OK, very well. Well, thanks for joining us. We're gonna be talking about the basic, some basic methods of using an LLC.
We're gonna be talking about how to use a fictitious name or a DBA, and also, why do you want to do that?
There are some situations where you do want to do that, but generally, if you haven't seen any of my other videos, I usually talk about how to structure the ownership of assets, or the management of cash flow in a way that changes the property rights.
That you normally are told that to, to use a certain way. You're normally instructed these companies or LLCs in a way that creates liability. What I do is show people how to change the property rights in a way that avoids liability.
Here's a quick example, if I'm gonna get interest or dividends from an asset stock or something like that.
Or I'm gonna sell gold and get dollars for it and I'm gonna get a 1099, I can legally avoid that.
Creating that tax liability if I just change the way I sell the property or hold the property rights.
And we can get into more detail on that.
But, um, Dawn here had some really good questions And I want to let her start with her questions and we'll let this take place how it, how it unfolds.
OK, so, I guess my first question is the, Why don't we start with the DBA?
When would you use it? What name would then you use on your bank accounts? And how would you go about changing the LLC, to use that?
There's two purposes. Yeah. That's a good question. There are two purposes on a DBA. I'm gonna probably do it for marketing.
So, if I want to try some new advertising, and I want to do in a different name, So I'm processing payments in a different name and arm advertising, a different name other than my core company name or my brand name. Maybe I want to do something.
I want to advertize to a market where I don't want to mix my other market that I have with my my brand, I want to do something new and just test and see what happens. Maybe it can mean it's going to fail. Maybe people don't like the offer, right? I don't want to connect that to my original.
So I can then I can offer it to the prospective customer, and I can process the sale through my merchant account under the fictitious name or DVA using the same company. So it's going to save you the money of registering a new company in the, you know, all that nonsense of getting a tax number bank account.
So, the way I do it is, that one example is I would just go to the bank, Because the bank is going to be the one I'm really needed to deal with, because I can advertize a DBA. I can, I can make up any name I want. I can place an attic and put a Facebook post. But when it comes to the bank, I need to clear the funds.
So you gotta go to the bank, your merchant processor, and your bank account or both, and ask what the bank wants to see to recognize a fictitious name for your current account holder. So you have an LLC that's already running everything. And you go to the bank and say, hey, I want to start processing payments under a new fictitious name, or DBA or a trade name.
And so, the banker, you should tell you something.
Like, register it with a state and give us a certificate.
So, what you do is you go back to your secretary of state, it could be in any state.
Now, sometimes the bank, you don't have to domesticate your company, so just keep that in mind. Sometimes the bank will say, Oh, you gotta bring your registered over here where you live and then we'll let you do it. You don't really have to do it that way but basically the banks going to tell you, go back to the state register fictitious name. You would make your LLC or your company, the owner of that fictitious name, That's how it works.
Then they might do a couple of things.
A bank, and say, OK, now that we see that you registered with the State, we will, we will amend your account.
Well, we'll change it so that we can accept payments either way. Or we want you to open a new account, or they'll do it for you.
Just still open another account.
No, so you have two accounts now.
All right, and they can merge them and all that stuff. So then you got, you got your merchant account, your check processing, and, or your bank, your core bank account.
That's how you would do it. And you would do it for marketing purposes.
Another way of doing it, now that, that covers a lot of different things in besting marketing, it doesn't avoid legal liability as much as it gives you privacy, OK, On the surface, because if, if you were involved in some kind of crime or something, it wouldn't matter, No, what you're doing on the, on the front end, because it could always be discovered what you're doing with the bank, right? But when you're marketing A using a fictitious name, no one's ever going to be able to track it back and see what the actual core company is called, and who cares. Anyways. The other way is, if I'm let's say I want some privacy for myself.
Personally, let's say I want I want a debit card.
This is a simple version. I'm going to debit card with a fictitious name on it.
Let's say I want to be known as, I don't know.
John Smith, all right.
Put her name. Well, I just opened up a company or I already have a company. I don't care what I have to call, it doesn't matter. I have a bank account for it. Then I just go to the bank again. And I asked, can I, how can I get the bank to recognize payments made to a fictitious name for this LLC?
This current account holder, you already have the account open.
Now. you could do it at this at the time you open the account. Just depends on how you want to do it. I just say, I didn't know an account yet.
So that might be easier. So just ask them to say, Well, it's usually, when you open the account mixture, that's gonna go through. Because sometimes they give you a hard time on the accounts and all that. But once you know you're gonna get the account open. Just say, Oh, by the way, I might set up a fictitious name, because I have a different marketing thing, I want to try it. If you don't have to explain yourself to the bank, but just, you know, human beings. You talk to people and they'll say, Oh yeah, if you want a fictitious name on this account, we can do it right now for you. Or they might say, just have it documented. Go register with the state.
