q and a 2014

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Business plans and the items that needs to be recorded; [5:00] taking minutes, using Written Consent and Waiver of Notice, comparing S LLCs and S Corporations; [8:00] What is the IRS form 2553 and when to use an ‘S’ election; [14:00] using a Minutes Service; [16:00] tax deductions and business write-offs; [18:00] Changing / removing members / partners in an unused company; [24:00] filing the 2553 and obtaining IRS confirmation; [27:00] do you need to take a salary when the company isn’t making money; [28:00] changing ownership of a rental property from your name to that of your company; [30:00] removing a partner [cont’d]; [32:00] what is a trial / soft close re: tax returns; [34:00] where is your principal place of business, UPS FedEx store front / home office, amend operating agreement, finding the workbook for business templates and discounts; [39:00] buying tax liens before your business is started; [40:00] the “missing incorporator page”; [42:00] how to use the Certificate of Secretary; [43:00] re-issuing certificates to transfer ownership; [44:00] can you use a company for multiple business activities; [46:00] does your state require a written consent; [51:00] when do you need to use a 2553 form; [53:00] non-profit companies and the issues surrounding the effective use of 501(c)3; [55:00] what is a claim against the company when trying to remove a partner [cont’d]; [59:00] back-dating documents – don’t;

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What to do after receiving your company minute book package; [3:15] completing a Real Estate resolution; [5:10] determining the amount of the capital contribution; [7:30] using sub-Chapter S to pay salary to a family member; [12:15] how many units can be used in an LLC; [14:15] strategies for withdrawing money from a corporation or LLC for other business purposes; [19:30] do transfers trigger an audit; documenting transfers to / from yourself company; [23:30] what expenses can be claimed as a start-up expense; [25:15] holding your annual meeting with yourself; [27:00] finding / choosing / working with a bookkeeper;

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How to pay yourself through an S Corp or S LLC; [9:10]using your EIN to avoid co-mingling funds; [11:40] setting up a business bank account and the capital contribution; [14:00] effective use of your minute book to document expenses and payments to contractors; [24:30] leveraging a home equity line of credit to buy / finance a purchase; [32:30] restrictions on using IRA funds to partner with other investors; [35:30] difference between members and managers in an LLC; [37:40] compare an IRA LLC with a standard partnership LLC; [43:00] The order to the initial set of meetings and using written consents and waivers of notice; [52:20] deciding on the correct structure for IRA investing;

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What is asset protection; [2:00] steps needed before opening a bank account; [4:00] how long does it takes for the IRS to confirm a change; [7:00] types of insurance; [9:00] borrowing money from a 401(k); [12:00] using an IRA to invest in real estate; [13:00] completing an IRS form 2553; [15:00] selecting business insurance; [16:00] Corporations and the 1120 / 1120S; [19:00] EIN and minute book; [21:00] Electronic Federal tax forms; [25:00] assigning shares on 2553; [27:00] ownership of rental properties determines membership of LLC; [30:00] confirming IRS docs reflecting S election; [31:00] when to file IRS docs to change LLC tax election; [35:00] claiming expenses before making a profit – use a business plan to help justify that you are not a hobby; [44:00] process regarding review of minute book; [47:00] do not use an INC for rental properties; [51:00] using separate phone / address for a business; [57:00] hobby vs. business;

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Capital Contribution vs. Loans vs. Business expense; [8:00] where / what to sign in your minute book; [10:00] hiring people; [11:00] state ID information; [13:00] what are the resolutions of an incorporator; [15:00] what date should be used when filing a 2553; [17:00] assigning share values; [19:00] who are managers, what do they do; how can you tell; [42:00] Registered Agents; [46:00] what is required when getting funding from SEED capital; [52:00] credit scores; [56:00] using Section 8 for rental properties; transferring title to your company; insurance coverage; [1:02:00] documenting a decision without a meeting;

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What is the purpose of a minute book; [5:00] using an LLC for rental properties and using Chapter C to restrict cash flow to maintain benefits; [16:00] completing the IRS form 2553; [17:00] do lenders require a company address change; [19:00] using the “waiver of notice” to streamline recording business events; [40:00] lending your company money; [44:00] using a company bank account; [48:00] what are the Articles for a Stock Corporation; Corporate By-Laws; Dun and Bradstreet; [54:00] loan repayment; [59:00] borrowing money from your 401(k); [1:07:00] using the company seal;

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Transferring property title; [3:00] funding an S Corporation – loan or capital contribution; [4:00] adding or removing a member to an LLC; [10:00] co-signing on a bank account; [14:00] Certificates – assigning and recording them; [16:00] first meeting; [17:00] transferring title on a property; [22:00] how many properties are permitted in 1 LLC; [26:00] separating company / personal bank accounts; [28:00] safely ignoring the company requirement to give notice of a meeting;

