9 Mistakes to Avoid With an LLC

everybody wants to have like the silver bullet i'm going to go to vegas mastermind group and buy a 10 000 asset protection plan and oh it's shiny it's glossy you know really what is it worth but people like guarantee on the box there's an on the box it says asset protection on the box i know it does and and it feels good but then someone's gonna break in there at night and take your box and you're gonna be like what do you got you got nothing you know so this is this is actually going to save so many of you money you're going to love this because i bet you matt 90 plus percent of our listeners have an llc would you take that bet yeah [Music] welcome everyone to the main street business podcast with matt sorenson and mark kohler we're just delighted to be with you today excited for today's episode yeah can i just say this is going to be everybody's most fun on a podcast this week and the most educational and the trifecta you're talking tax and legal build and wealth is that weird we're going to accomplish this if you only listen to one podcast this week we would have nailed that yeah because we have no competition this was the best the most fun i mean i only listen to one podcast so we'll see how it goes so welcome yeah we've got a good topic yeah we want to talk about mistakes and how to avoid them really yes maybe how to fix them if you stepped in them on setting up an llc yeah and i think we need to come out of the gate and say some of you are like you know what i don't need any more shame in my life uh i don't need mark and matt tell me how i screwed up my llc well we're we're here with through love and compassion to just say it's okay you're human and and you know what if your llc is jacked up it's not your fault it's probably some website's fault some brother-in-law you can always blame a good brother-in-law for most things yeah yeah yeah yeah i mean you can be a member of the llc jua llc jacked up anonymous there's a there's dozens of chapters there's probably one in your neighborhood um in your city yeah they meet on thursday nights usually i'm going on i've got my two year coin right here my llc has been clean for two years asset protected yeah it's a it's a milestone so um but us as tax and business lawyers mark and i are both attorneys for any of you new to the podcast we're small business owners we're passionate about building and protecting your wealth paying only as much tax as you need to and the llc is one of the most commonly used business entities some asset protection can be great for partnerships sometimes there could be some tax planning in it if you're doing an s selection on it and maybe you got the wrong entity and you need to kind of tweak it a little so it's a really commonly used entity also commonly screwed up yeah and i i'm gonna okay little behind the scenes i think i i like behind the scenes you know sometimes the blooper reel you know after takes those are fun so i'm going to just give you a little behind the scenes my vote for today's show title and i got out voted by a number of people including matt sorensen i'm still a little butt hurt about this but my title was what was this it wasn't very memorable that's why i was like yeah no one's gonna remember that i came up with it it was so good okay what was it what was my title corey that i wanted it was no that was yours that was a dumb one um and what was it no it was something like the asset protection no one talks about no one talks okay all right that would see right there doesn't it isn't that catchy it's so catchy you could remember it for no love you know at least 10 minutes you know okay so my title for today's show was you're the only one that remembered yours okay now okay so uh we've got an in-studio producer corey white who you know really tries to inject himself into the show inappropriately i just wanna yeah if you wondered what that voice was you know okay it wasn't god you know coming into our show it's corey behind the scenes okay so i think this is the asset protection people don't talk about everybody wants to have like the silver bullet i'm going to go to vegas mastermind group buy a 10 000 asset protection plan and oh it's shiny it's glossy i mean i could put an asset protection in a box for you but you know really what is it worth you know it's just yeah it's not it's it's mark but but people like guarantee on the box there's an on the box it says asset protection on the box i know it does and and it feels good but then someone's going to break in there at night and take your box and you're going to be like what do you got you got nothing you know so this is this is actually gonna save so many of you money you're gonna love this because i bet you matt 90 plus percent of our listeners have an llc would you take that bet yeah yeah i mean nicki minaj has an llc you know that's true by the way if you have not listened to this nicki minaj song about an llc i don't highly recommend [Music] but we're gonna bring it up anyway we'll get a chuckle out of it you'll get a chuckle out of it pretty much you know anybody who's anybody has an llc that's i i i could subscribe to that okay so now let's get to it let's go through our list now i'm gonna i want to bring what i thought was a better title for the show i'm gonna bring that point to bear here shortly okay but i'm gonna let you go first matt okay mistakes people commonly make when setting up an llc you go first people do not be shamed no matter how you know mean matt sounds just know i'm the good cop here i'll have a you know we can solve the problem