They all, they also might say the bank might tell you, publish the fictitious name in relation to the original company name.
In a local business journal, they might say do that three times, that is unusual, that's, you're talking to somebody at the bank that's probably been there for awhile, it's, you know, has more experience.
But easily, you can do that, the Secretary of State. So if I now I have an LLC account with a debit card.
But I can also get the debit card issued, the name, the individual name. So John Smith is not a human beings name.
It's the name of a company which is what the bank sees but the rest of the world sees John Smith. They say. Now I've done that with people that were in the middle of active levies. This is the best example so the IRS is doing a levy on somebody and this person there's one great example.
This person, she's this woman, had a nice commission check from a real, being a real estate agent, probably has Barbara $30,000.
Well, she couldn't clear the funds because the IRS had levied everything and it was just sitting on all her accounts. And so, as soon as she were to clear the funds, and it's made out to her name, there's no way around.
Having it paid out to accompany, OK? Most of the time, once the checks already issued, you're not gonna be able to change it.
And a lot of times, no one's gonna want to pay it to anyone other than yourself, anyways, if you can work around that. So if she were to clear the funds are deposited them, they would have been gone and it wouldn't have solved a problem. So what we did is, we set up a new LLC. She was a signer for it.
Even though she's gunfire, she's got the IRS attacking her. Now, in her case, we added her daughter to give, again, we use the changing the property rights to avoid liability.
So she and her daughter were the signer, and the owner, we just did it that way. There's versions of that. And then, we gotta DVA for the company. I don't even know what we called it, but we use her legal name that appeared on the check as the DVA. Now, this takes time, it might take a week to do this, right?
So, once we did that, she was able to clear the funds at the same bank, that the IRS is loving all her other accounts.
So, right next to all her accounts being levied right? next to the IRS, she's over there moving her money around.
There'll be another example of using a DBA.
OK, so, Could you use a DBA?
Let's just say you're that LLC is holding multiple one thousand ninety nine's and maybe the name.
You just want to use a DBA for a separate 10, 99, I guess, that would be for privacy, so, that would be appropriate.
That would be certainly a good use for it and also organization.
So, if I have different cash flows and also maybe different interests, maybe I have, maybe I mentioned cash flow where one cash flows for a rental income. That's mine.
And then, the other Cash flows for some other business thing, where I have a partner, But, we've agreed to use my, My company, to manage the cash flow. But, certainly, that would be great.
I can use a DBA, and the 1099 will be paid to the DBA, and that'll handle that, it'll separate it out, because, because I've got two different interests here, I've got my own interests, then I've gotten my interest with a partner.
That'd be a great example, Yeah. OK.
What would be the process to change with the Secretary of State?
Would you just, like, add that to your same existing LLC that was registered?
An easy way is to go login to the Secretary of State, and you would register a fictitious name and in that process, the state will ask you who, who the owner is and you want it to be the company that you're working with.
It's like a new registration so a new registration of an LLC.
There'll be no, it'll be a new registration of a thing. A thing you're registering with the secretariat but you're but you're going to do is make the LLC that's already registered with that state, the owner of this fictitious name and it'll ask you who the owner is.
Don't make yourself the owner.
OK, OK, so, my next question would be, if you have assets that you've already purchased with your biological name, the one your social Security number is registered to, could you find an existing LLC with, with that?
And, if not, how can you protect those assets? If that makes, you want to take something out of your name?
Yeah, so, so, let's just say, for example, I've already purchased crypto.
No, and I registered my name to that.
So, how can I, can I put that in my new LLC, can I find my new LLC, with, with that, or, or, or now, how do I know the answer is? Yes. So. So just, I'm going to try to make this as easy as possible, because sometimes you don't have to do anything. So if you, it depends on how you own and bought the coin. So if you bought crypto coins and use a third party like Coinbase that's a third party.
And for that you you want to not have it in your name, so let's say you did that in your name then. That's no problem. Buying assets are not taxable, it doesn't matter for everybody. Sees it. But what you wanna do is the time you want to take profits. Let's say just keep it in Coinbase. You.
Want to open up a new account at Coinbase, and use your LLC, use your password.
Then once that's open up, now, you have two accounts. You have a personal and a business at Coinbase for example. Or maybe it's a vault, we're holding gold, right? So then you open up a new account. That's how I like to do it that way. I just open a new account because that's cleaner.
And then I can literally move the property from my own title, my personal holdings, to the company.
I can just move it.
