Did You Move? Understand the Various Tax Ramifications

The federal moving expenses deduction is one of the most widely recognized tax deductions. If your work required you to relocate, you may qualify to use IRS Form 3903 to claim the cost of your moving expenses as a deduction on your federal income tax return. To be entitled to claim a deduction on Form 3903, two tests must be met:

  1. Your new principal workplace must be at least 50 miles farther from your old home than your old workplace was; and
  2. You must work full-time in the general area of your new workplace for at least 39 weeks during the 12 months following the move (78 weeks during the 24 months after moving for self-employed individuals)

If you meet these tests, you can deduct the cost of moving your household goods and the travel costs associated with the move, including lodging. If you are driving as opposed to flying to your new residence, you can claim a standard mileage rate of 19 cents per mile.

New Jersey does not allow a moving expense deduction. However, if an employer includes a moving reimbursement in your taxable wages to compensate you for your costs to move your goods, and/or the travel costs associated with the move, the reimbursement is excludable from New Jersey taxation.

Selling Your Home

If you sold your principal residence in connection with your move, and the former residence was owned and used as your principal residence for at least two out of the five years preceding the sale date, up to $250,000 ($500,000 for a joint filer) of any gain is excludible from tax (federal as well as New Jersey). IRS Publication 523, Selling Your Home provides useful information on this topic. There is no longer the age threshold associated with the gain exclusion as there had been, dating back to 1997. If your former residence was sold at a loss – absent the residence having either been used for business purposes or rented in the past – the loss cannot be claimed.

Filing Resident / Nonresident State Income Tax Returns

When a taxpayer moves to a new state during the year, this often involves filing two part-year resident income tax returns. This will require income to be allocated to the two periods of residency, assuming both states impose an income tax. Many tax documents reporting income, such as W-2 forms, 1099 forms, and Schedule K-1s, will be issued for the entire year. A move to Florida, where there is no personal income tax, is an exception.

Depending on the circumstances, a move during the year may necessitate the filing of a nonresident state income tax return. For example, assume an individual lived in New Jersey and worked in New Jersey during the first half of 2016. On July 1, the individual moves to New York, but continues working in New Jersey. Here, the taxpayer would have to file three state income tax returns for 2016: a part-year New Jersey resident tax return for January-June, and both a part-year New York resident income tax return and a part-year New Jersey nonresident income tax return for July-December.

New Jersey – Pennsylvania Reciprocal Agreement

Aside from the general rule that an individual files a nonresident income tax return when employed in a state other than their resident state, the New Jersey – Pennsylvania reciprocal agreement stipulates that neither state will tax the wage income of nonresident employees. Under this agreement, which has been in place for 40 years, any New Jersey resident working in Pennsylvania has New Jersey taxes withheld from their wages, and they are not required to file a Pennsylvania nonresident income tax return. In September 2016, Governor Christie announced his decision to repeal this agreement, but reversed gears and reinstated the agreement two months later. So, this remains unchanged from past years.

Finally, changing your state of residence can have other tax ramifications such as estate and inheritance taxes. And don’t forget – ­state residents are often entitled to in-state college tuition discounts at state universities.

 

Is Recording A Conversation Legal?

Technology makes it easy—sometimes too easy—to record conversations. Between free voice recording apps or phones that record conversations with the touch of a button, recording conversations has never been easier. In fact, several of my recent cases involved clients that recorded conversations with individuals that later became their adversaries in a subsequent litigation. Those recordings were required to be produced to the adversaries to the extent they were responsive to the adversary’s discovery requests and/or relevant to the litigation. If you intend to record a conversation, however, you should consider whether doing so is legal. This is important because eleven states prohibit recording a conversation unless all parties to the conversation consent and violators can face civil damages and/or criminal penalties. This article will explain the differences between “one” and “two party consent” states and various states’ laws regarding recording conversations.