yeah okay go ahead matt i want to set that up for you go ahead okay thank you so okay uh first mistake okay making your llc member managed when you set up an llc you have two options that every state has this same format you can do manager managed and you can disclose who the manager is which in many times could be you or you can do member managed and disclose who owns it if you do member managed you're putting yourself down as member and you're saying hey i own this it's right on the state's website come get me yeah we don't love that no we want manager managed for your llc so you're the manager and we don't know who owns it maybe it's you maybe it's your trust maybe you've got a partner in there maybe a spouse who knows but there's a lot more privacy to that and manager manage is just better for a number of other reasons yeah so first is you screwed up the first option is this a manager managed llc or member managed yeah and by the way we'll get some hate mail on this because i know right out of the gate some of you that are practitioners are going whoa whoa whoa whoa i always do member managed you these guys are yahoos they don't know what we're doing first let me a little and i say this humbly a little bit of credibility here we really are lawyers we really have a law firm and we've set up thousands i would dare say over ten thousand llc's you know yeah oh yeah easily um in our first we did over 200 last month you know yeah so like 250s and have been doing this since what we're on our 20th anniversary of the firm yeah so it's been cranking so some of you may go well all right so i want to tell you that think we're wrong just put your guard down for a moment let me give you a couple other reasons why this is number one on the list i like that you came out of this i i didn't know you were going to come out of the gate with this one okay but matt said privacy which is nice because you don't want to know who the owners are arizona is one of those states where if you're more than a 20 owner you have to have that disclosed on the website and in the articles kind of sucks but 90 of all the other states uh your you can get away with just manager managed in fact in some states like wyoming you can get away with just the incorporator like who is the lawyer that set this up so we've always thought why why share it if you don't have to you know exactly so yeah and um another reason just on that same is well what if i'm what if i set up my estate plan or my trust later and i want to transfer the ownership if it's manager managed i don't need to amend anything with the state if it's member managed you're gonna have to go do an amendment to the state to transfer the ownership from you to and amend that and so you give yourself kind of more crap to do when you do member managed okay and so and i like i don't even expand on mats if you change ownership not just within your own trust or something but you bring on a partner so now you're 50 50 or whatever so you've got multiple partners in an llc if you're manager managed there's a good chance i'm not modifying a thing with the state and no one knows that's really cool yeah yeah much more private okay now third gosh darn it i don't know what's going i need a i need a drink today i'm just like forg i had my third one right on the tip of my tongue and okay so it's privacy transfers and what else would you say why do we want manager managed we tell people you give them three three reasons for management i got one i got another one okay the bank the bank because if you go in with a member managed llc a lot of times the banks want to see all the members and they want to see the operating agreement they want to run socials on all the members yadda yadda uh more and more with the banking scenario setups we prefer and we have some online banks we can give you too they're like who's the manager what's their social what's the ein for the company show us the articles done and we did a show two or three weeks ago on what banks do to screw up the process so they're on a need to know basis but if you do member managed there's a good chance the bank's gonna want more crap so that's number three i don't have any others but that's mistake number one i like that map okay all right okay so go manager manage and you can always fix that moving forward so that's an amendment to the state we fix that often for clients okay okay um man number two is a hard one are we doing the most important in a row uh okay i'm not dan i'm not saying that okay all right okay yeah i'm just gonna throw this one out then because it's the next one that comes to mind setting up the llc in the wrong state nice cough right when i said that on the microphone corey i don't know if anybody that would be unedible because but i'm going to say it again corey are you ready corey because i just want quiet in the studio you know heaven forbid right on the snap do some directing here okay okay setting up the llc in the wrong state so uh i'll throw it back to you matt give us an example of wrong state well there's the classic one i set it up in nevada delaware a delaware i live in california okay are you doing business in nevada no but i heard an am radio commercial that said i should set up in nevada or i went to some seminar at a holiday inn and some corporate headquarter person that's a coach told me i needed 10 llcs in nevada for my small business i run out of my house in california yeah and i get unlimited llc's by the way you know i can set up as many as i want yeah yeah and it's only a hundred dollars more for each one i set up okay all