And why can I do that? Because I retain beneficial interest, it's not a sale, is no trick, I don't need a loan contract, I don't need to document it any way, you just take it from here and put it over there. It's all perfect.
Then you, you account for it however you want to.
This is only, if you're taking profits, because obviously, it doesn't make any sense that transfer it to, you know, while it, if you, if you've already purchased that, or because it's only for your eyes only. I wouldn't change it, unless I had to, another reason why you might want to have to change. It might be in that situation, is because maybe you're getting sued maybe you're there's some financial thing, where you're personally liable for something and you don't want someone to reach into that asset.
So then I would transfer it over.
The LLC allows you to change your property rights, whereas if you just own the thing, you can't change your property rights.
You can't even share them in an LLC, I can share my property rights and I can avoid liability for both people that share the rights or all three people.
But personally, I can't do that.
Used to be back in the seventies. You could just add your Uncle Bob to your bank account if you're getting sued and the creditor couldn't levy the money.
But because of the way the banks operate now in software, the software dictates that, even if your signature card says something else, the software ignores it.
So we have to use an LLC and that allows us to change the property rights.
So yeah, just move it over if there's a third party the other way is take it off a Coinbase right to put it into a ledger. Yeah, I never I never mind coins on Next And I'm just thinking like a purple for your own personal wallet. It wouldn't matter really?
It's not going to matter as long as you keep it in your wallet. Yeah. No, one can really even Coinbase craters And I can reach into Coinbase now. in the future they might.
But right now, no one's doing that unless you've filed bankruptcy, that's different. Yeah, that would be just move it over.
OK, thank you and then I guess while while we're on the subject now, I will say, though, the loan process for, Let's say you have a scenario where you, you have, you are now renting a property That was your parents' home, OK? Your parent is, is on the deed and so are you, so parent child on the deed.
Um, parent is mentally incapacitated, you are the POA for that parent and you want to protect that asset.
Um, and you want to transfer deed or transfer property rights to throw a quick claim deed.
When you're setting up an LLC to hold that quitclaim deed, does it have to be a multi member LLC?
In this case, since the parent is also on the deed A, B, I know Medicaid gets funny with this kind of stuff, because she, she is receiving a community waiver in my home.
And three, if I would have to set it up to be a multi member LLC, could I transfer friends from that LLC, if I can even do it to, to an LLC that where I am, the only one with rights, property, OK? Let's, let's do. That. Makes sense, I think, so far.
So, let's look at a perspective of you're qualifying for public benefits like Medicaid. Millimeter hmm. So, you'd be very careful with that.
So look at your application process, and make sure that she, I'm not, I'm not even looking at those right now.
I'm just going to tell you that it's likely that the beneficial interests have to be have to remain the same, at least in their eyes.
So, as far as a title goes, if you have someone who's giving you a power of attorney, and you're the caretaker on the record, it looks like there's two owners on the day like today, like, from your you're describing. It looks like two owners.
Now, a court that may review it for some reason, might say that there's only one owner because the other person's not competent, for example, but as far as the, you know, public record is concerned, you're fine with two.
So what you're describing is what to keep your Medicaid.
Retaining beneficial interest would look like this.
You would do a quick claim deed where the two current owners are now the two current members of the LLC.
And you may have to explain that to Medicaid, if they, if they want to know, or do you should probably just tell them. Or tell them ahead of time.
And make sure that they understand. And I can tell you right now, legally, that is the correct way to do it. It doesn't matter what they say. I hate to say that, but, I mean, the truth is, you might be dealing with people that don't understand that Medicaid, so it might take a little bit of time to deal with them. But the correct legal way is to retain the beneficial interest. Even if you retitle it in the name of the LLC.
Now, dealing with, when one member who may not be competent, that would be very costly for someone to challenge.
And you're in that the situation you're describing probably would never happen, Medicaid is not going to do that. They're just gonna accept it at face value.
I know because I once had an attorney tell me that I that I shouldn't do that, and now and now I'm like, No, I'm listening to your videos, and I'm just processing all this information, and I was like, Why? Yeah, exactly. Why? It's a good it's a good question. So just I would say you can and be careful about retaining beneficial interest. That is the key thing. that is so important. And just keep in mind, attorneys are good for, I like them for research, I like them, I like them to go find stuff for me. I don't need their legal advice. A lot of times, I just need a lot of, you know, some research or whatever. Or I need access, or maybe I want attorney client privilege.
So realize that an attorney is, a lot of times without even realizing it, sometimes they just mean well, but they don't understand. A lot of times, they're trained to create liability for people.
So yeah, it makes sense.
Yeah, that's what they do.
