- 3:05 Why LLCs are crucial for asset protection in real estate and business.
- 6:05 Common mistakes in setting up LLCs and how to avoid them.
- 9:00 The Corporate Transparency Act: What LLC owners need to know.
- 12:15 How proper LLC management can safeguard your investments from legal risks.
- Website: https://corporatedirect.com/
- LinkedIn: https://www.linkedin.com/company/corporate-direct-inc-/
- Facebook: https://www.facebook.com/corporatedirectnv/
- YouTube: https://www.youtube.com/channel/UCT-pLv4_qmcTH-Xnu_uEyNQ
- Contact Number: 843-619-3005
- Email: corwyn@corwynmelette.com
- Instagram: https://www.instagram.com/exitstrategiesradioshow/
- FB Page: https://www.facebook.com/exitstrategiessc/
- Youtube: https://www.youtube.com/channel/UCxoSuynJd5c4qQ_eDXLJaZA
- Website: https://www.exitstrategiesradioshow.com
- Linkedin: https://www.linkedin.com/in/cmelette/
ROBYN:
Do you want something more? More meaningful moments, opportunities, deeper relationships, and memorable experiences? Do you want to make a difference? If you said yes, a career in real estate could be the opportunity you’re looking for. Guiding people through one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative. Exit Realty’s revolutionary compensation model, training, and technology that provides you with the tools you need to start and build your successful real estate career. Call me today, Robyn Collins, R – O – B – Y – N Collins with Red Robin Homes at 843-557-5003. Again, that’s 843-557-5003 or visit us at redrobynhomes.com/joinexit and make your exit today.
CORWYN:
So good morning, good morning, and great morning to you guys. Welcome to another fabulous episode of Exit Strategies Radio Show. Hey, I am your host, Corwyn J. Melette, broker and owner of Exit Realty Lowcountry Group, in beautiful North Charleston, South Carolina. Guys if this is your first time listening to this show, you, sir or ma’am, are in for a treat because our mission is very simple. That is to empower our community through financial literacy and real estate education, guys. We’re legacy building. That’s what we talk about, that’s what we scream from the mountaintop, and that’s what we work on when we’re in the valley. That is what we’re always after, what we’re always promoting, and most importantly, what you are endeavoring to do. Build your legacy. Our word teaches us about having an inheritance for our children’s children, so forth and so on. So this is what we’re going to do on this show. I want to give a quick shout out to our listeners, those that listen locally. Literally just had a client and a faithful listener drop in. I want to give a quick shout out to Pastor and Elder Evans. You guys rock, quote unquote, the senior citizens flippers as they jokingly talk and reference at times. Stopping in just to say hi, because they tune in faithfully and listen to this show. For our folks in Monkey’s Corner, y’all know that’s where my mama lived, but for those of you all around the globe who listen to our content, guys, thank you so much from the bottom of my heart. So guys, today, look, flip, matter of fact, don’t even flip the flapjack. Go ahead and turn the stove off. I need you to grab your pen and your paper. I need you to take these notes today, because they are going to be not only nuggets, but they’re going to be big chunks of gold in this conversation today, guys. So I am super excited, very, very humbled to have with us two attorneys that work in this dynamic space of real estate and real estate investing and how to structure and all this other stuff that so many of you have questions about. So guys, I have with us, yeah, I have with us today, Ted and Garret Sutton. Now they combine our corporate direct. So guys, thank you so much for taking time out of your business schedule to be on with us today. Welcome to the Exit Strategy Radio Show.
TED AND GARRET:
Thanks for having us, Corwyn. Yeah, thanks for having us on. You’re quite welcome.
CORWYN:
So guys, look, if you could give us high level overview about you, what you guys do and those kind of pick some of that apart and have a good conversation today.
