U8 – LLC First Steps 0:02 All right, hi everybody, this is John Jay and I want to get started with a series of videos explaining how to set up a limited liability company for the purposes that I use them for. 0:18 Mostly, I’m using them for risk management. That’s a generic term I made up….

U8 – LLC First Steps
0:02
All right, hi everybody, this is John Jay and I want to get started with a series of videos explaining how to set up a limited liability company for the purposes that I use them for.
0:18
Mostly, I’m using them for risk management. That’s a generic term I made up. I use them for many purposes. Most many people lately want them to be used for investing.
0:29
Managing cash flow in a way that’s not taxable or not attachable by creditors We’ll get into how they can be used as a component of an estate plan.
0:43
They’re not really forest state plans.
0:46
We will talk more about that, but let me just show you what I, when would I go through the thought process when I want to set up a company.
0:54
So I’ve got my, my whiteboards, so to speak here.
1:02
And I’m just going to walk you through my thought process because I want you to understand what I’m thinking when I do this now.
1:08
This is for the states. Limited liability companies, OK. You can do this or partnerships.
1:14
This thought process is very similar to any country.
1:19
You can do partnerships, LLCs. You can even use trusts organizations. Those are primarily what I use.
1:26
Rarely will I use a non-profit or a C corp?
1:31
They don’t have the features. In fact, they have some requirements that I don’t like.
1:34
So, alright. So, for a limited liability company, let’s say you have me set one up for you that my first thought is. And usually, I get this information from our discussion. That’s why I like to talk to people.
1:46
So, let’s say I’m talking to John Smith.
1:50
And so, John Smith is wanting to set up a limited liability company. He likes the idea of a flow through a pass through and he likes the idea of taking a windfall and moving it somewhere.
2:00
A lot of people are looking at that.
2:04
I’m talking to John Smith. So, his name is going to be here. John Smith, right?
2:10
And John Smith is going to have an address.
2:13
We don’t know what that is, Whatever.
2:21
Now, we can use his address, let’s say that’s his home address, we could use that.
2:25
Let’s just say that says, Home Address.
2:28
And let’s say he happens to live in, let’s say, Georgia.
2:35
So, we’re going to set up a company in Georgia.
2:38
And he wants to call it ABC Company.
2:42
And it’s going to be a limited liability company, so I’m, I’m just jotting all this down, OK, And I get this information, like I said, from our discussion, and also from the needs that the client has. So, I find out what he’s trying to do. And then I work backwards.
2:56
A lot of times, I start with an LLC and then I set it up a certain way. Many times, they’re very similar. So, this is going to be a general example.
3:07
So, I set up the company called ABC Company, LLC and we can make John Smith the client I’m working with, the registered agent, OK? Now here’s the thing about registered agents.
3:25
The purpose of an agent is to receive process on behalf of the company, so I can pay another company or another professional, about $150 a year.
3:34
Sometimes it’s $100 a year to be available to accept a summons or official process and the name of the company.
3:44
And then that individual sends it over to me or whoever is supposed to react to it, OK.
3:49
That’s fine, but I don’t like to do that.
3:51
I mean, unless you’re running a brick and mortar or something, or have employees or partners, generally, I just tell you, it doesn’t make sense to pay for a registered agent when you can just use yourself as the agent.
4:03
Even if you’re not in that State, which I’ll get to in a minute.
4:06
So let’s assume we’re going to use his home address now. It is a physical address.
4:11
We could also use an office address wherever there’s a physical address. It cannot be a mailbox, cannot be a PO box. You can’t fool them.
4:20
So don’t try to use, you know, the physical address of a PO Box. You just really have to use a physical address where there’s an office space or something.
4:29
So let’s just call it physical office. Meet physical address, right?
4:35
City, state, whatever.
4:36
So that’s probably going to be Yeah, his home address, OK.
4:43
And this is an important thing.
4:47
Whatever address I used on the articles now, this information I’m compiling is for the articles. The articles are filed with the Secretary of State.