I mean that they're a banking agent, they're an agent for the bank, so it's just like you know, with fire, you know you're not going to stick your hand in it, but you can use it. So with an attorney, attorney has certain things like I would use them to receive my mail. There are great for that because of privacy. And I in fact I use attorneys to if someone needs to file tax returns his late for like several years.
I'll have them go to an attorney and I'll do all the work but I'll have them I'll have them pay the attorney and then have the attorney paste a CPA to do the returns.
Then I will do the rest. And the reason why we do it that way? Because when you pass the money that way and the attorney does all the work it through his office, client gets attorney client privilege, right. So when we go to the IRS after, Yeah. When we get, he's gonna get audited when you're late, right? For several years. So when he when he gets audited, so fun to do this, the client just doesn't believe it and when he, when he walks out, he goes in there for the audit and it's literally one minute.
And the audit is over and the IRS agent says, Oh, thank you for coming.
We don't need to talk to you anymore because my client says, All you're gonna get from me is what's on the four corners of the 10, 40, everything else under attorney client privilege.
Oh, wow. That's a party killer. Iges will kill the audit right there.
The last person I did this, he was walking out to his car, calling me on the phone and laughing, because he didn't believe it would, It would be that, like, that, his wife was saying, don't do it, don't. And he's laughing, and I said, What are you laughing? But he goes, It's exactly what you said. Oh, my god, that's grant. Would you use like any particular attorney for that? No, they're all the same, their dime 12. I love saying that about their dime. 12. They got, We got too many attorneys.
And but the nice thing is, bar membership gives you attorney client privilege.
I hate to say Barb membership, but farm membership is the thing, part part, I mean, we'd still have attorney client privilege either way, But you get an attorney who's a member of the bar, and you're gonna get attorney client privilege, we don't need them for tax advice or anything else in most cases, and a lot of times you can get documents that are necessary on Legalzoom.
And, you know, sometimes you might need consultation along the way. But, yeah, just realize who you're dealing with.
Attorneys are not about managing risk. What they're doing is creating a risk or creating liability.
They're not in fact there.
The first risk I actually set up clients for, and this is what we're talking about, right? Where I started this video, talking about changing property rights.
My first concern is the client's risk, of cost of litigation.
That could be a lot of money.
You could spend 10 or $100,000, and I've done it, as, I know, because I was stupid enough to not, not do a contract with somebody one time. and they did something wrong in it.
I had to sue them, and it didn't get, the lawsuit didn't need to go anywhere because it was just enough to sue them, and then we got what we wanted. But it literally, just to do that, to not even get through discovery, That cost me $100,000.
In my attorney and it took me a year and a half and it wasn't even a. I mean, it didn't even to go anywhere and my and my attorney would, she was a really, you know, had a great sense of humor. And we were laughing about this, and I came into office to give her the last check. And she goes, you know, you could have spent $500 with me, and we could have avoided all this.
And I said, I know, I know.
Yeah. That's my tuition. So I'm not just saying this, because I just made it up.
I already spent the money. I already lost money, so don't I'm sure I'll make some other mistake. I'll try not to. yeah, that's the idea. But don't get me started on attorneys.
They have, Oh, yeah. They are so expensive. So mad at someone told it one of my clients that he needed $4500 to prepare Quitclaim deed in New York.
And I said, The whole lot explain exactly what he's going to do for you. And she said, It's a quick claim Deeds, Which is one piece of paper.
No, you fill in the names, I don't know what he needs $4500 for. Maybe he needs a new car or something, I don't know. Maybe handling dads: who knows?
But, Yeah. You can say why.
Now, since we're still on the subject of quick claim deeds, I once had an attorney told me that a general warranty deed is better than I quit claim. Deed. Are you familiar with that?
I am not. Yeah, I'd have to look at the Statute, but there, each dede has its, has its place. And yes, The answer is yes, and if a local attorney tells you, that's probably good information.
I hate, I hate to say that, but sometimes, I mean, they they tell you the right thing, and it is the right thing, Especially when it comes to real estate, or, yeah, real estate is specific to titles, are specific to the local jurisdiction.
But generally, quitclaim deed will be sufficient warranty deeds in some cases, might work. And I can't tell you the difference until I read the statute. OK, so if you came to me like with that question, I would say, let me get back to you. And I would go pull the statute. I would read And I tell you exactly what was going on there.
So it should be in the state statutes.
It will be all all liens are statutory. So remember this phrase, all liens are statutory, which we'll be talking about this in a second here.
But all liens are statutory.
quitclaim deed is not so much a lien as it is color of title, but it is statutory much like allein.
So it's so sensitive to the statute that you really need to understand the statute, if an attorney says something like that. So, if your attorney says that, great, but, be intelligent, and go pull the statute, don't just take his word for it, it's probably 100% correct. But go pull the statute and find out why.
