. or Mrs. practitioner.’ And then you’re like, ‘Well, I can’t afford all this right now.’ And they say, ‘Okay, so here’s the priority, this one, this one, this one now, and then let me know when your business grows a little bit, and then we’ll add more.’ And they’re meeting with you on a regular basis, at least annually, to do reviews to make sure there’s not something else that you would need to add. Because insurances can be key to survival if we have a catastrophic legal event, then you want to make sure there’s enough insurance to cover that event. So that you don’t have to use your cash reserves to try to pay lawyer fees or if somehow you lost a case damage. So, you want to make sure you have the right coverages in place. And that’s the key.
Last would be, but not least, is that you need to have a lawyer relationship setup, like you mentioned with the lawyer you have. I prefer that it’d be on some sort of a basis where you’re not paying by the hour, so you don’t get the surprises. Whatever it is, you want to have it set up in advance so you know exactly what it’s going to cost you to make those phone calls to get the information that you need. And you’ve just got to set it up in advance.
And then these four people should all have each other’s contact information and should be communicating with each other on your behalf so that you don’t have to do that. So, if I have a question, as a lawyer, I should go to call your CPA and say, ‘Hey, we’re doing this, is this okay with what you’re doing with them?’ And they should go to call me and say, ‘Hey, there’s a legal document that I’m missing in my file, can you get that over to me?’ without ever having to discuss with you. But if you don’t have the team approach setup, then you’re having to control all that and get the information shared back and forth. So, it’s real important that you find business professionals that can work in that team collaborative approach, so that you’re able to do whatever it is you do best, whatever your life goal or dream is, and you’re working on that. And they’re supporting you in that and not dragging you down and making you do things that really are a waste of your time. [JOE SANOK] Yeah, and I think early on, when you’re starting a practice, oftentimes people are putting multiple hats on. So, they’re the website designer, they’re the bookkeeper. They’re everything… answering the phones, cleaning the office. And, you know, sometimes that makes sense and I think that your point about setting it up so that you can definitely grow and scale and don’t do things that are going to screw up your business. But pretty early on, you want to start aggressively removing those hats. You know, once you get some clients, when you really look at how much you could make by seeing one extra client versus cleaning your office or having a bookkeeper, having your accountant and your banker all work together, you want that to be seamless outside of yourself. And that’s what it looks like to become an actual CEO of your business, not just giving yourself a job. [SCOTT REIB] I recommend to all our business clients that they have an org chart that shows all the boxes of all the different types of work that are happening in their business, really put some titles in there. And then who’s doing the work. And so, at first, it’s them right there in every box. And then the game is how fast can I get out of these boxes, until eventually you’re in that top box where you’re the CEO. If that’s where you want to be. You may just be owning, at that point, you’re owning and running it and you’re not delivering any of the of the actual practice, you’re just on top, and that’s fine. And if you want to stay in a box, then stay in the box, just make sure you’re getting paid appropriately to be in that box.
Most mistake I see business owners make is that they’re not getting paid appropriately. Business owners should be making money for the job they’re performing in their business, because that’s what they would have to pay someone else to do. And then they should be making profit. And so that’s the two ways you should be getting paid. If you have a practice, and you’re not getting paid both ways, get with your accountant, figure out why you’re not. Because you’re performing valuable services for your business? What would you have to pay someone else to do that, and you should be paying yourself that? Using that formula, you should be still making money on top of what they cost to produce your services. And that should be profit. If you’re not doing both things, then you have got a job, not a business. [JOE SANOK] Yeah, awesome. So, what’s number three? [SCOTT REIB] Number three is to document everything. So, if you set up an entity, you want to make sure you’ve documented that correctly, you have your operating agreement, you have your minutes of the organizational meeting, you’re doing annual minutes. You’re documenting all the major decisions you make that way; you’re not doing handshake deals. So, if you, if you make if you lease a building, you make sure there’s a good written lease in place or an office. If you’re bringing on independent contractors to help you scale, then you’re doing written agreements with them. If you have employees, there’s written agreements, you have a written Handbook, everything that you do in your business needs to be written down. Because in business, and especially in the healthcare world, if it’s not written down, it didn’t happen. So, you have to make sure that you’re documenting everything. Now you can use email and texts to document some things. If you’re doing that, you need to make sure your art archiving it in a way that you can go back in and find it. Because with the way phones work now you drop your phone and it breaks and then you can’t access those things. So, you need to make sure you have some way of offloading those, if you’ve made an agreement with someone through text, for instance. Because that sure is a legitimate way of doing it, you need to make sure that you’re finding it. That’s a real key, don’t do any handshake deals, document everything. And if you’ll do that, that goes a long way to shatter proofing the business. [JOE SANOK] And we have some resources over at www.practiceofthepractice.com/paperwork. So, if you’re listening, we’ve got access to some paperwork, things that we use. And of course, always have your own attorney kind of look at those things just to make sure that it fits your state. [SCOTT REIB] And I find that super helpful when a client brings me a document that they’re like ‘Can I use this?’ It’s just so much easier for us to review that, tell you if you need to tweak it a little bit than to have to start from scratch. So yeah, so that’s, that’s a great resource.