GARRET:
Great. I started the firm a number of years ago. I’m an attorney here in Reno, Nevada. I became very fortunate to become associated with Robert Kiyosaki, who wrote Rich Dad, Poor Dad. And I’ve written eight books in the series, including this one, Start Your Own Corporation. And I’ve traveled the world with Robert Kiyosaki, not only the U.S., Corwyn, but around the world. And one of the things we’ve learned in all our travels is parents want their kids to know about money. Financial education is really important. And like you mentioned, Corwyn, if you’re going to build that legacy for your family, you need to let your kids start learning about financial education. And Ted can talk about the book he’s written, a free e-book. But again, I’ve been very fortunate to travel with Robert Kiyosaki and write eight books in the Rich Dad Advisor series.
CORWYN:
So Ted, go ahead, please. I’m over here about to literally shake out of my skin. Go ahead.
TED:
No, I know. Well, he certainly is a tough act to follow. As you know, I’m his son. I haven’t quite written eight books yet. I ended up following my dad’s footsteps into a legal career. I went to law school, graduated two years ago, and now I’m working with him at both Corporate Direct and Sutton Law Center. And it’s been a really great relationship. I think we’re a good father-son duo. He’s been a mentor to me and he helps me out whenever I have questions. And what we do at Corporate Direct is we’re a business formation, registered agent and asset protection service. You know, if you have rental properties and you need LLCs for them, we do the paperwork for you and then we act as your registered agent for those LLCs. And then we make sure that you have the structure in place to properly protect your assets. And that’s really important, because if you want to build generational wealth, you need to have that structure in place. And so we help with that. And then on top of that, we’re also helping with Corporate Transparency Act filings. Corporate Transparency Act’s a new law. It has broad reaching effects and nobody’s talking about it. And we here at Corporate Direct are getting prepared for that. And we’re also going to be doing those filings for our clients, too, because that also is a form of asset protection as well.
CORWYN:
Man, look, so I don’t know where to jump in because I’m literally over here, like seriously, for our listeners, I am literally shaking like I could just shed my skin right now and just go all in. All folks say I almost could just go into glory because I’m just excited about this because, first of all, Garret, that is phenomenal. We talk on occasion on this show, but I’m going to share this for you, but also for our listeners. When I’m meeting, interviewing agents, philosophy that we have here, we talk about the four quadrants. We do that because we want to get people to understand how, where money moves, how it moves, where it is in respects to those particular people and people within the quadrant. But I am blown away by the fact that you wrote this expanded series, all these books. So if we could, let’s start with that, because a lot of our listeners from a basic mindset follow that rich dad, poor dad, if you will, somewhat as at least in their mind, somewhat of a guide. So it’s kind of a little bit more on the follow up book series that you wrote to that.
GARRET:
Yeah, and so working with Robert Kiyosaki and the Rich Dad team has just been great because Rich Dad, Poor Dad kind of helps you change your context. Like you mentioned about the quadrants, Corwyn, people need to understand where they are and where they want to get to. And so Rich Dad, Poor Dad helps you understand where you want to go. And then the Rich Dad Advisor books are a supplement to that. And so this book, Start Your Own Corporation, is a way for people to understand how to protect themselves. All my books, I tell stories. It’s not like I’m writing legal jargon and words that people don’t understand. You have to communicate and educate through stories. And so all my books tell stories. And then we apply the legal principles to the stories. And so it’s just been great working with Robert Kiyosaki. And he has had such an impact on people. And like you, they’re just thankful that this book exists. And it’s so rewarding for me to have been able to write eight books in the series that further carries on this Rich Dad education.
CORWYN:
So let’s back up and hit this. I’m going to say, let’s move over in the roof because why should someone, so you’re going to invest in real estate. Why should someone set up a corporation or LLC or some other entity in order to run that business?