Awesome. Thank you, or just a wealth of information?
My last question would then be, um, About taking loans from your You. I know you were talking in your one video you get a windfall and instead of Purchasing the liability Each you can give yourself a loan for that.
Specific processes that are specific paperwork mm hmm.
That goes along with that, like, especially when the mortgage yes, hey, lock or like say I want to walk with my Windfall Lake or Whatnot lake would be the best way to do that OK, that that opens up. A can of worms, OK, There's a couple. Now that's good. This is great. This is great This I want to do this recording.
All right, so so the loan itself so just just avoid structuring alone you all know that loans are not taxable so don't try to use that as this cure all for any type of tax that you might think you might be encountering.
I would just caution you that way first.
So what that means is, here's an example.
Can I just take a loan out to pay my living expenses?
The answer is yes.
Yes. You can document it.
And if the IRS audits you for some random reason and not because of that and they look at it and they might go, this smells funny.
I don't want to be that person. I wouldn't want you to be that person. So the loan should be real. It should be for some purpose.
You're on the hook for your living expenses. Don't try to escape those. So, if I'm going to do a loan, it's if I'm going to document alone, it's because it's a documented alone. It's not that it's an unsecured loan from my LLC. Don't do that because you're going to create problems herself. You're gonna have to try to justify all. But the best way to do a loan for an LLC, when you have a nice windfall and the LLC has the money and you wanted to take a chunk of it and use it for something. Do that move the money around. It doesn't have to come to you to yourself directly.
So the way you do it, is, when you buy real estate, and you transfer the outfit, so your LLC has this windfall and you're going to use a new LLC to hold the title to the real estate, just for example.
I can take cash from my first LLC and I can simply spend it to the other LLC in the real estate example.
I can simply spend it to the seller and have the title held In the name of the LLC, I just did this recently for some land.
I just told the agent, hey, um, I'll get back with you on how I want to title it. But, I'm sending the money.
And then he's like, oh OK, well then who's going to be the buyer? And I said, I'll e-mail you later. So, I made up the company name and we sent the money over there.
Now, if I want to make it show it as a loan, I don't need to have that conversation with the seller. I can close.
And, let's say it's clear title and then I can go and get a mortgage and support it with a note. Now, here's here's how we do this. We go to Sally Maze, website. I think it's like Sallie mae dot gov or something like that.
You can Google this It's, um, Sallie Mae Mortgage security forms. Something like that securities. And I don't keep this bookmarked, and I don't keep it at the ready because I always want to share it with people.
And I want to describe how I find it every time in every time I need. Like if you come to me and you need a lien document, I will go there.
And so I go and find my mortgage or trustee document that you would use as a government, standard mortgage, or trustee contract, and that is by state, and you can download it and edit it.
You can download it in Microsoft Word or ODT, leiber office, PDF, all these things.
So you would edit that document. So, so on alone, so you notice, I took the cash from one LLC and I put it into another purchase. And I'm holding the title, Now, I just funded, I took cash from one LLC and I funded another LLC. That's what I'm doing. And then I document alone, so the way I document the loan is I literally write up the loan on the mortgage contract.
I go and put the terms so there's a little bit to it.
I have a video on how to do this but basically, I'm gonna, I'm usually gonna make I'm going to amortize my loan for if it's real estate or a place to live a house, I'm gonna amortize it for 30 years. Why? Because everybody else does that.
If I do it for five years, that looks kinda funny. No problem, but I wanted to look like everybody else. So, I do a 30 year amortized loan, but let's say I don't want to have a 30 year mortgage. nothing says I can't pay it off early, right?
I can also have a balloon payment in five years. So, there's all kinds of ways I can structure the payment.
But, I do whatever I want.
I put the mortgage together, I put all the numbers, I go to, I searched on the Internet for amortization calculator, and I type in my principal amount and my interest rate.
Give yourself a decent interest rate.
It shouldn't be zero, it should be something that's real based on what you think your credit is, and it could be close, it doesn't have to be accurate, it could be realistic, like what's the what's the decent like if if a good rate right now is 4% for me, I'd probably give myself a 6.5% rate. It doesn't really matter anymore, because you're managing all the money. So you give yourself a real rate.
So you've got your mortgage contract are all done.
Then you go to you pull down the note from the same place, Sallie Mae, you pull down a Promissory Note for your state.
And then you, you put the numbers in the missing fields that match the mortgage or the trustee.
The note itself should be dated. You can notarized, it's not necessary. Most cases. I don't do that. I just have it ready. I delivered to the client, and I say to the client, Put this note in a safe place. Maybe make a backup copy somewhere, because no one's ever going to see it, and I'll tell you why we do it this way. Then, we go on record the mortgage, and this is the key thing.