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Completing the IRS form 2553; [3:00] Maintaining the corporate veil and avoiding Hobby Status; [10:00] how large should your capital contribution be; [13:00] non-profit expenses; [16:00] 105 reimbursement plan coverage; [19:00] using a 1031 exchange to postpone taxes; [29:00] taxes on the sales of real estate;

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When are meetings REQUIRED; [1:00] Is the Certificate of Formation the same as the Articles of Organization; [3:00] changing state rules for the Registered Agent address; [8:00] adding resolutions to the minute book; [9:00] should you use the 2553 to change your company tax election to “S” – either LLC or Corporation; [15:00] what are the different types of tax treatment available to an LLC? a Corporation?; [20:00] when should you decide to become an “S” company; [31:00] is there a Statute of Limitations; [33:00] do you need to use a special format for resolutions; [34:00] how to regard capital gains; [37:00] how much or little should you provide as a capital contribution; [40:00] comparing your Operating Agreement and the state “Act” that regulates company activities; [42:00] using the Banking Authority to add other signers; [44:00] ownership Units for LLCs and Shares for corporations; [45:00] the difference between an S LLC and an S Corporation; [50:00] IRS form 1065 / K-1 to change from a single member LLC to a multi-member (partnership) LLC; [51:00] ask your accountant if the ROY case can be used with your home; [55:00] how often should paychecks be issued; [56:00] where to document the number of ownership units for an LLC; [58:00] do you have to issue paychecks if your “S” isn’t profitable yet; [59:00] allowable business expenses; [1:00:01] combining handyman business with a real estate S Corporation;

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What does the IRS form 2553 accomplish; [2:00] is there an order to the modules and videos;[ 4:00] opening a business bank account; [6:00] why should you use an S LLC or an S Corporation; how does “S” save on taxes; [10:00] choosing an accountant; [19:00] going through the Minute Book – front to back; [41:00] using Trusts; [43:00] business banking considerations; [47:00] do you need a notary;

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Loaning money to your business; [5:00] other books to read about LLCs and Corporations; [7:00] some examples of unusual business deductions; [21:00] “renting” your home office; [29:00] going through the Minute Book; [40:00] turning your hobby into a business expense;

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the importance of doing company paperwork; [10:00] business expenses and avoiding co-mingling of funds; [14:00] opening the business bank account and capitalization; [23:00] following instructions for the IRS form 2553; [24:00] using “prom” notes and loans to the company; [35:00] sharing items across multiple series in a series LLC;

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Using a single member bank account; [5:00] Manager, secretary – which title to use; [8:00] what is the correct election to use – S, C, partnership or single member; [9:00] should you consider the money you’ve spent as a capital contribution or a loan or a business expense, using prom notes; [15:00] California Franchise Tax Board – FTB; [17:00] paying yourself – owners’ draw; [23:00] S tax election requirements; [27:00] hobby vs. business; [32:00] using a loan agreement; [34:00] how to represent yourself; [38:00] picking a company address; [39:00] using a local registration; [47:00] doing business out-of-state “foreign registration”;

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Using a 105 plan to have your company pay your medical expenses; [4:00] re-financing your property; [7:00] paperwork for a single member LLC; [11:00] transferring a personal business license to your LLC; [12:00] does your LLC need a business license for rental properties; [15:00] business credit and borrowing from a friend; [24:00] paying yourself first; [29:00] California form LLC-12; [30:00] re-using an LLC for a new purpose; [36:00] New York form 275a; [42:00] dissolving companies; [44:00] number of units assigned to an LLC; [46:00] how much to invest in capitalization; [49:00] deciding on ownership percentages; [55:00] business insurance;

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Different types of taxation – single member, partnership, S (2553 form), C (8832 form) and when you should consider S or C; [8:00] the difference between a member and a manager or a shareholder and an officer; [9:00] form W-9 for a single member LLC; [11:00] filing jointly – pros and cons; [12:00] other agencies that may be able to tax you; [18:00] filing a tax return for a partnership LLC; [21:00] how soon should you complete your first meeting?; [24:00] determining how many units you can assign for your LLC; [25:00] what is your title – member, manager, president …; [31:00] completing Schedule ‘A’ in your minute book; [33:00] how to add money to your company without co-mingling your funds; [36:00] paying off debts incurred by an old LLC;