4:58
And the articles are the law of the company that determines the rights and liabilities of the company. As they appear on the public record. This is going to be to your advantage. So you’ll want to use it in that, with that understanding. We’re not trying to hide. We don’t need to take your name off there. And some people say, I don’t know many, many, where. You do want your name, you want to establish that you have certain property rights, are no property rights, because that ends a lot of conflict.
5:23
If someone thinks you own something or someone thinks she has the right, you have the rights to certain property, Well, he might spend, be willing to spend five or $10000 to investigate that. And if he does, it might cost you five or $10000 to deal with that.
5:37
Whereas, if he can conclude in one minute that you don’t have any property rights, will then, you have no conflict to deal with DC.
5:45
We have this physical location.
5:48
For the registered agent, the state will check to be sure it’s actual, an actual physical location, All right. So, like I said, we could use his home address.
5:58
Here’s what I do sometimes, I know that When a lot of you are setting these up, I don’t do this all the time, but you’re not going to have this situation. No one’s going to sue the company, because it’s not doing anything.
6:11
You’re not having contracts, You’re not borrowing money.
6:14
Most of the time, and if you were, you wouldn’t know well in advance if someone had some sort of process to be served on the company.
6:20
So we can use any physical address. We can do like this. We can go, we can use departments.
6:26
OK, you can go look at it, like, pick the state, let’s say you’re in Georgia, and you pick New Mexico that you do this. And you can literally go on white pages dot com, and you can search for a name at random, even John Smith, OK?
6:40
And you can find a person named John Smith, who has a home address, and you can use his address.
6:44
Now, sometimes, people object to that, And then the state says, hey, you have to change it, So no problem, but it’s like 1 and 1 in like one thousand attempts.
6:55
You can also use a business address like this, like an apartment complex, so I can go on my favorite search engine, and I can search for New Mexico apartment complex’s, for example.
7:08
And I’ll get a long list of apartment complexes and I click on one of them and I can find the main office address and I use that business address, OK, but not an apartment number, So it’s a real business location, and mail will be sent. Their service can be made there, but you’re not going to be there, and it won’t matter anyways, but it will meet the criteria for the state.
7:28
And I can tell you, the state, don’t, the state employees don’t like us doing this, You’re not gonna get in trouble for it, but it’s discouraged. Alright, if someone says you shouldn’t do that and they want to make a problem with it, all you do is you can go to free registered agents dot com.
7:46
Look for free agents and get a free agent for a year if you want.
7:49
Or if you’re just go pay for one. Rarely do we have that situation.
7:54
I’m just going to put a note here.
7:57
I’m not going to demonstrate this. You can you can do it.
7:59
So, if you go to white pages dot com, then you just search on, I mean, you can make up any manual. It really doesn’t matter. Whatever name you search on becomes the name of the registered agent at whatever address you’re going to use, OK?
8:15
So, Here, you just use the main office, address, no apartment number.
8:24
Yeah.
8:27
All right. Easy enough.
8:30
Now, there’s another an address, which is will be the office or Principal Place of business address for your LLC, it could certainly be his home address.
8:43
Whatever address you choose, let’s call it the office address or principal.
8:54
Place of business, OK?
8:59
That does not mean, OK, whatever that address turns out to be, that does not mean you’re actually going to get mail there.
9:07
It’s just an address.
9:09
So, I’ll tell you where you get mail.
9:11
The company will receive mail where you tell people to send the mail, so don’t be so stressed about what address this has to be.
9:20
Um, it can be just as good to do that, In fact, the only important thing here is that the registered agents address is a physical address in the state in which the company is being registered.
9:34
Everything else can be out of the state.
9:37
There’s an exception, though. You do this in California.
9:40
If you live in California, Do not use a Californian address in your filing of the articles because the state will notify the State of California and the California Franchise Tax Board will send you a bill as a California resident for not registering in the state.
9:59
The bill will be for the filing fee, if you did register in the state, and then it’ll become a state tax obligation.
10:06
Could it could ruin a lot of things.
10:08
So just don’t connect your California address when you’re registering outside of the State of California.
10:16
OK, now So far John Smith is the I Don’t know.
10:22
That’s the client We’re working with it could be you right. That’s you.
10:29
He can be the registered agent Now, a lot of times.
