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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....
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)
Mom’s Mistake is No Excuse – You Need a Professional Registered Agent
You need a responsible and professional registered agent to receive and promptly notify you of a lawsuit. The Court will not accept excuses if you misplace service of process.
ADA Compliance and SEO
It turns out that by following SEO best practices, you are also in line with the four principles of the WCAG.
What’s new in 2021?
Corporate Direct will keep you informed of these new rules and will attempt to assist you with filing your FinCEN report.
Distributing LLC Money
Distributing LLC Money can seem confusing and burdensome at first. However, if not done correctly, you run the risk of a creditor seeking to pierce the veil of your entity.
California Does Something Right (Temporarily) for Small Business
The California Franchise Tax on business entities is the highest in the nation. But due to the economic impact of the Coronavirus, California is temporarily waiving this tax.
Is Bitcoin a Scam? Scam-Proof Your Assets
I couldn’t fit all scams in my newest book, Scam-Proof Your Assets. Is bitcoin a scam? No. Not in and of itself.
The Crimes of a Nominee Officer
Filing false reports with the state of Nevada can result in significant penalties. In this case the false filings were doubled. First, the Annual List was filed under a knowing falsehood.
Can Emails Create a Binding Contract?
When negotiating terms via email, make it clear in the beginning that the email exchange is for discussion purposes only
Are Reverse Mortgages a Scam?
Reverse mortgages are a calculated risk that should involve insights from numerous professionals. Be sure, before considering any such option, that you speak with a certified HUD housing counselor
New Laws Upend Property and Privacy Rights
Do these exclamations ring of an authoritarian bureaucracy? That bell is ringing louder in the last year as local, state and federal agencies have approved new restrictions on property and privacy rights.
Black Swan Events and Force Majeure Clauses
Force Majeure is a French term meaning superior force. It is also a contract clause that relieves parties from performance when an extraordinary event occurs.
The Four Dangers of Series LLCs
There’s a lot of talk about Series LLCs and people are wondering if they’re a smart idea. The short answer is that they aren’t. See 4 reasons to avoid them.