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When should you consider using IRS forms 2553 or 8832; state Franchise Tax Boards; [3:00] if you are a high wage earner when should you select “S” tax election; what about “C” benefits; [14:00] using different bank accounts with a Series LLC; [16:00] Completing your LLC Minute Book; [35:00] using Trusts and Trustees; [1:00:00] using a Self Directed IRA account for non-traditional investing; [1:10:00] using form 1065 / K-1 for partnership companies; [1:17:00] changing ownership of your LLC and returning certificates;

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What to do when your accountant ‘vanishes’; [5:00] how detailed do you have to be when documenting decisions; [14:00] adding members &/or managers for funding reasons; [18:00] when should you use a ‘waiver of notice’ or a ‘written consent of action without meeting’ and what about the ‘certificate of secretary’; [27:00] taxes – personal and business; [36:00] banking documents; [42:00] accounting for training and educational expenses; [45:00] obtaining corporate credit and working with lenders and hard money loans;

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Single person (member) LLC – what to do with schedule B and schedule C; [3:00] what documentation is needed for the state initial list; [4:00] single person (member) company paperwork; [7:00] completing the IRS form 2553 for ‘S’ tax election; spousal consent; using an estate planning trust; California Franchise Tax Board fees; [14:00] using the Certificate of Secretary and transferring certificates to new members; [17:00] how many units should you assign your LLC; [21:00] when should your S-Corp or S-LLC start paying you a salary; [22:00] where can / should your accountant be located; [24:00] making distributions of profits; [27:00] tracking mileage and other items for the IRS; [29:00] printing receipts;

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Don’t be a hobby; [4:00] paying company and start-up expenses on a personal credit card; [10:00] company logo and actual LLC name; [11:00] when does California FTB send payment notices; [14:00] converting rentals to flips if the market allows; [18:00] registering a California company in Connecticut; [20:00] 30% with-holding when using foreign investors; [27:00] repayment of loans; [30:00] privacy in 21st century America; [36:00] getting ready to split a business into separate parts for franchises; [39:00] investors – accreditation and non-solicitation; [47:00] asset protection or liability protection – can you get both?; [56:00] using an umbrella company for tax treatment; [1:02:00] equity stripping – pulling money out of a deal ; … and we dropped the call – sorry about that.

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Real estate – rentals vs. flips / wholesale / rehab; using an out-of-state company to manage property managers; using “C” LLCs or Corporations; [21:00] restrictions on company names; re-using an EIN; using a DBA or fictitious business name; [27:00] using a Delaware LLC for proprieties in another state, banking considerations; [29:00] do you need a business license to sell properties in your state; [30:00] California and the LLC-12 form; [38:00] selection a web host to support your web site; [41:00] using an S LLC or S Corp for multiple streams of income; [43:00] should you change an S to a C election; using multiple ‘personal “S” entities with partners; [56:00] when to file the California LLC-12; [58:00] Minute Book Appendix A and your SSN; [1:00:00] problems registering a Series LLC in a state that doesn’t support the Series concept; [1:03:00] rolling unpaid interest into the unpaid balance of a loan; [1:06:00] details of ‘prom’ notes; [1:13:00] division of work – President, Secretary and Treasurer; [1:16:00] minutes and annual meetings / reports; [1:19:00] operating agreements and when to hold the initial meetings

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lending money to your real estate business; [6:00] when do you use a written consent or a waiver of notice; [8:00] when should the first annual meeting be held; [13:30] when should your first regular meeting be held; [16:30] different tax treatments for your LLC – “S” or “C”; [23:00] bookkeepers and accountants – do it yourself vs. hiring a pro

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replacing yourself as LLC member with your Living Trust; [5:00] do you need to use the Certificate of Secretary; [8:00] how often do you need to hold meetings; [12:00] transferring title of a property into an LLC – transfer taxes; [17:00] gold seals vs. metal crimper; [18:00] trust deeds vs. tax liens; [25:00] working with a hard money lender vs. adding partners and a Joint Venture Agreement; allocating income and expenses; [41:00] example of manager liabilities and the corporate veil; [54:00] types of business insurance – commercial umbrella liability policies; [1:00:00] flow through entities do not have retained earnings; [1:03:00] financing alternatives – hard money;

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wide-ranging discussion regarding qualified retirement plans and self-directed investment. Should you roll your work 401(k) when you leave a job? to an IRA?, a solo 401(k)?, a Roth IRA? discussion of prohibited transactions; limitations on partnering with your IRA; getting paid by an IRA investment; [45:00] funding your company – capital contribution?, business expense?, loan / promissory note?;

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discussion of the uses and needs for an LLC or Corporation; [10:00] Holding a NY property in a PA LLC and registering for liability protection;