10:35
It’s a good idea that that person you’re doing this for like yourself or if you’re doing it for someone else that you you want to make his interests?
10:47
zero Ownership interest zero.
10:51
You also have so you want to establish the owner when you file these articles and you want to establish the organizer?
10:57
The organizer you can never change and it doesn’t matter who the organizer is because the organizer, um, has no property rights, It’s just the organizer.
11:06
It’s not until you establish who the member is, or the owner or the shareholder, OK, how are you describe it? So what I like to do is this.
11:18
Instead of, OK, I can do like this John Smith organizer.
11:26
But instead, here’s what I like to do.
11:33
I’m going to say that the organizer’s, another organization, OK, and this type of organization that’s organizing this LLC, is A private membership association.
11:48
That happens to be the same as an unincorporated Association.
11:54
It also happens to be the same thing as a trust, OK?
11:58
Now it’s an unregistered trust. You don’t have to register this trust.
12:03
A PMA is a trust.
12:05
A PMA is an unincorporated association. It’s a private club.
12:09
It’s a private organization. That goes by lots of names.
12:11
It’s a society, OK?
12:15
It’s a foundation, OK? A PMA is all those things.
12:20
So everyone has one.
12:23
Everyone has a PMA. In fact, you’re associated with probably 12 PMS, like a list for you right now.
12:28
The one I like to suggest to people as notice how when I’m going to find my articles, I’m writing in my profile here.
12:36
The organizer is the client’s name or your name.
12:41
In all capital letters come a PMA. This is an entity. That happens to be an unregistered entity. I’m never going to registered. I don’t need to.
12:49
And I’m going to call it the organizer.
12:51
How is it the organizer?
12:53
Well, it’s because I said it is right. That’s the whole beauty of the articles.
12:57
It’s whatever you say, then exists. Right.
13:02
So, I like to make the PNA the organizer. Then, I like to do this.
13:11
I like to also make it the owner.
13:17
The 100% owner.
13:21
OK.
13:24
It’s also known as 100%.
13:30
Beneficial owner. You’ll hear that a lot.
13:35
The Bank and FinCEN and the exchanges and third parties they all want to know more than who the title holder is, right, Know, that works. The trustee can be the title holder, and everybody goes, yeah, well, we want to know who the beneficiaries are, right?
13:51
So when you say, a PMA is the owner of your limited liability company, and you’re not, the bank’s going to ask who the beneficial owners are.
14:02
Well, the thing is this is the beneficial owner, OK, and that’s where the inquiry stops.
14:08
Now, some of the bank employees don’t get this, you’re going to have problems with some of them, but it’s worth doing this because of the absolute privacy you’re getting with it.
14:16
You don’t have privacy signing for the account, but you do have absolute privacy, because if you’re using a trust, it’s like this as the owner of your limited liability company. This is an unincorporated group, right.
14:32
Who is that group I haven’t told you yet.
14:34
Let’s just give you an example.
14:36
You get a lot of power here.
14:38
If it’s the 100% owner, the 100% beneficial owner.
14:43
What is this?
14:45
Well, let’s say it’s your family.
14:47
How many people can you list in your fan?
14:49
You got White Brothers, Sisters Cousins Mom, Dad Grandma, even if they’re deceased can still list because they all have the states less than states. The states are dissolved.
15:00
So any one’s PMA, it might be 50 or 60 people who don’t care what John Smith is doing.
15:09
Only John Smith does, but he’s naming all the people and his family, and his family is actually a private membership association. Why is it private?
15:18
Because not everybody can be a member of his family. In fact, you couldn’t even pay to be a member of his family. You’d have to be a member of his family, somehow, right? Through blood or marriage, right?
15:29
So it’s a very unique PMA. It’s, by definition, a PMA. You can’t even break it apart.
15:34
Even if someone tried to, Like if this were a trust, the John Smith trust, someone could simply, you know, the subpoena, the trust documents, and pick them apart and said that the truss wasn’t operating properly right Or articles or something like that.
15:47
But a family, How are you going to break that apart and see the family’s not legitimate?
15:53
Right?
15:54
This is like one of the most powerful things you can do and you can do in any country.