So you're documenting alone whether or not the money changed hands or the moving cash from one LLC to another.
That's all it was.
But when I record a mortgage, now it's alone because I've documented the nature of the transaction and I want to do it that way because it's public record and it's secured.
I don't care about giving myself an unsecured loan for groceries but I want to do this for secured collateral collateralize property of record so everybody can see.
And the reason why we put the note in there, and no one's ever challenged that I know of. I mean, I've never seen cases like this. I mean, someone could do it.
But if anyone wants to challenge the legitimacy of legitimacy of the mortgage, you would have a note to show them if you had to.
And it's very unlikely that would ever happen. But just just say, if I do that for a client, you know, he may just forget about everything. It's all done and five years later, a 10 years later, he's still got the mortgage is all working great And then someone wants to challenge it, and he doesn't know what to do.
But if I give them the note now And he never gets to use it great. If he has to use it he cared.
He knows where to go to get it So that would be that that reason.
That's how you document real estate And you probably want to it's another way to strip equity Right.
once you have clear title one way to protect the equity is to just strip it with a mortgage.
So what you're doing is, so let's say you move the cash from the first LLC to your second.
The second LLC is that the title holder you still need that lender.
The lender could be that first LLC.
The no lender, the borrower can be the other LLC.
You can also make yourself the borrower.
That's a normal transaction but there's nothing wrong with making the other LLC a borrower, OK, you can go either way and you can title the property still in the LLC.
But you're the borrower.
Just keep in mind that if you paid off quickly, which I don't recommend, We can talk about that too.
You may create a tax liability for yourself. So anytime you have a large loan in your name, just realize.
The better way to handle the debt is to not paid off, but to offset it with another cash flow.
So there's an, there's two reasons. one is I'm not going to create a tax liability by paying it off early.
I'm not going to create a lump sum payment and push myself into a new tax bracket and I'm not going to have a bad use of capital.
So I always look at terms of I was looking at money like this, like if I have $100,000 on my desk, I'm asking myself, What's this costing me to be staring at it right now? It's costing me money because it's not out doing something for me.
It does. It cost me, it's, I'm losing money, like tomorrow it'll be worth, you know, $3 less, I don't know, $15 left, So I look at money like that.
So, if I take cash and I put it into, let's say it's, um, let's say I put cash into an asset.
Maybe I put cash into this and the second LLC is, is owning an apartment complex at a two unit rental, right, and I'm getting positive cash flow out of it. Well, I've got all my cash in this, yes, make me money, but my cash to be out doing something else, too, I need to go get some loan money to finance myself out of it if I, if it's my own loan, if I'm structuring it, So my interest in the property is always the same.
And I'm just structuring as alone, my money is still tied up in this transactions. I still need to do something with that cash. So just keep that in mind.
That is another type of risk that a lot of people don't want to talk about or don't know that that's a risk.
So, paying off a debt early is not a good idea, I guess, to summarize it, but that's how you structure a mortgage.
Can I mentioned Carl unless you have some questions? Yeah. No, I was just going to ask.
So, so, obviously, this is assets asset to asset from one LLC to another. What if you are personally living in?
Can you do that or now?
You can I mean, it looks funny. That's why you want to keep the title out of your name.
But then again, I mean, even if you have a PMA or some another name in there, you still have the beneficial interest. So, here's what it looks like.
A thing in which you have the beneficial interests, lent money to a thing in which you have the beneficial interests, then you still retain the beneficial interest, you're living there, you're you got that benefit and you had the benefit of the money and you are you have both companies, so if the IRS were to see that, they could disregard all button, whatever. Who owns what, where, and they could just look at beneficial interests.
And they can make a determination and say, well, all you did was take money from over here, and you bought yourself the House.
They could do that, and they probably should do that.
So just keep that in mind.
So then that would be a taxable event.
Or they could, they could, say, they could say that you had, Yeah, they could say that it's taxable, and it was underreporting, and all they would do is send you a bill?
I mean, maybe.
And I don't know that I can recall seeing that too much.
I mean, it is too convoluted. Even though you shouldn't do things like that, it's too convoluted. Here's where your big risk is.
I mean, if you're gonna get sued by somebody, a judge would look at that and make the same conclusion and you have a bigger liability there because when it comes to courts, there are unfair. Courts give judgements of critters that are unfriendly. They're less friendly than the IRS. And you have rules of discovery.
And those those, those civil proceedings, can allow a creditor to investigate all kinds of things where the IRS doesn't care, even though the IRS could do things like that.
The Irish just wants to take, stuff they can find, so you're better off with the IRS situation, so I think.