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using 1 LLC for multiple types of businesses; [6:00] part time real estate; [9:00] using REIA as a resource for finding investors; [12:00] finding escrow / title officers; [16:00] “dealer” status; [20:00] LLC renewal process with Georgia; [22:00] changing the type of business activities; [24:00] single member LLC and a non-member manager; [29:00] terms for a business loan; [34:00] expense deductions and limits; [36:00] trusts; [40:00] finding hard money loans; [44:00] working with medical professionals; [45:00] private lenders; [46:00] start-up costs vs. loans;

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[0:00] Using LLCs for Real Estate; [3:00] comparing an S corp and an LLC; [13:00] monthly fees and support; [18:00] Bookkeeping – Do It Yourself or Hire; [35:00] business expenses as tax deductions; [44:00] allocating expenses across multiple LLCs; [49:00] when to transfer properties into an LLC; [51:00] capital contributions; [53:00] adding to an existing capital contribution; [57:00] accounting for training expenses; [1:00:00] using an LLC for tax reduction and / or protection; [1:05:00] Capitalization, loans, prom notes and repayment; [1:07:00] part time real estate activities and S tax treatment; [1:14:00] using written consent and a waiver of notice as the only person in your company; [1:20:00] documenting your business decisions;

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Removing partner from an LLC, changing state registration, updating IRS; [9:00] Holding the Initial Meeting; [11:00] having the LLC pay for courses and other expenses; [13:00] using promissory notes or loans; [14:00] vehicle mileage or outright ownership; [17:00] filing taxes as a disabled vet; [20:00] accumulating several weeks / months of expenses before issuing a prom note; [22:00] annual meetings during your first year; [23:00] acting as a trustee during meetings; [27:00] Schedule B and C not used for single member LLCs; [28:00] Chart of Accounts; [29:00] state sales tax bonds; [32:00] completing the Minute Book; [33:00] Secretarial Certificates; [37:00] titles – manager vs. president, secretary, etc.; [42:00] using a written consent or waiver of notice; [44:00] Quarterly Tax Reports; [48:00] business activity to justify expense deductions; [50:00] when to hire a bookkeeper; [55:00] using Series LLC for flips and rentals; [57:00] holding multiple properties; [59:00] types of trusts; [1:00:01] prom notes interest rates, terms; [1:12:00] charging credit card interest; [1:21:00] interviewing accountants; [1:22:00] Series vs. Standard LLCs;

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[2:00] Banking – use the same bank as your personal account, or not; [5:00] Maryland does not allow Series LLCs at this time; [9:00] what goes into your minutes; [11:00] Skype calling; [12:00] spending limits; [13:00] authority to sign contracts; [15:00] transferring property into an LLC; [19:00] hiring family / 1099; [21:00] using the “C” tax election for benefits; [29:00] single member or sole owner, waivers of notice and written consents; [39:00] transferring ownership is living in part of a duplex; [41:00] renting office space from yourself; [47:00] re=allocating personal debt; [54:00] land trusts, hobbies; [1:03:00] personal and credit card expenses;

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types of seals used today; [1:30] buying property in the name of your LLC / Corporation; [7:00] taxes for a Series LLC; [8:00] naming conventions for Series LLCs; [19:00] using an IRA with a Series LLC; [14:00] issuing certificates; [21:00] state business license deposit; [22:00] what needs to be written in the minute book; [28:00] finding training modules; [30:00] electing C tax treatment, usefulness and reversing the election; [39:00] why use an LLC?; [44:00] home office space and deductions; [52:00] start-up costs, operating costs, loans, capital contributions; [58:00] what should you record in the minute book; [1:01:00] holding title – tenants-in-common?;

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trading and handling expenses, start-up costs and training; [6:00] using the educational modules; [8:00] real estate with an S or a C tax election; [20:00] determining home office space and deductions; [29:00] transferring real estate into an LLC; [35:00] charging rent for your home office; [40:00] different brokerage accounts for personal trading or with a funding supplier;

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where we discuss funding your business – loans vs. capital contributions; [12:00] using expense reports and loans to collect money from your business; [22:00] handling training expenses; [29:00] using a “written consent” or “waiver of notice” to maintain the formalities; [34:00] how many meetings you should have; [37:00] the titles that you can have in your company; [41:00] meeting paperwork; [54:00] notarizing documents; [55:00] annual meetings;

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[1:00] making loan(s) to your business; [4:00] using the C tax election along with an LLC for real estate flips; [15:00] how can a C election benefit you; [26:00] Pennsylvania Real Estate; [33:00] the benefit of using Homestead Protection for your own residence; [39:00] representing the C LLC as the general manager; [41:00] what titles can you give yourself; [41:00] documenting loans; [52:00] paying yourself with an owner’s draw;

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