right nice um well let's get to the state issue if you're buying real estate let's talk about that first we always recommend setting up the llc in the state where you own the property so if i'm buying a nevada property cool doing a bad llc but if i'm buying an arizona rental property i'm not going to do a nevada llc if to do that i'm going to have to pay fees in nevada then i'm going to have to register in arizona and pay fees in arizona and then i can use that llc why don't i just go straight to arizona and do an arizona llc there's this misconception out there that er that nevada has this heightened level of asset protection that's portable that you can move over to any state that matters for the basic real estate investor or business owner it doesn't you know it's it's not worth it the fees in nevada are expensive delaware too um so beware of those states sure they're nice for big corporations and in certain nuance situations but for the typical small business owner entrepreneur real estate investor you know you small business owners we're going to set up the state where you operate from if you're an online business you might go to online if i may okay so let's stay with this real estate promo and let's vet this a little bit more matt some of us you know in the industry we say peel away the onion okay get it you know not a technical term yeah you may want to adopt that it's okay is that why i cry when you explain this stuff fair enough it's got a two-prong effect okay so uh so let's go back to matt's example i live in arizona and i have a rental in arizona but i got sucked into a nevada llc now we can talk about how to fix it in a moment i'll give you some good news there there is hope see no shame hope see there's a small subtle thing there okay so you set up an arizona uh sorry let's back up could i set up a nevada llc and register at foreign in arizona sure i'm not saying that that's bad and i'm not saying nevada llcs don't have good asset protection if i'm doing business in nevada and there can be what we call a charging order protection entity status that's called a cope cope we've done separate podcasts just on that topic holding up this amazing book on screen here on youtube i just just want it where do you put your hands well i don't know put your hands down no i don't know where to put my hands now so in my book i talked about kind of high level asset protection and so a cope may be necessary for some people with more assets so i may go nevada i may go wyoming and i may go maybe at delaware but that's something we grow into so for again for the common client that just has a simple rental property in arizona maybe i'd live in california i'd set up an arizona llc hold that rental property i know californians have a franchise tax issue do i need to register to do business in california maybe at least with the franchise tax board and pay my fee whatever that's a topic for another day but the point is i'm to get asset protection i have to have the llc registered in the state where the property is so why pay double fees having it in nevada and in arizona in that example if i'm just getting started have four or five rentals there's no need to double down on cost yeah yeah and there are some states that say if you have an out-of-state entity that you don't register to do business in our state and you have a lawsuit here we don't even recognize that llc yeah uh it's you pretty much and other states have fees they ding you for failure to do that so you want to be careful on that i actually have a blog article on on my blog but um just just get registered in the state you're actually doing business for you operational business owners small business owners you're going to want to be in the state you're doing business in property owners state where the property's at um those are the the best guidelines there beware of people recommending nevada or delaware when you don't live there yeah and and again not that it's not bad i'd we'd all like to drive a sports car that's worth a hundred grand but it may not fit your situation it may not you know you're just not a sports car guy you know and it's okay stay in your lane you might be a minivan guy and you just own it just do it zone is there really such a thing as a minivan guy or is we just i think there is is there okay all right i don't i don't want to put labels on people you know that's that's inappropriate um we are inclusive here of minivan owners and sports car owners you're all welcome here that's right okay all right number three what would you say is number three okay um you know holy i think we brushed over something matt may i is your okay okay let's make this very clear if i'm buying rental property it's not where i live or where the best asset protection is first and foremost i set the entity up where the rental property is then we talk about additional strategies that's step two or three don't overdo it people if you're an operational business i don't want to skimp over that if i'm a realtor i'm a contractor i'm a plumber i'm a consultant i'm selling stuff online and i live in new jersey you may say well i don't need a new jersey llc because i sell everything online so i could set up a florida llc and not pay any tax because i want a florida llc well you're not going to get around state tax because you're a resident of new jersey bottom line and you're not going to get protection in new jersey setting up a florida entity and third if you're doing an operational business you're going to have to pay fica the f word and you're going to say one day what the fica and