And then the next strategy is related to intellectual property. Intellectual property is anything that you that you’ve created for your business, it could be the brand name, it could be blog post, it could be videos. Maybe you have an online training course, it could be a podcast…. All those things are intellectual property. And there’s ways that you need to protect it. Let’s start with what I think is probably the most important, which is the brand. So, if your brand is The Practice of the Practice, you want to make sure when you choose that name that someone else isn’t already using that name. There are some basic ways to do that. With the internet, you can do Google searches, that’s a good place to start. You can do LinkedIn searches to make sure there’s not someone else using that business, you would go to GoDaddy or one of the other providers and look at URL searches and see if anyone using the URL that has that in it. And then you’d want to have a lawyer, do a trademark search and make sure someone hasn’t already trademarked that brand. Because here’s what happens, you build a successful business on this brand and then you find out 10 years into it, that someone else already had that brand and now you have to rebrand your whole your whole business. That can be costly, just having to change all of your graphics, all of your business cards, all of your letterhead, all your advertising, that can be costly. Plus, you lose the ground that you have built over 10 years. I’ve had a client come on that had a business that had been in business for 15 years. They owned it five years. And when they came on one of the onboarding questions I asked was, ‘Do you have a trademark for your brand?’ And they said, ‘No, do we need one?’ I said, ‘Well you need one, I’ll see if you can get one.’ And we ended up getting it. But it wasn’t easy, because there were some very similar brands out there. And they were very close to having to rebrand this, they were doing at that time about three or 4 million, they were in eight states. It would have been a been a major deal.
Had someone at the very beginning, taken the steps to make sure that the brand was something that can be protected, they wouldn’t have ever had the risk of losing it. So, as you’re setting up your brand, if you’re already set it up, now’s the time, don’t wait. Figure out is this the right brand to build your business on before you invest more in it.
And then from a copyright standpoint, you want to make sure that if you’re creating, if you have content that you’re using out there, that you want to make sure that you’re protecting it. So, you can register that copyright with the United States Copyright Office, it’s a fairly simple process, it’s very inexpensive to register the copyright for a website, for a blog, for a video for an online training course, you know, it’s less than $300 to do that, for a particular thing. So, if it’s an important piece of intellectual property, you want to do that. And then I would use copyright notices on everything so that people understand that you consider that to be your copyrighted material. And so that’s a real key, especially in today’s world, where information spreads so rapidly, that you’re taking the steps to claim what is your intellectual property, because you may need it in the future.
Another place to protect your venture properties, when you’re using strategic partners like web designers, graphic designers to help you build collateral for your business, you want to make sure you’re using work for hire agreements that say the creation is yours. That you own the intellectual property and that they can’t use it in the future. And I’ve seen that mistake a few times. You can even sometimes lose your whole website, if the contract’s not right, where they own all the content, you might have paid five grand for that website, and they own the content. If you don’t keep paying them, you lose all your content. So, you have to be careful, careful to protect it. [JOE SANOK] So, for every blog post at the bottom, should you be putting Copyright 2019 Practice of the Practice, like that level of every blog post? At the end of every YouTube video, every podcast to say that or put it on the show notes? [SCOTT REIB] You should be, it is not a legal requirement that it be there. The deal is that if you ever needed to enforce a copyright infringement action, you have to actually registered the copyright. So, if you started finding that someone was like just wholesale copy and all of your blog posts, and using them as your own blog post, you could file a federal lawsuit once you’ve registered that copyright. And not only stop them, but if they’re somehow profiting from that blog post, like they’re selling advertising on their blog and using your material, that should have been your dollar. And so, you can actually get those dollars back and the attorney’s fees if you register it. If you just put the copyright notice on it, it’s telling the world that you claim that information, but until you actually register it, it doesn’t give you the protection that you really need. [JOE SANOK] All right, number five, [SCOTT REIB] Don’t use other people’s intellectual property. You and I both know that we could throw up a website in a matter of hours with the different tools that are out there now. Right? It may not be what you want, but you can put one up pretty quickly. And if you want graphics where you just do a Google search, and all these graphics show up, well, most of those things are not royalty free. They are copyrighted by someone else. And if you use those on your website, there are statutory penalties that they’ll get from you in a lawsuit. And we’ve had several clients over the last couple years get these demand letters from copyright litigation lawyers saying if you don’t pay $10,000, you know, we’re going to sue you in federal court, and asked for even more money plus attorney’s fees. And there is no defence, if you have an image on your website that is infringing because you don’t have written permission to use it, you are guilty of that. And your only option there is to try to negotiate the smallest amount you can pay and pull that off your website and fix it. And it doesn’t even matter if your webmaster did it, not you. It’s your website, you’re responsible for it. And so, we see that a lot. And so, with images, you want to be very careful.
