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Today’s interview is with Demetrius Robinson, attorney, about tax-, business-, and family law as well as work-
life balance. In line with that he defines himself as father-husband-attorney-soldier and admits there can be challenges in maintaining a balance. The conversation is far-ranging providing both broad contextual considerations as well as specific advice when it comes to taxes and business law, especially for startups and companies that are expanding. This is reflected in his background.
Demetrius has a Masters of Law in Tax. While he does family law, his area of specialty is tax law in business, all of which can help with family-owned businesses.
Before law school he worked for JP Morgan Chase in the their Treasury Division when Congress was developing the Dodd-Frank Act to stop another Great Recession. His job was to determine the impact the law would have on operations of large corporations and government agencies Chase represented.
He also worked on projects helping low income individuals with their unemployment, making sure their interactions with financial institutions didn’t adversely effect them. This ultimately led to him leaving Chase and going to law school, working to help “both sides of the coin.”
The conversation turns to risk management and the need to calculate downsides in addition to upsides when making decisions and the purpose or regulations.
The conversation switched to legal and tax issues the entrepreneur can encounter. While the driving force behind the company may be the same there are differences encountered based on the size of the organization, from solopreneur to CEO of a multimillion dollar company.
Demetrius’s advice to solo- and entrepreneurs is, “You can’t do everything by yourself.” Being pulled away from what you do well to take care of other tasks in your company ends up hurting your firm. At the beginning, when starting up, it is especially valuable to get an hour or so of an experts time to help sort things out.
Demetrius provides fractional services where he works as you in-house counsel on a retainer basis. If you have a problem, just call.
Additional advice to solo- and entrepreneurs includes:
- create processes in the beginning. This allows for smoother transitions when having to make changes.
- don’t be afraid to step out of your comfort zone
- try new things
- don’t be afraid to fail when trying those new things
- don’t be afraid to go in different directions. It’s not necessarily the first product introduced that is the successful one. Also, new products may come to mind that are worth pursuing.
The listener is referred to our sister podcast, Thrive and Connect, and check the category “fear” to get more information on addressing some of the difficulties associated with these suggestions.
The fear can be a great motivator as well as a tool for avoiding hubris or foolhardy behavior. When balanced out with a sense of opportunity you stay on your toes and avoid missing opportunity.
The next phase of the conversation moves to what to do when you DO become established and are experiencing success.
Remember that the model that was used to startup and got you where you are today may not be the model that will get you to the next level. Transitioning from 10 employees to 100 will obviously require a change in the model that is used.
It is important to escrow money from the successful periods to help manage the change that will inevitably be needed as you grow. Reorganizing and restructuring will have associated sunk cost.
Demetrius draws on his understanding of how the military organizes, reorganizes, delegates and gets work done as the technology, goals, and makeup of the armed forces changes. The point is, it is important to delegate power to those closest to the decision and you hold the strategic position that coordinates these efforts.
A rule for determining how to delegate is to look at the revenue/hr a position can influence. For example, if making $100,000 in revenue and 2000 hrs in a work year, as an owner all decisions made should be worth $50/hr. If the value is less than that hourly rate then the job is better delegated so someone lower in the hierarchy. On top of this there is the skill level required which may not be one of your strong points.
The question is, “Which is more important, your time or your money?” In terms of amplifying value, it’s your time.
Connection versus compliance are also discussed. Value goes up with connection vs a “check-the-box” attitude associated with compliance. Compliance IS important, e.g., paying taxes properly but value is added with connection.
The conversation shifted to addressing tax implications for a given financial decision such as whether or not to purchase or lease a forklift or a piece of computer hardware. But determining whether or not that item is best for your business requires expertise other than Demetrius’s. He avoids situations where the client is paying him to educate himself. It is better to bring in someone well versed in that area and work as a team.
Keep in mind when using fractional consultants and vendors whether or not they are team players and will work with the other consultants/vendors. Ask them, “What other disciplines have they worked with and how did it go?” If the individual says, “I can do it all.”….RUN!! Avoid paying to educate your consultants. Good consultants know their limits and understand the benefit of being a team player.
The conversation switched to tax considerations startup companies should think about. The tax code is designed to encourage people to start up companies and take risks and create economic growth. Demetrius lists the types of costs that can be deducted (these amounts can change with time, circumstances, and changes in the tax codes), For example:
- $5,000 – startup costs
- $5,000 – organizational costs
- If a research-based company payroll taxes can be written off as a business deduction
Using contract employees vs hiring employees is discussed. (See podcast 0002, “Are you a solopreneur or an employee?,” for more information.) There are certain tax implications that can be quite serious, e.g., failing to withhold payroll taxes if the individual is classified as an employee by the IRS.
The conversation turned to community activities. The Legal Aid Society of Columbus was then talked about with regards to their providing support to low income families. Demetrius provides tax legal support to the group. It’s a way for him to give back to community.
Getting back to business, Demetrius helps startups and small businesses by providing services with regards to:
- entity selection
- understanding contracts they’ll be involved in
- legal and tax implications associated with employees
- executive compensation plans
- stock options for employees
- exit strategies and associated tax implications
- general tax advice
Next, Demetrius talks about the ideal relationship with a client. In screening for an attorney items to consider are:
- openness in that the client feels sufficiently comfortable that they can keep the attorney informed with regards to key information, some of which may be personal but which is protected by attorney-client privilege
- what experience does the attorney have in your areas of concern
- is the attorney adaptable in being able to apply expertise learned in other areas to your situation
- understand the scope and cost of the work you are asking them to do
- spell all of the above out as clearly as possible in your agreement with them
- use flat-fee arrangements if costs are difficult to determine on an hourly basis
The conversation then turns to considerations with regards to entity selection, e.g., LLC, sole proprietor, partnership, etc. Having a clear sense of where you want the business to go in the future is important to save a lot of headaches in the future.
The interview closes out with Demetrius describing his ideal client. It’s someone who has a glimmer in their eye, who can see their success and needs someone to help them achieve it.
For more information you can contact Demetrius at:
(o) 614 706 4317
drobinson@robinsonlimited.org
For more information on the “8 Steps From Chaos To Clarity and Calm: CEO Advanced Training” go to
https://www.ctrchg.com/ceo-advanced-training/
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