we're going to say we feel your pain and so if you need to elect your llc to be an s corporation to get around fica and we can save you thousands with that strategy go to another podcast on that one for us okay you're going to need that entity registered in new jersey because i have to get a tax id number in new jersey i need to do my payroll in new jersey i'm going to pay state tax in new jersey and setting up in florida or texas or nevada is not going to save me state tax i set it up in the wrong state and so i think that's a strong number too because there's so many ways to screw that up okay do you feel more comfortable this is sub part two to to mistake number three i'm just confused where we're at here really you're gonna throw out that passive aggressive comment that wasn't passive aggressiveness what number are we on we're on number two the wrong state okay all right okay number one with member managed instead of manager managed number two is the wrong state can i give number three because you dipped your chin i think it's a big one you guys know how smart matt is because you've listened to the show and i think he's playing dumb i think he's sending me a message that i was going into number three when i shouldn't have been okay what's your number three what's number three number three is you set up an llc and you should have set up an s corp ooh that's why you were thinking two and three were bleeding there okay i see where you're going mr sorenson yeah and i i saw you kind of throw out the s corp okay and i think that is a really common mistake um but it's one easily fixed that's the good news that tastes good i'll have that what's that soup of the day yeah really i i think that's a good point matt because people think oh an llc save taxes no it doesn't the s corp can save you taxes so come out of the gate with the right freaking entity yeah i like it so yeah so let's get the right entity so the second sorry third mistake is you set up an llc but you really needed an s corp now when do you need an s corporation now we have a whole separate podcast episode on the power of the s corp lots of content that you know ridiculous book mark was waving around has plenty of information on the s corp this is not the escort the s corp for corporation and i know you may want to listen to some podcasts about escorts that we wouldn't do that that's very important we have a lot of female listeners that may be offended with the s escort topic uh i thought you were talking about like the ford little sedan little the escort model the ford oh yeah what were you talking about i don't okay sorry yeah um s corporations dirty birdie dirty birdie so that's corporations on that note i'm gonna stick with my fries corey brought me some french fries and it and i'm just going to just nibble a little bit here during our podcast is that okay okay all right all right okay escort it makes sense when it's operational right operational businesses so you real estate investors that are buying rentals don't worry about it okay but you operational business owners the consultant the small business selling goods or services you know the internet marketer the agent the real estate professional contractor you you people should all be in an s corporation now you if you're a low income or this is a side hustle you only make 10 or 20 a year net income you may just stay in an llc but if you're making 40 50 more a year net after everything you can expense the s corporation is going to save you thousands of dollars in taxes it's a better structure now since mark's still eating let me tell you whoa whoa i'm ready to go you know just okay i'm i'm just nibbling i'm just nibbling all right okay dude you're gonna go to number four okay were you gonna take away number four for me no i'm finishing three okay gosh i didn't know where we were hey four is all yours okay all right you got when we get there okay go ahead i'm glad mark's i'm glad mark's eating now cause he's a little hangry so some french fries let me finish number three okay all right is that caffeine-free soda what are you drinking there i just want to know what i'm working with you know what i have not had my rock star today yet so i'm just a little i'm so this is a diet dr pepper if you wanted to know thank you for sharing my eating habits with the universe i a little self-conscious about that you know there's a video camera on you yeah everybody's like man i thought mark was pretty fit no he's not no french fries and diet dr pepper that's his lunch why are we listening to this bozo you know that's what you're thinking but but you went with diet i mean that seems pretty reasonable okay here's the good news you set up an llc you're an operational business you're making more than 50k a year crap do i need to shut this down and go start to set up a new s corp no you can add an s election to that llc okay we change the tax status with the irs and now you're an llc still with the state you can keep your same bank account keep the same name keep operating as you have but you have an s corporation for tax purposes you'll need to start doing some payroll and you'll have a different tax return so you need to kind of learn that that nuance there but now you can avail yourself for the s corporation tax strategies even though you're still an llc yep you just claim that s corporation tax status easy way to opt in with the s election love it all right number number four all you okay and i've got a really good analogy that goes with this one number four you set up your llc with one sheet of paper now you may think you're like