I. One Party Consent vs. Two Party Consent In General

In the context of recording conversations, the states in our country are divided as either “one party consent” states or “two party consent” states. A “one party consent” state a makes it a crime to record or eavesdrop on an in-person or telephone conversation unless one party to the conversation consents. A “two party consent” state makes it a crime to record or eavesdrop on a conversation, including a private in-person communication or telephone call, without the consent of all parties to the conversation. Most states, like New Jersey, New York and Texas are “one party consent” states. Eleven states, including California, Massachusetts, Florida and Pennsylvania are “two party consent” states. Certain states also have state-specific nuances in their laws that are important to understand before recording conversations. This article discusses the relevant laws of New Jersey, New York, Texas, California, Florida, Pennsylvania and Massachusetts in more detail.

A. New Jersey and New York

New Jersey and New York are “one-party consent” jurisdictions. In particular, New Jersey and New York law make it a crime to record an in-person or telephone conversation unless at least one party to the conversation consents. Thus, in these jurisdictions, you may record a conversation or phone call if you are a party to the conversation or you get permission from one party to the conversation in advance. Violating these laws could subject you to criminal prosecution and civil claims and damages for violating the law relating to recording conversations.

B. Texas

Texas is also a “one-party consent” state. In particular, it is a crime in Texas to intercept or record any “wire, oral, or electronic communication” unless one party to the conversation consents. Texas law, however, does not cover oral communications when the speakers should not have an expectation that their communication is private. Therefore, you may be able to record in-person conversations in Texas without consent if those conversations occur in public places, such as on the street or at a restaurant.

C. California

California law is a “two-party consent” law. Thus, in California, it is a crime to record or eavesdrop on a confidential communication, including a private conversation or telephone call, without the consent of all parties to the conversation. But California law protects only “confidential communications,” which California defines as conversations in which one party has an objectively reasonable expectation that no one is eavesdropping. California also protects confidential conversations occurring in public places as long as it is reasonable under the circumstances for a party to expect the conversation is private. Therefore, in California, you cannot assume that you may record a conversation if you are in public. Similar to the “one-party consent” states, in California, if you violate this law, you can be subject to criminal prosecution and a civil lawsuit for damages.

D. Florida and Pennsylvania

Florida and Pennsylvania are also “two-party consent” states and, therefore, it a crime in these states to record a “wire, oral, or electronic communication,” unless all parties to the communication consent. There is an exception in Florida and Pennsylvania for in-person communications when the parties do not have a reasonable expectation of privacy in the conversation, such as when they are in a public place. Therefore, these conversations may be able to be recorded without violating these states’ laws.

E. Massachusetts

Massachusetts is considered a “two-party consent” state. In particular, in Massachusetts, it is a crime to secretly record any conversation in which sound is being captured. Thus, if you intend to record a conversation in Massachusetts, you must make sure to advise everyone in the conversation that you intend to record it. In Massachusetts, if a participant in a conversation is aware that you are recording and does not want to be recorded, it is up to that person to leave the conversation.

II. Choice of Law

Because each state has different laws on this issue, the next logical question is how to determine which law applies to your case. Unfortunately, it is not always clear which law will apply to a communication, especially if the communication is over the phone. For example, if you are recording a conversation with someone in a different state, it is difficult to say in advance which state’s law applies. If all participants to a conversation are in the same state, however, then it is more likely that the law of that state will govern.

III. Conclusion

Many times, people record conversations in situations in which they are in a disagreement with another person. The relevant laws across the country, however, are not uniform. Therefore, it is important that you understand the laws of your state before using the freely available technology to record conversations. Otherwise, you may subject yourself to criminal prosecution and a civil suit by an injured party. Indeed, no one wants to have a discovery issue in a litigation that leads to an admission of a possible criminal act. If you have any questions about the laws in the states in which you live or work, you should speak to your trusted counsel.