Yeah, just just realize that that's what it looks like, and so I'm gonna give you a phrase to think about. So. The Iris will call this self dealing.
Lending to yourself.
So you can have a company, your company, lend money to another company. Yeah, you retain beneficial interests.
You can make your ownership of each company on the public records different.
This has done all the time, and on the surface, it's going to be fine. If someone were to investigate it, they would ultimately determined that the beneficial interests were the same, or at least questionable.
This is not a problem.
I mean, people do it all the time, and it's tillage. intimate transaction just know that someone could probably pierce that.
Something to keep in mind, I've never had that problem. I've even done that during, during a lawsuit.
Basically, taking property away from a creditor, and they didn't want to spend the money that go after it, so it's expensive.
And I kinda know that it's kind of a game, even though they can called thing called a fraudulent conveyance but they're not going to do anything about it, because it's too expensive, and they're not going to advise their clients to do anything in most cases.
I don't think I've ever ever had that.
I've ever even seen that in many of the cases I've taken over the years, the plaintiff was entitled to do that, and they never did.
Sure. So so the worst that could happen could be that, that the IRS use this as underreporting and then they'll send you about.
Sure. And it's, and it's unlikely that that would happen. But just keep that in mind.
It just looks like self dealing, and it's, so, all the effort you put into making a loan and all that, the IRS would just ignore that.
But still do it, and still act that way.
I mean, when I, when I take money out of a company and I buy a car, I'm going to make payments on the car.
And I'm going to document those. In fact, I may, I may deposit the money in the bank account for the LLC.
Just make sure you have a different cash flow source. You don't want to take money out of the LLC and put it back in that, that's kinda silly. You know, you'll, you'll be laughed at. So they don't do stuff like that. The other thing is, you can, like, we're talking about, you can take money from the company, fund, another company. You can document it any way you want.
So, it looks normal.
Another thing to do is, if you're buying a vehicle, you can use cash from the first LLC, buy the vehicle, You can put the vehicle in your name.
And so, what you would do is when the money gets wired or your hand the certified check to the dealer, you just tell the dealer that the money is loan money from the lender, and the lender needs the Lean documentation.
And then the dealer will take care of that.
No questions asked, they don't care.
And so what will happen is, the dealer will create the lien documents on the title, and send the title, or certificate of title to the lender, OK, Which is your LLC, and it could, your LLC could have your home address, and the dealer doesn't care. They're just gonna do what you ask, right? Yeah. They'll document the loan, have you tell them.
So, let them do all that work. You don't even have to go find a mortgage document all that. The dealer will handle all that for you.
Yeah. So that's one way to do it. Buy it in your name. Put the lean on there.
The other way to do it is by the name of the company. So are our trust. Like, on your way to go to the part of the dealer to buy your car, you think of the name of a trust, you might, let's say you're buying a BMW, so maybe the name of that tries to give me the BMW 100 trust.
Because the last one was a BMW 99 trust, you know, or the next one is the 200 trust, whatever. It could be something simple like that.
So the title holder of the vehicle can be a trust. You can say, it's a trust. If someone asks you for the trust documents, you're not going to feel that car dealer is not going to care the bank.
But not the car dealer.
I like to use LLCs, they're more versatile.
I could also take an LLC and put a lien on the vehicle and then use LLC for other purposes, because the lien doesn't transfer liability, like ownership does.
So there's another use there.
Sorry, can you repeat that?
Yeah, if I have an LLC, and I wanna own two different unlike risks, a vehicle, and a house, for example, that's not a good combination, because of vehicles are very large risks in a home. You live in. It's not.
And so, if my LLC owns both, and it's likely let's say, this car isn't a wreck.
If the driver can be sued, and if the driver owns the house, or has an interest in the house, are the owners of the same, right? So, now, I've just connected this liability, which is crazy, to a house, which never had that like. Yeah, so the way you separate that out, is you have the house owned by the LLC, and take the same LLC, but have a lien on the vehicle with it, not title.
So lien and title are two different things.
And you can use the same owner, the same party, for one lien and one title, or I can you know any combination of that.
My gosh, this really is just a new way of thinking.
Yeah, just changing property rights and in making it legitimate, We're not trying to, you know, I mean, actually, we're not even hiding anything we want people to see, we want the IRS to see if they want to question, because hopefully we did everything right.
I mean, I've never, never had a client so far where the IRS said, hey, you know you did this thing, and Neo is this money. I've never had a problem.
Usually, it's, They already had that problem, right? So, I get them out of it.
And we do these things, so.
So, how, how would you treat taking money from an LLC to use for, like you were saying, for expenses, that's just a taxable event.
Is there any, is there any way to do that in the best way possible? Or does it not matter?