GARRET:
Corwyn, we just live in a very litigious society. And every other billboard is for attorneys to advertise and a rec to get a check. And that attitude, it prevails. And people realize that the legal system will reward people who bring actions. Attorneys are on a contingency fee. They get a third or more of what they can collect. And you annd I aren’t going to change that system. But the system also allows us to protect ourselves with LLCs and corporations. So knowing that we live in a litigious society means that you have to take the steps to protect yourself. And that’s what we do. It’s very affordable. This asset protection that we do here at Corporate Direct, it’s not expensive. We have a free 15 minute consult with an incorporating specialist so you can understand what it costs, what we’re going to do to protect you. But for example, you have a client, Corwyn, who is buying their first duplex, right? If they keep the duplex in their individual name and a tenant sues, they can get everything that person owns, the owner owns, the equity in their house, their bank account, all of that. By simply setting up the LLC and having title to the duplex in the name of the LLC, that creates a wall. The tenant suing can get the equity in the duplex, but they can’t get beyond the LLC to get at your other personal assets. And so that’s what we do in the books and in our lectures, is to let people know that there are ways to protect yourself. Now, insurance is always the first line of defense, right? You’re always going to have insurance. But these LLCs are the second line of defense. And as you engage in investing in real estate, whether you’re flipping or holding, you need to use LLCs for your protection.
CORWYN:
A lot of seasoned investors that I work with tend to do that. They set up an LLC, I advise it because you want to put in some type of, OK, look, let’s put this property here. Let’s get a little bit of separation from it for your day to day operations, your day to day life or whatever that may look like. Now, sometimes they don’t. But one other thing, and you guys, please correct me if I’m wrong, but when you do that, when you sell that property, if you sell it to another investor, then technically you can just sell that whole LLC to another investor, correct?
GARRET:
You can. If I’m the investor, though, I don’t want to buy your LLC because I don’t know if there are any claims against it.
Right. So I’m going to set up a new LLC. So when I buy your property, Corwyn, and let’s say you have your property in an LLC, I’m going to buy from your LLC and I’m going to have title transfer to my new LLC. That way, I’m not taking on any problems that may have existed before. I have a brand new, clean LLC that I move forward with.
CORWYN:
OK, that makes perfect sense. So, Ted, a little bit ago you touched on something and it’s funny. I literally recently in our office meeting put this out there because I was sitting at closing a couple of months ago and the closing attorney brought this up because, again, like you said, most businesses have no idea that he had it up on the screen because he was working on it before that closing. So he started a sidebar conversation with me, letting me know. But if you don’t mind, let’s delve into this Corporate Transparency Act.
TED:
Yeah, of course. So the Corporate Transparency Act, as we mentioned, it’s not discussed about only a few attorneys are really delving into it. But what the Corporate Transparency Act is, it’s a new federal disclosure law that requires most small businesses to report information to the federal government. Now, this is different than what we were used to, because when you set up an LLC or a corporation, you’re usually only doing it with the Secretary of State. So it’s at the state level. So it’s unique because it’s the first law of its kind that requires businesses to report this type of information to the federal government. And you’re going to need to submit a lot of personal information. You need to submit information about the company itself, about the company’s beneficial owners. So whoever owns it and then also whoever sets up the company. And the biggest takeaway is that if you don’t do this, then you can face some very significant penalties that include ten thousand dollars in fines or two years in jail. It’s very concerning for me because a lot of people aren’t talking about it. And it affects over 30 million comfort. Yeah. Over 30 million small businesses in this country. So it has broad reaching effects and the penalties are very significant. And on top of that, it affects a lot of real estate investors, too, because a lot of them hold title to properties in LLCs. Those LLCs count as small businesses. And because of that, they need to report their information to the federal government. And if they don’t, then there’s a chance they could be slapped with those significant penalties.
CORWYN:
And I don’t remember, but I know that the penalties are fairly substantial. So what does that look like? And then what does the average small business LLC owner what have because people to be blunt about it. A lot of people think this doesn’t apply to them. It only applies to the big way.