ABC’s OF H-1Bs

 

Based on the current predictions, given the new Republican Administration, the U.S. economy will rebound. What does this mean for the immigration practitioners, professionals, and prospective H-1B employers and employees? Assuming that the economy performs as projected, it is highly likely that we will once again, as we did in 2016, witness the H-1B lottery (technically referred to as “Random Selection Process”) during April 2017. To better prepare for the H-1B cap, this article endeavors to summarize a few practice pointers which every prospective H-1B employer and employee needs to know.

Limited Numbers: Not 65,000; There Are Only 58,200 Regular H-1B Visas.

The current annual cap on the H-1B category is 65,000. However, all H-1B nonimmigrant visas are not subject to this annual cap. Up to 6,800 visas are set aside from the cap of 65,000 during each fiscal year for the H-1B1 program designed specifically for the Nationals of Chile and Singapore. Unused numbers in the H-1B1 pool are made available for H-1B use for the next fiscal year. Thus, in effect, only 58,200 H-1B visas are granted each year with the exception of the 20,000 additional H-1B visas which are reserved for individuals who have received master’s or higher degrees from a U.S. college or university. In an upcoming article, we will discuss, in detail, whether or not every master’s degree from a U.S. academic institution qualifies an individual for the H-1B master’s cap.

Because of the limited number of H-1B visas, employers should identify individuals who would need H-1B sponsorship. This will allow sufficient time for petition preparation, including the time required to file and receive certification of the Labor Condition Application (LCA), Form ETA 9035. Thus, formulating a strategy for an H-1B Petition is a key to hiring an H-1B employee for the next United States and Citizenship Services (USCIS) fiscal year which begins on October 1st, 2017.

How Long Will USCIS Accept H-1B Petitions?

It is preferable, not mandatory, to submit H-1B Petitions on April 1st, 2017. The answer to the question “how long USCIS will accept H-1B Petitions?” depends upon how many H-1B Petitions USCIS will receive during the first five (5) business beginning on, April 1st, 2017. If USCIS receives a sufficient number of H-1B petitions during the first five (5) business days, an announcement will follow from USCIS about the Random Selection (“H-1B Lottery”) process. If, however, USCIS does not receive a sufficient number of H-1B petitions to reach the statutory cap for fiscal year (FY) 2017-2018, during the first five (5) business days, it will keep accepting H-1B Petitions until it announces a “final receipt date” for new H-1B petitions. It is beyond the scope of this article to discuss how USCIS conducts the Random Selection (“H-1B Lottery”) process. We will address this topic, in detail, in a separate article.

Refrain From Filing Multiple H-1B Petitions For the Same Employee.

An employer may not file more than one H-1B petition for each prospective employee during the fiscal year. A prospective employee who qualifies for the “Master’s Cap” of 20,000 cannot file two (2) petitions to encompass the regular H-1B and the Master’s H-1B. This limitation also precludes an employer from filing multiple petitions for different jobs for the same employee but does not preclude related employers (e.g., parent and subsidiary companies or affiliates) from filing petitions for the same beneficiary. However, the employer must demonstrate a legitimate business need to do so and if it fails to meet that burden, all petitions on behalf of the beneficiary will be denied or revoked.

Both the Proffered Position And the Prospective H-1B Employee Should Qualify.

Not only the prospective employee but both the proffered position as well as the prospective employee should qualify for the H-1B visa. For a proffered position to qualify for an H-1B visa, it must be a job in a “specialty occupation”. “Specialty occupation” is an occupation that requires: (1) a theoretical and practical application of a body of highly specialized knowledge; and (2) attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.

The H-1B regulations further require that a position also meet one of the following criteria, in order to qualify as a specialty occupation: (1) A baccalaureate or higher degree or its equivalent is normally the minimum requirement for entry into the particular position and/or; (2) The degree requirement is common to the industry in parallel positions among similar organizations, or, in the alternative, an employer may show that its particular position is so complex or unique that it can be performed only by an individual with a degree and/or; (3) The employer normally requires a degree or its equivalent for the position; and/or (4) The nature of the specific duties are so specialized and complex that knowledge required to perform the duties is usually associated with the attainment of a baccalaureate or higher degree.