so clever you know i'm like oh i found the website it's only a 52 filing fee these lawyers are rip off i can do it myself and you file your articles and you're like i'm set i'm ready to go well you really only have about 20 percent at best of what you really need to have a legitimate llc there's a lot of pieces and parts you should have an operating agreement you should have organizational minutes you should have membership certificates a corporate book there'd be maybe a an ein or tax id application filled out are you going to do an s election why did you even freaking do this in the first place are you just doing it because someone told you to or because it's cheap and so you think that's what everybody else does that's what i should do it all of these reasons are number four of i cut corners and i think i'm okay the problem is when you get into court or into an irs audit you really don't have a legitimate llc it's a piece of crap it's not worth the paper it's printed on and so we here's here's the analogy you ready everybody thinks asset protection is this i gotta pay a bunch for it or if i you get what you pay for in asset protection that's what people think and that's wrong you may say well i spent five grand so i have great asset protection it could suck the best asset protection is sometimes the easiest things to do it's just maintaining your llc doing your annual minutes your annual board meeting and i know some of you professionals out there are going to go you don't have to do that with an llc all right maybe technically you don't do you want to go into court and say that you're judge you know what we didn't have to do those formalities so we didn't so just deal with it our llc is great why not show up in court with your crap together and a lot of clients at night before a court hearing or before depositions are working on their llc because it's a wreck don't get caught so here's the here's the analogy okay abs are earned in the kitchen abs are earned it's the little things you don't have to go spend thousands on a you know a diet or this crazy thing or liposuction i don't need the thousand dollar ab roller no now this is coming from the guy eating french fries personal trainer for 750 a month i don't need that you don't need a personal trainer now this this metaphor is coming from the guy eating french fries during this point do not get distracted by that um it's called a paradox it's called something but it's not it's not gonna be good i have a friend that's like french fries you can eat those all day those are good for you i'm like you know what i'm gonna adopt that i thought that was i mean you live in idaho true i'm very come on cut cut yeah cut me a break i mean yeah i gotta support the peeps you know there's farmers out here you know trying to help my fellow man and woman and farmer and kid you know by the way potato harvest is around the corner i'm so excited okay now but here's my point it's the little things in asset protection that are cheap and affordable and simple they give you the best asset protection and it's just like again exercise and workout it's the little things doing them daily that really get you the biggest bang for losing weight so they say hey cor do we have any fry sauce can i dip these into some saturated i need some fry sauce okay what point were we on all right okay here let me add to that this is a really important one okay when you have an llc you should have a tax id you should have an operating agreement you should have the membership certificates you should have a corporate book okay now here's another time where i hear it it's not just when you go to court there's a couple interesting points on this i always get the calls of someone who's trying to sell real estate they bought it in an llc and no one cared when you buy in an llc if you especially if you spot with cash but now they're selling the property and the title companies like well where's what's your tax id oh it's just my social okay where's your operating agreement i don't have one uh okay so they come running to us because the title company's like yeah we're not gonna sell this property this little piece of paper you have that's not it you didn't do the whole thing or you go to the bank and you try and get a loan and the bank's like oh you got an llc here's a list of documents you need for the llc operating agreement tax id ss4 all these documents they're going to ask for it's not the one piece of paper that comes from the state that you just paid the fee and it came back with a nice little stamp on it so um okay love it now there you go if this was some other podcast that gave self-serving you know advertising during their podcast you might expect someone to bring up the fact that they had a special in the law firm this month where we do what's called a corporate cleanup or an llc cleanup i mean that would be a shameless plug that i would not want to stoop to but yeah something and i think you know that company probably offer like 50 bucks off yeah just try and make a little sweeter for people to give a little incentive to get it done now they've learned something that their llc is all jacked up yeah so if some of you might come across the podcast that would stoop to that level of talking about a certain special they do for maybe the seventh year in a row and people find it very helpful to get their llc cleaned up you would want to go to kkos lawyers.com kkos lawyers.com and maybe just look at that i mean it could really benefit you just hypothetically yeah so yeah so we'll leave so there's that so there's that um