GARRET:
And that’s the interesting thing, Corwyn. This is targeted for small business owners and small real estate investors. Typically, you have legislation that goes after the big businesses. But this legislation has an exception for big businesses. It’s going after the small LLC and corporation owner. Now, the intent behind this disclosure law is to catch money launderers and terrorist financiers. All right. And the Wall Street Journal had an editorial saying, does the government really think that these terrorist finance people are going to self-report? They’re going after these people. Thirty million of us have to file this. And I’d be surprised if they catch one money launderer from this because people aren’t going to self-report this information. It’s not a happy law. The government isn’t talking about it. A lot of lawyers have ignored it, but it is the law. It came into effect January 1st. We’ve been filing for all our clients because it is the law. I don’t like the law, but it’s the law. I have to help our clients. It’s ruined. And so because a lot of people are ignoring it, we’re finding that a lot of people are coming to us to get the filings done because the penalties, as you said, are significant. Two years in prison. The government is going to make an example of people who do not comply with this law. And if your company existed in 2023 or before, you have the whole year to file. You’ve got until December 31st to file. But I wouldn’t wait until then because it takes a while to collect this information and to file it. If you have an entity in 2023 or before, you should file it now. And then Ted can talk about what happens when you file an entity this year.
TED:
Yeah. So as Dad mentioned, if you have a company that was formed in 2023 or earlier, you have an entire year to get this information to the federal government. It’s called the branch is called FinCEN. It stands for Financial Crimes Enforcement Network, and it’s a branch of the Department of Treasury. 2023 and before, you have a year to get this info to now.
GARRET:
Eight months. We’re already into May.
TED:
And then for 2024, you have 90 days to get your information. So you set up a company this year. You only have 90 days instead of a whole year. And then for 2025 and after, you only have 30 days to get your information to them. There’s a little bit of a grace period right now, but in 2025 and going forward, you’re going to need to get this information to them as soon as possible. And if you don’t, you could face the law’s significant penalties that include up to $10,000 in fines or two years in jail if you willfully ignore it.
CORWYN:
OK, all right. So that is significant for our listeners, guys. If you have businesses, LLC’s or whatever else that are structured to set up, guys, this is something that you need to make sure that you listen, paid attention to, et cetera. Real estate investors, even real estate agents, as many set up LLC’s or some do S-Corps or what have you in order to run and structure their business properly. So you as well need to make sure that you’re paying attention to this.
GARRET:
One more thing, Corwyn, is when you file this, the federal government wants a copy of your driver’s license or passport. So they’re going to have this huge database with all this sensitive information in it. Now, you only have to file once unless you amend anything within the corporation. So you bring in a new person who’s a 25 percent owner or a manager. You have to amend at that time. If your driver’s license expires and you get a new one, you have to file again with the federal government. So part of our job at Corporate Direct is to keep track of your driver’s license or passport expiration date and let you know, remind you that you have to file again.
CORWYN:
Wow. OK. So you guys really are handholding it, making sure. OK. And which is great because as a business owner, you should be busy with business. Right? So having someone to take care of those other pieces that you can, OK, look, you got this. I can go over here and focus on making money versus, you know, chasing down or doing all this other stuff is that’s great. Yeah.
GARRET:
It’s important to have a team member, you know, to have a group of team members who can help you out. And so we built out our CTA filing department. So we have four people that are doing these filing. Yeah. It’s important to have somebody else help you out because in the end, it’ll make your life easier.
CORWYN:
Yes, so much easier. So, guys, look, let’s take this opportunity right here to make sure that we can get our folks in contact with you.
So contact information. Where can people learn more? But most importantly, reach out to you for questions and to get assistance.
GARRET:
So you can head on over to corporatedirect.com. We have a link there where you can schedule a free 15 minute consultation with one of our incorporating specialists. And on top of that, we have a lot of additional articles and resources that you can use to help educate yourself on anything corporate law related or the Corporate Transparency Act. So corporatedirect.com is what I recommend doing. And then we also have a YouTube channel of our own. So if you go to YouTube, type in Corporate Direct on the search bar, you’ll see our channel right there. I post videos there once a week. So if you don’t like reading stuff and you’d rather watch stuff, then you can head on over to our YouTube channel for that.
CORWYN:
Look, we definitely encourage our listeners to read more because sometimes the information is definitely misinformation and maybe in some of the other platforms or some of the other places. So we want people to engage, make sure they have an understanding and then reach out if they have questions. So we definitely want them to do that. So listeners, guys, please go to the website. Look under books because I’m loving the fact that you guys have like this whole series of books that kind of follow behind.