It doesn't matter, but I can tell you this, OK, so, living expenses. Let's say, it costs you where you live in your demographic, akasha $80,000 or 60,000 year. live comfortably. We're, you know your lifestyle. Let's say your annual living expenses are $60,000.
Well, you're not going to be able to tell the IRS that you only made $40,000. So Just keep that in mind. But just because your living expenses are 60,000, and you're kind of going to have to report 60, 2000 a year legitimately, it doesn't mean that if you become a millionaire, that, you need to report $5 million a year.
Just because you're a millionaire doesn't mean you're 62,000 needs to become, one point two million.
Because the rest of it stays in. Yeah and you just take out what you need. Exactly, exactly. If I want to buy a yacht, well it's not me.
It's that company over the yacht and I'm not going to be the owner but I get to go there on the weekends. You know, so the money gets moved around.
the things that you know so that you don't take the property and the liability with it, OK?
Yeah, And would you have to transfer that in any particular way like would you transfer from an LLC to a personal bank account or does it not matter?
Whatever is easier for you? Do you like ..., like PayPal? I check.
OK, However, if you want to take the cash Or I would just recommend, I mean, you can spend money from your LLC to pay your light bill. I just don't recommend that. As a regular practice. I do that because of the way I'm set up, because I have a company that only does that if I have another venture going on or a partner or something.
I'm always gonna set up another company, but I have a company that's really old and it's expired, and I just use it for all my personal things. Nobody ever does. And it's just for privacy.
But the better way to do it, is if you want to take money out of an LLC for personal use, just go ahead and do that.
Just put it in your personal account, And then spend it.
The only exception to that is if your personal account is under luvvie, you know, if you have some weird thing going on then, of course, you want to go around that.
I'll give you an example.
If I, if I rescue a small business, Like, this is an office, like, say, a dentist office, and there they haven't Usually the IRS is the, the, the case. So the irises loving till take on all the receivables or merchant account, all the receivables. So it's just solve them out there, The IRS is so stupid. Sometimes they just, they just take all the money that kill the business.
And I think maybe that's their purpose is to kill the business where they could just, they can just take a little bit, but they want to kill everything.
So what I'll do is I'll set up a pass through an LLC, and I'll, I'll change the merchant processing. The check processing insurance payouts, all that gets routed back to the LLC.
So, now, the S corp that was being levied by the IRS can't be levied anymore. Even though the levies are still valid, there's no more money to levy.
And so the dentist is able to pay his workers, pay the light bill, and and still pay himself, get a reprieve, and just sit back with the IRS. and then the IRS comes to the table and they're so polite. And they want to make a deal.
And because they can't get anything until they asked permission because we just took the money away, and they can see what we did.
It's not like it's a secret.
They can see all those receivables they're getting. They are now going over there, but they can't touch it because it's not it's an innocent party.
And it is not owed to the S Corp yet yet, so it's not a receivable of the S corp, and they can't make that company pay the IRS first.
It's that simple because all we did is why we changed the property rights, right in front of them, OK.
All right, well, let's just to, Right to think about and determine how to step forward, so thank you, OK. Good, um, I'll say the recording for you and then I'll make it available. Do you mind if I publish it? Now, OK, because I think it'll help a lot of people.
All right, so, So you made the wine LLC for me so I'm going to work.
1. The speaker discusses the use of an LLC and a fictitious name or a DBA (Doing Business As) to manage asset ownership and cash flow in a way that avoids liability.
2. One example is using a DBA for marketing, allowing a company to test new advertising strategies without associating it with the core company or brand.
3. The process of setting up a DBA involves registering a fictitious name with the Secretary of State, and then negotiating with the bank to accept payments under that name.
4. A DBA can also be useful in separating business interests in cases where an individual has a personal interest and another interest with a partner.
5. The speaker then discusses how to manage property rights through an LLC, allowing users to shift from personal to business accounts and vice versa.
6. It is emphasized that beneficial interest in the LLC should be maintained, and that proper legal research is necessary in navigating these complex financial mechanisms.
7. The speaker also discusses how to protect equity by documenting real estate transactions and loans realistically and professionally, mentioning the Sallie Mae Mortgage security forms as a useful tool for this purpose.
8. The idea of “loaning yourself the house” is suggested as a way to keep money invested while also benefiting from loan money.
9. Potential pitfalls are mentioned, such as the possibility of a taxable event if the arrangement is not properly handled, and the risk of a fraudulent conveyance lawsuit if property is wrongly taken away from a creditor.
10. Lastly, the speaker explains the process of creating lien documents on the title of a vehicle, which the dealer will then send to the lender, which in this case is your own LLC.