Therefore, in order to qualify as a “specialty occupation,” a proffered position must: (1) require a theoretical and practical application of a body of highly-specialized knowledge; (2) require a bachelor’s degree or higher in the specific specialty (or its equivalent) as a minimum for entry into the occupation; and (3) meet one of the four alternative criteria listed above.

For a prospective employee to qualify for the proffered H-1B position, regulations specify that he/she should have either one of the following: (1) Full state licensure to practice in the occupation (if required); (2) Completion of the degree required for the occupation; or (3) Progressively responsible work experience in the specialty equivalent to the completion of such degree. Thus, a general degree absent specialized experience may be insufficient because there must be a showing of a degree in a specialized field.

The Filing Fee Depends Upon the Type And Size of H-1B Employer.

Aside from the H-1B legal fee, the employer will need to pay the USCIS filing fees. Note that there is no flat fee that every employer is required to pay. The amount of the H-1B filing fee depends on the size and type of employer. All employers are required to pay the base filing fee for the H-1B petition. Additionally, pursuant to the American Competitiveness and Workforce Improvement Act (ACWIA), employers are required to pay an additional fee (commonly referred as ACWIA fee) of $750 or $1500 unless exempt under Part B of the H-1B Data Collection and Filing Fee Exemption Supplement.
A sponsoring employer is required to pay a fee of $750.00 if it employs 25 or fewer full-time equivalent employees. In all other cases, the employers need to pay $1500.00. Employers such as institutions of higher education; nonprofit organizations or entities related to, or affiliated with an institution of higher education; nonprofit research organization or governmental research organization, etc. are exempt from paying the ACWIA fee. Additionally, employers seeking initial approval of an H-1B must pay a $500 Fraud Prevention and Detection fee as mandated by the H-1B Visa Reform Act of 2004.

Additionally, as a result of the FY2017 Omnibus Appropriations Bill passed on December 18th, 2015, the supplemental fee for H-1B petitions are increasing for companies that employ 50 or more employees in the United States and have more than 50 percent of their U.S. workforce in H-1B, L-1A, or L-1B nonimmigrant status. Specifically, the previously expired fees H-1B petitions will increase from $2,000 to $4,000. These supplemental fees must be paid on initial and extension petitions. Further, either the employer or employee can pay an optional premium processing fee of $1,225.00 to expedite the adjudication of a petition.

Be Aware of Salary and Benching Costs.

A prospective employer must obtain an approved Labor Condition Application (LCA) from the U.S. Department of Labor (DOL). The employer attests on the LCA that the H-1B nonimmigrant worker will be paid wages which are at least the higher of the actual wage paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question OR the prevailing wage level for the occupational classification in the area of intended employment. Thus, not to undercut wages paid to the comparable U.S. workers, Congress has included a safeguard in the H-1B program. Additionally, and in some cases the employers are required to pay the costs for the petition process. The wage offered to the prospective H-1B nonimmigrant may drive whether or not the employer is or is not required to pay for the H-1B visa process.

Regulations require that employers must begin paying LCA-stated wages when the employee “makes him/herself available for work” but not later than 30 days after employee’s entry into the United States (if the prospective H-1B employee is outside the U.S.) or 60 days from the date that USCIS grants a Change of Status (if the prospective H-1B nonimmigrant is inside the U.S.). Liability begins to accrue when the person “enters into employment” with the employer. Thus, even if the worker has not yet “entered into employment,” when the H-1B worker is present in the U.S. on the date of the approval of the H-1B petition, the employer is required technically to pay to the worker the required wage beginning 60 days after the date the H-1B worker becomes eligible to work for the sponsoring employer. The H-1B worker becomes “eligible to work” for the employer on the date set forth in the approved H-1B petition filed by the employer.