there's that a caddyshack quote you went to caddyshack you know on my deathbed i got total consciousness so i got that going for me i'm impressed oh yeah now you're welcome uh okay so all right should we hit number five we're on five right yes okay and then we could maybe i've got a number five do you have a number five i've got a number five well i you got one from the great state of idaho you're deferring okay yeah number five nice uh great senator from the state of idaho ooh now you got to help me out with a good metaphor something that okay i'll be ready but here i'm going to give i'm going to give the quote and then the problem here number five and then you can take it to the hoop i mean this is what some may call an alley-oop you ready okay all right sometimes more isn't better sometimes you can set up too many llc's rather than no llc at all so sometimes less is better and sometimes more is not better do you have anything to make that really insightful what would one good example um sauce ooh sauce yeah you know you got the right amount of sauce you put too much sauce on something yeah your french fries your hamburger like let me give you an example i used to love whoppers then one day i asked for extra ketchup on my whopper and there was way too much ketchup on it i haven't had a whopper for like 20 years since ruined it yes you in our entire relationship you've never shared this before i didn't know that yeah yeah i always wondered when we went never mattered until now so i can't remember when you and i went through a burger king drive-through but yeah if you snuck by there without a whopper i didn't notice but man are you okay i mean i mean i've survived okay yeah all right it's just been you know that's powerful it was powerful well those burdens in life well you heard um here's another analogy though let me give you another one it's like vitamins or medicine okay you can take too much you can od on this stuff and i think a lot of people just think well i mean you take this if you got headaches should i just take 100 of them no you're going to overdo it and here's the there's a cost to asset protection there's a cost to all these entities there's a cost to set it up there's the cost to maintain it here's what else we see people have so much going on they don't they can't even keep it together they don't even use them properly because they've got so much going on they got oversold this structure that they don't even know how to operate and frankly doesn't do them any benefit anyways and now they've screwed up just even the basic components of it because they got overwhelmed oh you know what and i feel bad because i could have said it better i was using the word better you know like more is not always better whatever it's here's the proper way to say can you have too much of a good thing i think with an llc you can have too many and it becomes expensive and unnecessary and so when someone's trying to sell you oh you can have unlimited llc's and it's a flat fee that's not a good thing you know it's like saying you can have unlimited ice cream anytime you want no that's i don't want that i don't need that now there are some things that one might say you can't have too much of a good thing um a couple come to mind but okay sorry i'm sorry i got carried away i was just got something but cory said we have to make sure we keep our pg rating here so we're just gonna i don't know you were probably thinking of the ford escort car again so i'm just gonna yeah yeah yeah that's exactly what i was going to all right um let me give another an um can i are we ready for the next one i'm actually going to do another one i'm going to do it i'm going to do next i don't want to get sucked in here i'm trying to just refocus again because i was thinking too much of a good thing sorry all right are we at six now can i go to six what we're on number six okay number five was too many llc's okay so all right um what can i get i've got number six well you just did five i gotta do six oh you got one now i was just i was just trying to save you if you didn't have one ready okay go ahead no i'm ready okay number six you bought an llc off the shelf and it doesn't fit your situation okay that's number six okay your llc here's the analogy since we're all about analogies here this one's gonna be you know this is this one's for everyone okay your llc should be like a tailored suit don't just buy it off the shelf there's not a one size fits all the llc you do for different things that you do is going to be different the llc you have with a partner is different from the llc that's just you the llc that you use for a rental property in one state may be different from an llc in another state and so um people who just kind of sell this off the shelf it's the same thing for everyone just do an llc for this and that and it's just that's all they sell they're doing the wrong structure maybe you need a series llc in your situation and you're in a state that offers a series llc that's better tailored for your situation that's more efficient has better asset protection maybe you need an llc for charging order protection because you're trying to protect assets from your personal liabilities rather than protect your personal assets from the business liabilities maybe you have an operational business maybe you have a partner okay all these things are more tailored solutions for your llc that you should get some advice on you should get educated on yourself as well and then get the tailored llc for your situation you know what i got i had another deep thought i've