GARRET:
For real estate investors, the tax and legal strategies for real estate investors is one of the books Ted should tell you about his new book.
CORWYN:
Ted, let’s talk.
TED:
Yeah, that was pretty directed. I guess I got to answer this now. So I just wrote an e-book. It’s a free e-book. It’s titled The Five Tricks to Teach Your Kids About Money. And it’s really great because we are seeing an effort where parents are educating their kids on financial education. I think this is great because if we start them younger, they’ll be much better off when they’re older.
But one question that I got a lot from people was how exactly do you educate them? What are certain things that you could do to boost their financial IQ? And so I boiled it down to five tricks, which are things methods you can use to help boost your kids financial IQ. And if you head on over to sunstream.com, that’s S-U-N-S-T-R-E-A-M.com slash five tricks. That’ll take you to the link to download the e-book. It’s totally free. You don’t have to pay for it. And it’s a short read, but it gives you five methods that you can use to help your kids. And if anyone out there downloads it, I would really appreciate it. I’m at about 300 downloads right now. My dad has sold a million copies of his book. I definitely do want to catch up to him a little bit. So the more help I get, the merrier. That’d be much.
CORWYN:
I love it. I love it. All right. We’re going to help you with that. You don’t want to be sitting at the dinner table and look over there and see the table still slanted. We want to try to see if we can get that level.
TED:
We’re kind of eating it out a little bit here.
GARRET:
I never bring that up that I’m way ahead of him.
CORWYN:
Look here, we’re going to see if we can help you cover some ground there, Ted. We’re going to see if we can help you cover some ground. More than welcome. So, guys, look, we’ve had an awesome show today. So I always like to ask our guests and Ted, just being transparent and direct, man, you have a distinct advantage. You have next to you 40 years of experience and a good bit of that predates you, which means that the lessons have already been learned and you got a head start technically on everybody else. But I always like to ask our guests the hindsight question. If you knew then what you know now, what would you have done either differently or done sooner that would have you much further down the road than where you are?
GARRET:
I know my answer, but go ahead, Ted. No, that’s a good question. I would say that it’s important to learn this stuff sooner. I think I did learn this stuff as a kid when it comes to finance and the law and everything like that. But I think it’s important to start early and just to be patient in the process, just because I came into the law and it’s taken me time to learn. So I think it’s important to just start somewhere and make your mistakes throughout, whether it be financial, in your career, whatever it is. So start soon, be patient. And once you do those two things, you’ll see the results come to fruition at some point later on.
CORWYN:
Good deal. All right, Garret?
GARRET:
I wish I had bought real estate much earlier. My parents didn’t invest in real estate. I didn’t really know anything about it. Then I became associated with Robert Kiyosaki and the world opened up to me and I started investing in real estate later. It’s just something I wish I’d done earlier. And a lot of people are afraid of making mistakes, but that’s part of the process. That first piece of property, you’re going to make a mistake or two, but don’t let that stop you. Because over time, investing in real estate is a really good way to go.
CORWYN:
Awesome. Awesome. Those are words of wisdom. That was a big chunk of gold right there for our listeners, guys, right there. So Ted, Garret, I want to thank you guys for taking time out of your business schedules to be on with us today.
We’ve had a fabulous show. Definitely want to get you guys back in the future and delve maybe into particulars, but for our listeners, guys, please go to corporate direct.com. Check the website out, the resources and reach out to Ted Garrett and their team so that you can get the assistance that you need and help you to build and grow your real estate empire. So guys, thank you again so much from the bottom of my heart for being a part of Exit Strategies Radio Show family. Again, thank y’all so much for being, being on with us today.
TED AND GARRET:
Thanks Corwyn. Awesome. Thanks Corwyn.
CORWYN:
So for our listeners, one more time, you know how we do this thing over here. Y’all know how I feel. Y’all know what I say. Y’all know, I always put the two of those things together and I give it to you this way, which is, I love you. I love you. I love you. We’re going to see you guys out there on those streets.