And then if you’re creating content, make sure that you’re actually creating the content. Copying is the highest form of flattery, but plagiarism is not. You don’t want to wholesale copy people’s work and then use it as your own. And just giving them credit isn’t really enough, it’s not like you can just put a citation, you have to have permission. So, if I wanted to use one of your blogs Joe, because I thought it was really good content, I can’t just go put that in my blog, I would have to ask you for permission to post that on my site. And a lot of people are skipping that step because they think well, it’s okay that it’s already on the web. So, everyone has access to it. Well, they have access to it on your site, you want the traffic going to your site, not my site. And so that’s another place where I see a lot of entrepreneurs making mistakes is because you can just get the information so quickly and publish it in so many different ways that it can kind of get away from you, because you’re just not thinking as fast as the technology.
So be careful not to use images that are someone else’s, or to use content that is someone else’s without getting the right permissions. And it’s very easy on the image side to find, there’s several different places you can go and get royalty free images to use. And so just take that extra step or go to the sources. And by the images, if it’s important, you can get some really top-quality images for less than $50 an image. So, if it’s a really important image for a website, or for a printed collateral piece, just take the money, buy it, make sure you have the rights to use it, and then stay within the rights that you’ve purchased. And that will save you a whole lot of heartache by avoiding those demand letters that come in the mail. [JOE SANOK] Yeah, we use Unsplash, which is a great free resource for images and artists just post them there. You don’t even have to kind of give them credit for it. So, for images that’s a really good one. For music, we actually purchase through Jamendo. So, if you’re doing a YouTube video, you’ve got to pay for the music in the background. So, make sure that that’s one thing we didn’t touch on. But I know a lot of people are doing cool videos, you can’t just drop a song you have in your iTunes into that. [SCOTT REIB] And you can’t play music at your office unless you’ve got a blanket license agreement which you can get. There are service providers that will get those for you, you can go to BMI, ASCAP, but you need to have something in place that gives you permission to replay the music or videos. And I see that a lot in medical practices and health care practices where they’ve got the TV set up with Disney videos or whatever playing so that the kids that come in are entertained while the parents are taking care of their healthcare business. So, you’ve got to be careful because you’ll also get that demand letter. [JOE SANOK] Well, Scott, you are a wealth of information. The last question I always ask is if every private practice owner in the world were listening right now, what would you want them to know? [SCOTT REIB] I’d want them to know that they are in business, it’s a business. You have to realize that while your mission may be to help people with their mental health, it’s a business and you’re in business to make money. And so, you have to make sure that you’re running it in a way that you’re able to make that profit, and that you’ve not just bought a job and become a slave to it. I see too many people, professionals that take this jump and end up just a slave to this practice, because they don’t have the right mindset that they’re running a business. So just remember that, yes, it’s a practice and it’s a noble profession, but at its heart, you have to run it like a business. [JOE SANOK] Awesome. And Scott, if people want to connect with you, if they want to download your five proven strategies, what’s the best way for them to connect with you? [SCOTT REIB] The best way is to go to www.reiblaw.com/practice. And on there, there’s a way for them to get access to this podcast, access to a free strategy session with my team and to download the free e-book Five Proven Strategies. [JOE SANOK] Awesome. Well, we’ll have links to that in the show notes as well. Thanks so much for all of your expertise today, and have an awesome day. [SCOTT REIB] You too, Joe. Thank you. [JOE SANOK] Well thank you so much for listening to the podcast today. Don’t forget if you are growing your practice rapidly, if you are adding clinicians, if you are launching big ideas, if you’re unsure what to do next, we’ve got mastermind groups, we’ve got one on one consulting with me and Jeremy and Alison and Kasey. We have social media marketing with Sam. We have almost everything that you need to start, grow and scale practice. So, head on over to www.practiceofthepractice.com/apply. I’d love to talk with you and help you figure out what would be the best use of your time moving forward. We also have an infographic where you choose your own adventure, where you answer things that then kind of gets you to what we’re probably going to recommend but we’d love to just jump on a phone call with you anyway. So again, that’s www.practiceofthepractice.com/apply.
And thanks so much for letting me into your ears and into your brain Have an awesome day.
This podcast is designed to provide accurate authoritative information in regard to the subject matter covered. It’s given with the understanding that neither the hosts, the publisher or the guests are entering legal, accounting, clinical or other professional information. If you need a professional you should find one. Thanks to the band Silence Is Sexy for your intro music. We love it.