Lender – Partner – Investor: Breaking Down the Differences | Mark J Kohler

Lender – Partner – Investor: Breaking Down the Differences | Mark J Kohler


Hi mark Kohler here with a tax and legal tip That is so important that it could save you a lot of money and potentially getting in a huge lawsuit with a potential partner investor or lender that’s right this is all about how to Classify the person you’re going to be working with or persons that are providing money to you and your small business or real estate Project so listen up. This is a big deal now. This is also a big topic I’ve got a good half hour or longer video in my video library And this is a whole chapter in my book the tax and legal playbook at the end of this video I’ll give you a couple of references on where to study up more on this But I want to just give you again a cursory knowledge of the issue here And here’s the biggest takeaway don’t call anybody an investor when you go on say oh I’m looking for an investor that That sends out a code word that could get you in a lot of trouble with the Securities and Exchange Commission SEC and that could be a federal issue or even a state issue because if you call someone an investor and lose their money That’s right You can be going to jail so make sure that you don’t use the word investor until It’s appropriate now as you can see with the title of this video there are three classifications. There is the lender there is the partner and There is the investor now each one of these people are different you cannot have someone That is in several categories They have to be in one category so for example if you’re gonna borrow money from someone and say hey I’ve got this real estate deal I’m gonna borrow it 8% and give you a couple points and you’re gonna sign a promissory note with them Then they are a lender you cannot say oh, and I’ll give you 20% of the profit on the back end Okay, that doesn’t work now. They’re a partner because they’re gonna in a piece on the back End and they’re just suck they just got sucked into any potential lawsuit because they’re now a general partner with you, and you go We’ll mark there’s these participating notes where they’re gonna be a lender and get a piece of profit. Yeah, it’s When you have a general partnership scenario and someone got ripped off Anybody that gets a piece of the action? Becomes a partner so if they’re a lender they’re a lender they get a promissory note. They get a trust deed whatever some security That’s great Lenders are cheap We want lenders because you just give them interest in a couple points But if you want someone to put money in your project we’re talking partner now I like the partner auction because it’s the safest option for securities issues, and you’re not gonna call them an investor You’re gonna say do you want to partner with me? And it could be in a business or a real estate project and they’re gonna get a percentage of the deal And they’re gonna put money or services in the in the project or deal right they’re gonna put in money or service and you’re gonna Document this bare minimum with a joint venture agreement or some sort of partnership agreement. That’s bare minimum I’d like to see an LLC structure with even S corporations in the mix or at least just a basic LLC with an operating agreement guys You don’t want to be knocking this out on your own on some google site where you just get a template These are major important legal issues, and if you’re gonna be partnering with someone for thousands of dollars You don’t want to play lawyer in this situation and I get it, too You don’t want to spend thousands of thousands of dollars with this But get a document have a lawyer review it and warn you as to some of these issues? It’s something that we do all the time in our law firm very affordably for clients, but that’s the partner option They get a voting right they’re not in the dark, and if you call them a silent partner That’s an investor and there you go investor silent partner equals investor They’re gonna put in money And then they don’t get to vote they are gonna sit back and you’re gonna do whatever the heck you want with the project right? That’s what you want. You just want someone Hey, come in best with me, and I’m gonna go out and make money and give you some profit But I’ll call you when it’s all over Then you lose their money And there was not the proper disclosures or disclaimers or SEC or state or federal? documentation when you took someone’s money and made promises and they didn’t get kept up to date And they didn’t get to vote oh my gosh. This is where the investor issue arises now I love investors And I want you to put together your own little fun 500 grand or a million dollars and start your business Or do real estate, but you have to set up What’s typically called a ppm or a reg d offering and go through the rules of how you? Take money from people crowd funding falls into this – you’ve got a bunch of investors. We’re gonna put in a few thousand dollars Those are investors bottom line you’ve got to know this you’ve got to know the difference between lenders partners and investors and use the right terminology It’s gonna keep you out of hot water this goes from a promissory note to an LLC to a ppm a private placement memorandum Our law firm does all three and everywhere in between Just get a lawyer involved to help do it right you’re taking thousands of dollars from someone And when you do it right you earn their trust And you know what Mike experienced project managers, or deal makers or business owners? It’s easier to find money than to find deals because when you do it right people trust you So learn about this you’re gonna Love it and you can get more information about this on my website with some information to follow and from my book at the tax With legal playbook learn it and be careful Thanks so much for watching it, and if you found that helpful. Please look in the description below I’ve got links to my tax and legal library my QuickBooks training videos how to start a small business 50 60 70 videos some as long as 30 minutes explaining more information on tax and legal strategies that will change your life Also, if you’d like to subscribe to my newsletter or check out my social media links Please click here their weekly free tips and strategies and articles that you’ll find extremely helpful And I would appreciate it if you’d subscribe to my channel. I’ve got so many videos here I produce every week on my youtube channel, and I’d love to give you a ping every time I shoot a new video Thanks so much and keep living the American dream

3 thoughts on “Lender – Partner – Investor: Breaking Down the Differences | Mark J Kohler

  1. So this is in partnership. What about in S & C corps? I lend my c corp buisness money with a Prom Note. After watching your videos I worry I should be an S

  2. Hi, I need investment in my business and my close friend is interested in this. But he wants 40% partnership, He is saying, he will not interfere in my work.
    Terms are:
    1. My salary will seprate from profit.
    2. From rest of profit, 20% for company growth
    3. Balace amount we will divide in to 40/60 shares

    This is my first Business.

    Please guide me in this..

  3. Thank You ,,, googled everything possible to find funding for big projects to create passive income. ,,, Had stumbled across a realization of a business model that needs serious money from 3 to 12 million dollars that generates between 2 and 5 million net… Yes , it is possible by eliminating the overhead including the payroll .
    Will watch any other programs you made / make as to continue educating myself.

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