never said this before this you've heard here first on main street business sometimes the the greatest strength can also be your greatest weakness for example one of the greatest strengths of an llc is they're so flexible i mean you can do so many different things with an llc that's their greatest strength but it can also be their weakness because people will just take a vanilla one and think it does all those things automatically it doesn't you have to still tailor it do you like that i i like that yeah i'm trying to think of what my greatest strength is that is also weakness but nothing comes to mind so maybe it doesn't work in all cases it's just yeah it's not a universe this is a small little concept that's yeah just as small as i work for llc's yeah yeah i mean works for other people not me um now i'm ready with number seven okay okay thinking the llc does more than it really does so you set up an llc thinking oh this thing's awesome it doesn't even do what you think it's gonna do for example okay some people go hey i got this rental property i set up an llc that's awesome and then they get on uh get on their phone driving down the road texting and driving and they get in an accident and heaven forbid that they really really hurt someone or kill someone and it's happening more and more in the country distracted driving more and more prosecutors are throwing down involuntary manslaughter as if it was drunk driving i mean it's serious so someone's out there texting and driving gets in an accident and they go hey but you know what i got an llc it's going to protect my rental no it's not the llc is not there to protect the rental from you being an idiot the purpose of the llc is to protect you and your assets from the tenant or the property or a problem that could happen inside the llc and people are always shocked to hear that now there are some states that give us that outside protection and inside again like matt said it matt said a tailored suit so you got to get into that detail and make sure it's doing what you want if you want to pocket there we got a got to sew a pocket there you just can't assume it's going to just appear out of nowhere so some people think llc's do more than they really do go in with your eyes wide open the main purpose of an llc is to protect you from whatever the freak the llc is doing not to protect the asset in the llc from your teenage driver mm-hmm you like chat number seven i like that that was a good one okay i liked your number six i didn't say it a little delay okay delayed gratification there but i want to let you know thank you you're doing a great job today matt i was curious i wanted to know what you felt about it yeah um your i value your opinion okay why are we on eight yeah should we do eight okay you know i really shut corey down he was popping off earlier in the show and now he's like so corey if i offended you i just want to i just want to say i'm sorry because yeah he's yeah he's not even responding now i think i think okay i got number eight this is a good guy we got eight all right throw down eight i got i got eight number eight you set up the llc but you don't use it right all right this is common a lot of people set up the llc maybe they even got all the documents okay they did they got all the stuff it's the right entity and structure for them it's in the right state we've nailed all these other things we've talked about but they don't operate it properly they receive money in their personal bank account and they pay all the llc's expenses out of a personal bank account they have a rental property and the llc doesn't even own the rental property they have a lease and the lease isn't as in the name of the llc it's just in their personal name you don't have an llc you've got one but it's not doing anything it's on the bench it's not even in the game all right you've got to put the llc in the game um and you put it in the can that's a great first thank you that's football season okay that's coming up baby yeah excited so uh st there's a few a few key steps step one open a bank account the llc knows his own bank account separate from your personal stuff okay this goes back to making sure you're getting the asset protection of it there are seminars continuing education for lawyers on how to pierce the corporate veil yeah how to blow through someone's llc that they didn't set up right they didn't get the right documents or they didn't operate it properly okay these are the things that we're talking about that these lawyers that that are going to try and blow through your llcs they can get to your personal assets this is this stuff we're talking about here one of them would be they don't use the bank account of the llc they just use their own personal bank account and they call this alter ego they basically say you're like batman and bruce wayne you're not really batman you just go back and forth and we don't really know which is which so both of you are responsible okay well so i your separate bank account treat it separate okay wow i i like it and all these examples just in number eight it's kind of blown my brain i'm gonna go back to the because it is fantasy football team uh time okay you know uh friends also tonight yeah sherry i want to give her a shout out she was working on her fantasy league last night and and and it was a big deal and i i don't have my league set up um or my team anything close to it but anyway i like what matt's saying is if you're going to spend all the time to draft this player and put them on your team let them play in the game make sure they're