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California Non-Residents Beware: You May Still Need to File a Tax Return
Every American needs to file a federal tax return with the federal government. And if you live in California, you are required to fill out Form 540 for your individual state income taxes. This makes sense. If you’re a resident of California, you’ll file...
Trusts and S-Corps
Given the restrictions on the ownership of S-Corporation stock, it may be difficult for grantors to store such stock into a trust. However, upon proper election, the IRS regulations allow for two types of trusts to remedy this issue. Qualified Subchapter...
California Residents: Your Out of State LLC Will Face Double Taxation
California residents beware! If you own an interest in an out of state LLC and sell it, you will have to pay even more in taxes. The California Office of Tax Appeals (OTA) recently held such in Matter of Buehler, OTA Case No. 21067960, 2-23-OTA-215P (pending...
The Cascading Charging Order Explained
Real estate investors and business owners always run the risk of being sued. If they’re not protected, a courtroom loss can lead to a loss of personal assets. Even if they use a strong LLC, the victor in a car wreck case, for example, may try to get a charging order....
California Physicians Beware: You May Have Additional Requirements
If you practice medicine in California, you may have additional hoops to jump through. The Medical Board of California requires physicians who practice under a name different from their own to obtain a Fictitious Name Permit (FNP). If you do not have this permit, you...
Spending Money in College: Mistakes & Solutions for College Students
For most people, college is the first time to gain independence from your parents. But when college kids have this sort of freedom, they are prone to making many mistakes. And many of these mistakes involve money. While many of these financial mistakes are made, they...
The IRS is Cracking Down on Trust Promoters
By: Ted Sutton, Esq. There are some promoters out there who claim that they have a trust strategy whereby the trust avoids paying income taxes. But recent IRS rulings have started to crack down on this practice. The most recent ruling came from Chief Counsel...
The Difference Between Certificated And Uncertificated Securities
By: Ted Sutton, Esq. A security refers to an ownership interest in a business or a financial instrument. These ownership interests can be in a private LLC, or corporation, or in a publicly traded stock or bond. There are two choices for holding ownership interests in...
The CTA Applies to Your HOA
By: Ted Sutton, Esq. The Corporate Transparency Act (CTA) will apply to many different types of entities. It even extends to Homeowners Associations (HOA’s), including condominiums, community associations, and co-ops. This means that if you own an interest in an...
New York LLC Transparency Act
By: Ted Sutton, Esq. Marissa was an aspiring barista who lived in New York City. After she graduated high school, she started her own coffee shop in Brooklyn. She properly formed a New York LLC. However, she forgot to report her beneficial ownership information to...
California Residents: We Don’t Recommend Forming Wyoming & Delaware Statutory Trusts for Your Holding Entity
By: Ted Sutton, Esq. Sean and Scott are very successful entrepreneurs who live in San Francisco. They have had good fortunes investing in tech startups, and both have become very wealthy. Being shrewd with their money, they both decided to invest $5 million of...
Is Your Business an “Inactive Entity” Under the CTA?
By: Ted Sutton, Esq. Sam was a young man who began buying stocks at a young age. As he got older, his stock portfolio kept growing. But because he held the stocks in his personal name, Sam was concerned about the portfolio being exposed in a lawsuit. In order to...
Texas: The New Hotbed For Business?
By: Ted Sutton, Esq. In the business realm, Texas has become the lone star that is burning brighter. And it may become a top state for business in the near future. They say that everything’s larger in Texas. This also includes a larger demand to form a...
Five Reasons Why We Don’t Recommend DAO LLCs
By: Ted Sutton, Esq.Over the last few years, the use of blockchain technology has exploded onto the scene. DAOs have grown in popularity alongside it. So, what exactly is a DAO? A DAO is a new entity form that stands for Decentralized Autonomous Organization. What’s...
AI May Be Infringing On Your Copyrights
By: Ted Sutton, Esq. Intro Many people have used AI to generate new artworks. A few of them can generate an image. And as we saw with the artificial hit “Heart on My Sleeve” meant to sound like Drake and The Weeknd, AI can also generate new songs. But if you make...
Why Some Licensed Professionals in California Can Form an LLC, But Most Cannot
By: Ted Sutton, Esq. Mike has worked as an attorney at a large San Francisco law firm for five years. After graduating law school and passing the California bar exam, he was hired as an associate at the firm. Like many others in Mike’s position, he regularly worked...
Commingling Funds – Why you should NEVER do it
When someone sues your business, a plaintiff may try to pierce the corporate veil to hold you personally liable. The corporate veil itself symbolizes that you are keeping your business property separate from your personal property.
Cancel Culture in a Petri Dish
Cancel Culture in a Petri Dish When Free Speech Mutates into Contract Interference You have your opinions. Must everyone else agree with you? How far will you go? Will you end up in court? If a business does something you don’t like, would you stage a boycott? Would...
The Q-Sub
A Qualified Subchapter S Subsidiary (Q-Sub) is an S-Corp that is 100% owned by a parent S-Corp. Both the parent entity and the Q-Sub can be a corporation or an LLC.
Section 1202
So what exactly is QSBS? Under Section 1202 of the Internal Revenue Code, a taxpayer may be exempt from paying capital gains tax when selling QSBS stock if they meet certain requirements.
The Corporate Transparency Act
The CTA requires both companies and beneficial owners to submit a report to the Department of Treasury’s Financial Crimes Network (FinCEN). Both requirements are discussed below.