An employer must continue to pay an H-1B employee who is not working due to a nonproductive status at the direction of the employer (e.g., this is referred to as “benching” because of lack of work, lack of a permit or license). This regulation applies even if the H-1B employee is receiving training (either provided by the employer or through some other external arrangement at the direction of the employer). Thus, the employer is liable for both nonproductive time as well as productive time once employee becomes eligible for work. Employers who do not pay non-terminated H-1B employees may face civil penalties. Employers are generally advised to pay an H- 1B employee his or her salary as listed on the LCA until that employee has been terminated and the USCIS has been notified of the request to withdraw the H-1B Petition. Furthermore, if the H-1B employee is terminated prior to the end of the period of admission, the employer should withdraw the H-1B and may be liable for “the reasonable costs of return transportation” to return the foreign national home.

Compliance Issues: Posting Notice of the LCA & Maintaining Public Access Files.

Notice of the LCA must be posted, or where there is a union it must be given to the union, before filing the LCA. The notice may be the LCA itself or a document of sufficient size and visibility that indicates: (1) that H-1Bs are sought; (2) the number of H-1Bs; (3) the occupational classification; (4) the wages offered; (5) the period of employment; (6) the location(s) at which the H-1Bs will be employed; and (7) that the LCA is available for public inspection. The notice should state where complaints may be filed. Notice must be posted “in a least two (2) conspicuous locations at each place of employment where any H-1B nonimmigrant will be employed” and the notice shall be posted on or within 30 days before the date the LCA is filed with the U.S. DOL and shall remain posted for a total of 10 days.

Notice may be posted in areas where wage and hour and OSHA notices are posted. An employer may also provide electronic notice to employees in the “occupational classification” for which H-1Bs are sought, through any means it normally uses to communicate with employees including a home page, electronic bulletin board or e-mail. If accomplished through e-mail it needs only to be sent once; other electronic forms (e.g., home page) should be “posted” for 10 days. Notices must be posted at each worksite including ones not originally contemplated at the time of filing but which are within the area of intended employment (same MSA- Mean Statistical Area) listed on the LCA.
Additionally, an employer must maintain a group of documents referred to as a Public Access File (PAF). The PAF must be accessible to interested and aggrieved parties. The PAF must be available at either the employer’s principal place of business or at the worksite. An interested party is one that has “notified the DOL of his or her/its interest or concern in the administrator’s determination.”

The PAF must be available within one day after the LCA is filed with all supporting documentation including: a copy of the completed LCA; documentation which provides the wage rate to be paid; a full, clear explanation of the system used to set the “actual wage”; a copy of the documentation used to establish the prevailing wage; copy of the notice given to the union/employees; and a summary of the benefits offered to U.S. workers in the same occupational classification, and if there are differences, a statement as to how differentiation in benefits is made (without divulging proprietary information).

Demonstrate Sufficient Level of “Control” Over Prospective H-1B Employee(s).

In order for the H-1B petition to be approved by USCIS, a petitioning employer must establish that an employer-employee relationship exists and will continue to exist throughout the duration of the requested H-1B validity period. Hiring a person to work in the United States requires more than merely paying the wage or placing that person on the payroll of the H-1B petitioning organization. In considering whether or not there is a valid “employer-employee relationship” for the purposes of H-1B petition adjudication, USCIS must determine if the employer exercises a sufficient level of “control” over the H-1B employee.

Thus, the prospective H-1B petitioner organization must be able to establish that it has the “right to control” when, where, and how the prospective H-1B nonimmigrant beneficiary will perform the professional and specialty occupation job. USCIS considers various factors in making such a determination (with no one particular factor being decisive).

For more information about the H-1B nonimmigrant work visa process or to consider H-1B nonimmigrant work visa options, the immigration and nationality lawyers and attorneys at the Nachman Phulwani Zimovcak (NPZ) Law Group, P.C. invite you to visit them on the web at www.visaserve.com or to email them at info@visaserve.com or to call the firm at 201.670.0006 (x107).