suited up they got their helmet on you're using them properly i thought i'd just take your analogy to the next level i like that i like that yeah get them out there you know because your llc's you know and they're they're playing defense right yeah they're playing defense they're trying this you know they want plane of scoring points on you so you gotta get them out there okay now are we okay just saying nine mistakes or do we have to do ten because it's kind of cliche you know like yeah you're reaching for ten let's be different let's go with nine okay you want number nine are we okay let's do okay biggest mistake in setting up an llc no pressure this is the last one yeah i think this is like you know this is like the closer you know this is the closer oh you're going to love it this is the closer all right this is like um who's this the guy never mind just go i guess okay say like number nine sinatra that's who i was gonna say sinatra he closes his show with my way okay that's a closer great song one of my top fave songs yeah sinatra's a classic okay number nine num number nine mistake in setting up your llc is not using kkos lawyers may i was that a little too much you know what do they call that presumptive cocky presumptuous yeah that's uh that's just solid advice yeah we tried to do good job if you set up an llc with us and you're not satisfied or felt like you didn't get what you promised or whatever we want to solve it believe it or not we're a law firm with customer service so we have customers we have service we try to put both together so here's and here's why all that matters and what we talked about and this you know there's other law firms out there let's i mean go you you can use someone else but you know they could also suck and there's the biggest competition i have to say that we have is not other lawyers it's pretend lawyers yeah corporate headquarter places that are like business coaches or we're asset protection gurus they're not real lawyers they're not standing by what they're doing they're not licensed they don't have malpractice insurance all right and um and that's the ones that we see people come in in tears frustrated frankly a little scared they felt like they got taken advantage of and a lot of those clients thought they did all the right stuff they thought they were spending the money and being like doing what they were supposed to do but they got taken advantage of yeah and we we hate to see we want to do that here and our fees are reasonable 800 bucks for an llc when you can you get up to an hour with the lawyer who's going to go over and make sure you get all the right documents for it that's going to talk about getting it in the right state that's going to talk about the temperature what's that put it in the big picture look at your yeah where's this yeah exactly and and so so that's you know if you do it an entity on legal zoom that's about 700 bucks to do all pieces that you're supposed to do now i know they tease you like 99 bucks but that's just for your one piece of paper that we've already talked about so but to get all the pieces that they do offer but you gotta click click click and keep adding them you're basically the same price as we are at a law firm to get it done yeah well plus you get attorney client privilege with all your conversations and what's going on here you're not getting that illegal zoo yeah and i and i and and i'll say this in all seriousness wrapping it up too is um yeah we're joking around self-serving that you know check our firm out blah blah but if you don't use us at least look for those same characteristics so same services those same pricing model and please please please listen to this podcast with your business partner your individual personal partner your kids your family make sure that anybody you're trying to help build their american dream they're getting advice from the right type of advisor business coaches are great accountants are great financial advisors are great bankers are great but they all we all need to stay in our lane and so we're trying to stay in our lane explain these issues we have guests come on our show that drive in a different lane and so we hope that you continue to listen we're grateful to have you here and great show matt you did a great job just wanna let you know i i think you did an amazing job and i liked how you're wearing the kqs lawyer's hat oh representing yeah that was nice for any of you watching on youtube and you can check this out on mark's youtube you know if you want to see mark's amazing beautiful studio that he's in or you want to see my office with terrible lighting and rinky-dink set up you know the contrast there yeah we're going to solve that problem well everybody thank you so much and we will see you next week for another episode of main street business podcast please give us a five star rating let us know how you feel if it's really positive and then tell your good friends about it if you've yeah if it's a negative comment just you know send it to your brother yeah just email mark at marcjahler.com see you guys next week thanks thanks everyone [Music] you

Channel: Mark J Kohler

Views: 55,837

Keywords: tax, legal, entrepreneur, asset protection, wealth building, cpa, attorney, lawfirm, Mark J Kohler, Mark Kohler, Crypto, Bitcoin, limited liability company, how to form an llc, starting an llc, LLC, taxes, income tax, taxation, single member llc, how to start an llc, mark J Kohler, Mat Sorensen, DIRA, Before you form your LLC

Id: UYkUOqChg1s

Length: 48min 24sec (2904 seconds)

Published: Mon Sep 13 2021