How LLCs Can Protect Doctors
Doctors are frequent targets of medical malpractice suits. This is why many of them have malpractice insurance to cover these claims. But what happens when the insurance does not cover the full amount?
Multi-Member LLCs: Structure and Issues
Members can own different ownership percentages in an LLC. Generally, ownership percentages are based off the member’s capital contributions.
Are You a California Resident?
Many people believe that as long as they are outside the state of California for six months and a day they are not residents of California. And thus don’t have to pay California’s high income taxes. But the state of California is both broke and arrogant. And they make the rules the way they want.
Design Your Asset Protection Plan
You design a lot of things in your life. The layout of your house, the flow of your business, the requirements on your children, and many more scenarios are all elements of conscious design. Asset protection is no different. There is an architecture, a cohesive...
Corporate Opportunities
Does the Rule Apply to Real Estate? If you invest in and/or syndicate real estate what are the duties to your investors? You owe them a duty of loyalty. But how far does that go? The issue of corporate opportunities is important. I wrote a whole chapter on it (from...
Checkbook IRA
A recent case has shed light on one of the riskiest retirement plan strategies put forth by promoters. In McNulty v. Commissioner (157 T.C. 10) a U.S. Tax Court brought clarity to the scheme of using self-directed IRAs for personal investments.
Piercing the Corporate Veil – How to Avoid It
50% of piercing the veil court cases nationwide succeed because owners are failing to properly follow corporate formalities. This exposes business owners to personal liability - meaning they can lose their possessions. What is the Corporate Veil? What is the corporate...
The Wyoming DAO LLC
A DAO is an organization operated by a smart contract, which is a computer code running within the blockchain. The ‘A’ for Autonomous refers to the self-executing nature of it all.
Has The Time Come For Cyber Bounty Hunters?
How vulnerable is our own infrastructure to cyber attacks? Should cyber pirates be paid, as they were by the Colonial Pipeline authorities?
Bylaws and Operating Agreements
Many states allow for oral understandings to serve as an Operating Agreement. Can you see the danger in this?
Why Manager Managed Instead Of Member Managed?
One of the biggest questions we’re asked when clients are forming an LLC is: Should we be manager managed or member managed? The LLC allows for great flexibility.
California: Pay To Play
California continues to fight for its $800 minimum franchise tax. If you live outside the state but passively own real or personal property worth over $50,000 inside California you are doing business in the state. Sayeth California’s Franchise Tax Board: Please pay the $800 or we’ll sue.
Corporate Transparency Act Update
The Corporate Transparency Act (“CTA”) passed by the Senate and House now requires annual reporting of an entity’s beneficial owners to the U.S. Treasury’s Financial Crimes Enforcement Network (“FinCEN”) database.
The Five Ws in Every Good Business Plan
You may be in a hurry to put together your business plan. But don’t confuse the frenetic blur of activity with thoughtful preparation.
Tax Advantages of Incorporating Your Business
We’ll give you the best reasons for incorporating your new business based on tax benefits and give you the information you need to incorporate.
Employer Identification Number (EIN)
EIN stands for Employer Identification Number. The IRS requires that you have such a number when you incorporate or form an LLC.
C Corporation
Corporations have been used for over 500 years to limit owners’ liability and thus encourage business investment and risk taking. Their use for this purpose continues to this day. You will hear about both C Corporations and S Corporations. Both are corporations with charters granted by the state of organization.
S Corporation
Business owners can select how they wish to be taxed, and an S Corporation is one of those tax designations that can make a big difference in how much you pay in taxes, and how to handle profits and distribute shares.
Limited Partnerships – Advantages and Case Study
Limited partners are not held personally responsible for the debts and liabilities of the business, although the GP, if an individual, may be personally responsible.
How to Set Up Single Member LLCs
You must be very careful when you are the only owner of your LLC. Single member LLCs require extra planning and special language in the operating agreement.
How to Bring Investors into Your Business
How do you bring investors into your business? Not the sympathetic Mom and Dad kind of investors but rather the serious investors who expect quite a lot.
Incorporate First – Deduct Second
Should you set up a corporation or LLC before you start trying to deduct expenses? A recent case suggests you should. Many think that they can deduct all of their start up expenses before formally incorporating a business. But in Carrick v. Commissioner of Internal Revenue (T.C. Summ. Op. 2017-56, July 20, 2017) the Tax Court ruled otherwise.
LLC vs Corporation
Choosing the right entity can be one of the most important decisions a business makes. Business owners and investors may find themselves asking which to pick, LLC vs Corporation.
Courts Limit Pension Payouts
Are you certain of your pension? Can you count on Social Security to pay you in the future?
Garrett Sutton Recognized for Lifetime Achievement Member by America’s Top 100 Attorneys
America’s Top 100 Attorneys announced the Lifetime Achievement selection of Garrett Sutton, Esq. among America’s Top 100 Attorneys®.
Case Study: How Does Reverse Veil Piercing Occur?
Piercing the corporate veil. It sounds painful, and it is. A judgment is entered against a corporation with no assets. To collect the court allows the judgment creditor (the winner in the case) to pierce through the corporation and reach the personal assets of the shareholder.
4 Reasons To Use A Limited Partnership Or LLC For Real Estate Investments
Although other limited liability entities are available, for the following reasons, the preferred entities for real estate investments are the limited liability company (LLC) and the limited partnership (LP)