Michael Phulwani, Esq. and Ludka Zimovcak, Esq. (below)

President’s View: Honoring New Jersey Companies that Care

CO-PRESENTED by the Commerce and Industry Association of New Jersey (CIANJ) and COMMERCE, the Fourth Annual Chairman’s Reception Honoring “Companies that Care,” was held at Nanina’s in the Park in Belleville, New Jersey, on March 15, 2017—just one day after a significant snowstorm closed schools and businesses throughout the state. More than 260 business leaders attended from all across the Garden State.

Top honors were earned by Hackensack Meridian Health and its affiliate, Southern Ocean Medical Center, chosen as the 2017 “Extraordinary Good Works” recipient for helping Joseph Aulert, a hospice patient who had just weeks to live, share his photography with an exhibit for the public— a dream he had shared with his caregivers.

The art exhibit opened at Southern Ocean Medical Center on Nov. 11, 2016—a very fitting day since it was Veteran’s Day and Joe was a U.S. Army veteran, and it was also his birthday. Joe was too sick to attend even though his room was just a few floors above the exhibit, but his nurses brought the show to him via video—enabling Joe to see people admiring his work and even buying some of it. A few hours later he passed away, knowing his wish was realized.

In addition, 39 other companies were honored as “Champions of Good Works,” recognized for charitable and philanthropic programs that care for veterans; help children; feed the hungry; shelter the homeless; volunteer to help the needy; raise money for charities; protect the environment; and support employees and their families during emergencies.

This year’s “Champions of Good Works,” all featured in the March 2017 issue of COMMERCE, include the following: AECOM; Atlantic Stewardship Bank; Bayshore Family of Companies; BDO USA, LLC; Bergen Community College; Berkeley College; Columbia Bank; Connell Foley, LLP; Day Pitney, LLP; Deloitte; Delta Dental; Englewood Hospital and Medical Center and cancer specialist Dr. Frank Forte; Felician University; Georgian Court University; Holy Name Medical Center; I.C.E. Service Group Inc.; InGroup Inc.; Inserra Supermarkets; Kean University; Konica Minolta Business Solutions USA, Inc.; Lakeland Bank; LG Electronics USA; Marsh & McLennan Agency; Mazars U.S.A. Inc.; Norris McLaughlin & Marcus, P.A.; NPZ Law Group, P.C.; PeapackGladstone Bank; PFK O’Connor Davies, LLP; Plast-O-Matic Valves, Inc.; PwC; Ramapo College of New Jersey; Ramboll Environ, Inc.; RWJBarnabas Health; Saint Peter’s Healthcare System; Stryker; T&M Associates; The Valley Hospital; United Airlines; and Wellness Interactive, Inc. Thank you to the major sponsors: Platinum Sponsor—Inserra Supermarkets, Inc.; Gold Sponsor—Lakeland Bank; Silver Sponsors—Bayshore Family of Companies; Hackensack Meridian Health; JCP&L; RWJBarnabas Health; Bronze Sponsors—Connell Foley, LLP; PSE&G; PwC; Stryker; Chairman’s Circle Sponsors—Atlantic Stewardship Bank; Capital One; Bergen Community College; Goya Foods; LG Electronics USA; Mazars USA LLP; TD Bank; United Airlines; Valley National Bank.

And thank you to the Supporting Sponsors—BDO USA, LLP; Berkeley College; Caryl Communications Inc.; Columbia Bank; Delta Dental; Dorfman Abrams Music, LLC; Greenbaum, Rowe, Smith & Davis LLP; Holy Name Medical Center; ICA Risk Management Consultants; InGroup Inc.; Konica Minolta Business Solutions U.S.A., Inc.; Marsh & McLennan Agency; Norris McLaughlin & Marcus, P.A.; Phoenix Marketing Solutions; PKF O’Connor Davies, LLP; Plast-O-Matic Valves, Inc.; Provident Bank; Ramapo College of New Jersey; Ramboll Environ, Inc.; Saint Peter’s Healthcare System; Smolin, Lupin & Co., P.A.; SUEZ; T&M Associates; The Valley Hospital; Wellness Interactive, Inc.; Whitestone Associates, Inc.; WithumSmith+Brown, PC.

Honoring corporate philanthropy is not only the right thing to do, it allows many of our state’s most generous companies to learn from each other and expand their giving programs. CIANJ is so proud to count so many of these businesses as members, and New Jersey is lucky to have corporate cultures that embrace giving and community service. In this competition, there are only winners—especially those in need in the Garden State.

Shark Tank Investor/Entrepreneur Daymond John Means Business

A Cover Story/Special Section Introduction
By CIANJ Chairman Andrew Silverstein, CPA, Partner, Dorfman Abrams Music, LLC

COMMERCE’s Annual Accounting Issue, which will be bonus-distributed at the NJCPA Convention in June, showcases how accounting firms, banks, colleges and universities, and law firms support entrepreneurs and help their businesses to thrive and grow in New Jersey. Getting sage advice from the beginning is a competitive advantage for each company as it goes from business plan to market to expansion mode. This section illustrates just how important good financial planning is to the future of any business. All of these lessons are tied together in this month’s Cover Story, which includes an exclusive interview with Shark Tank’s Daymond John, who turned his flea market clothing operation into a billion-dollar empire and a $250 million net worth. As a mentor, John is teaching the next generation of entrepreneurs how to pursue the American dream, and the ins and outs of free enterprise. * * *

Daymond John—founder and CEO of FUBU, the popular American clothing and hip hop apparel company—is a star investor and entrepreneur on ABC-TV’s Shark Tank who grew up poor. After his mother taught him how to sew, he started selling wool caps for $10. He then took a small operation based in his mom’s house and transformed it into a business with more than $350 million in revenue within just six years. FUBU has earned more than $6 billion in global sales to date.

In 2015, John was named a Presidential Ambassador for Global Entrepreneurship and was part of an exclusive group who joined former President Barack Obama at the Global Entrepreneur Summit in Kenya. Recently, he launched blueprint + co, a creative co-working space with a mission to educate and empower communities of like-minded executives and entrepreneurs.

In this exclusive interview with COMMERCE, Daymond John discusses making money, empowering entrepreneurs and the secrets to his success.

The Secrets to Business Success. “Knowing that I am not the smartest person in the room and surrounding myself with other smart people. It’s also about knowing that when I throw money at something, I need to roll up my sleeves and learn it myself. Success is about realizing that change is going to come, and not getting too comfortable. And of course, doing something that I am passionate about and love, not just for money.”

Maximizing and Monetizing Ideas. “You need to learn who your customer really is. Do not assume somebody is going to do it for you, do not put things out there without testing them first, and always listen to your customers. More than 90 percent of the successful products that come out of large companies were developed and came out of customer feedback. There’s always a better way, and you have to listen to those people who are telling you what the better way is.”

Investing in Entrepreneurs. “I look for entrepreneurs who have failed and still have the passion, drive, knowledge and resolve to get back up. I look for entrepreneurs who are passionate about what they are doing, but also know that they cannot do it by themselves. I like to invest in people who surround themselves with like-minded people and make sure they get the education they need to be successful. I also look for entrepreneurs who have the same moral standards that I have.”

Red Flags When Evaluating Entrepreneurs. “Entrepreneurs who do not do their homework and talk fictitiously scare me away from deals. There are some entrepreneurs out there who think that a lightning bolt is going to cure everything—meaning they think that if you throw a million dollars at their problems, it’s going to make everything better. I also do not like to work with entrepreneurs who are shortsighted and take themselves too seriously.” A Favorite Deal from Shark Tank. “One great investment for me was with Al ‘Bubba’ Baker and his baby back ribs. He was a superstar football player, and then he goes and starts creating these boneless ribs. He got the first patent on food I have ever seen. The deal was almost dead 10 times because I did not think I could add value to him, but he proved me wrong. We ended up with a great partnership.”

Read business professionals talk about the importance of entrepreneurship here.