15:57
You can pretty much do it the same exact way I’m showing you right here.
16:00
Sometimes, you might need to use a partnership.
16:03
We can talk about that at a later video.
16:07
So, now I’ve figured out who’s playing what role in this thing, Then I would just go on the Internet. And I would pick the state. So, let’s say I’m like I was talking about Georgia, so I mentioned earlier. So good at Georgia, the Secretary of State’s website.
16:27
There’s a tax for this. Now, what you’re doing is, you’re paying a tax to the state for indemnification, the state’s going to protect you.
16:35
That’s why you’re registering with the state. Now, there are other ways to do this.
16:38
But, what, when you register your company with the State, you get the benefits of all the statutes that are provided for your type of company in business, OK?
16:49
It’s kind of a good thing.
16:51
There are other ways to get those benefits. We can go with that later.
16:55
Um, that’s the whole idea So you definitely want to ration for the state.
17:00
And also, it turns out, the banks tell you that you have to do that as a condition, having a bank account.
17:06
So what the bank’s doing is accepting you as a member of its bank, that’s what it really is. When you’re a customer of a bank, you’re actually a member of an association.
17:15
The bank says, In order to be a member of our association, you have to be a member of that association, which is state.
17:23
So, that’s what you do, and lots of times, the bank will ask for a certificate, certificate, a certified copy, OK, of the articles.
17:31
So this information is going to appear, um, on public records through the Secretary of State’s website or through its office. Now, it’s all on the internet, so it’s on the website.
17:45
And what’s going to happen is the bank or anyone looking can see who the organizer is.
17:52
You can see who the beneficial owner is or the president.
17:57
It can see who the registered agent is. If you’re the registered agent, that’s just fine.
18:01
You can do that individually in your name, you can do that at your home address, um, but again, you need a physical address.
18:09
The registered agent has no liability, no ownership responsibility, OK?
18:15
So, that is the general idea.
18:17
I hope that clears up. Some things.
18:21
Y’all are pretty good, or have been over the past several years, about understanding, I know it’s new, but that a lot of people get this, and then, there’s still some people that are not. They’re uncertain about why I’m doing the things I’m doing.
18:34
I do it in a kind of an unusual way.
18:36
I’m, I’m really an advocate of privacy, And I know that we don’t have the privacy when we’re seiners for the account.
18:43
Um, because everyone can see that. And, So, I just use that to my advantage.
18:49
And then I just conceal the ownership rights inside of, like I said here, inside of a group. OK?
18:58
My opinion, I think that’s the best you can do.
19:00
Now, if you happen to have a trust that you’ve been using for awhile, you can certainly replace the, this type of way of doing it with your actual trust.
19:10
That’s it. You don’t have to. You also, you don’t really have to layer organizations and make an LLC here in an LLC there and you don’t need to do all that stuff.
19:18
Just form a company and manage your property rights in a way. That’s undivided.
19:24
And we’re gonna get in more into details as to how we can use this, because I want to show you how we can use the PMA later on as an aspect of an estate plan.
19:33
Now one other thing, one other point I want to mention: let’s say John Smith is married to Mary Smith.
19:42
Why does she need to be named at all on these articles?
19:47
She doesn’t need to be named at all.
19:49
What will happen is if I make John Cement the PMA, well, then that doesn’t preclude John Smith.
19:56
This guy here from signing for the company.
20:00
It doesn’t, and likewise for his wife she’s not a signer.
20:06
But as you’ll see when you get your bank documents, the abstract documents that I mentioned, the banking abstract documents that’s, that’s the term I use, there’s a bank resolution in there.
20:18
Now, this is a standard document, where you can authorize someone to sign for a company at a bank account, at a banking institution, OK?
20:29
So, if we wanted to, later on, we could add Mary Smith as an authorized user on the account.
20:35
John Smith is going to be an authorized signatory for the LLC.
20:41
Even though he’s not an owner, but we’re going to have a banking resolution now, all yet, all he’d have to do is create a banking resolution from his vacuum resolution, Just create another one, and put her name in it, and it’s good to go.
20:55
She could do that whenever she wants or not.
20:58
All John really has to do is he wanted married to have access to the account, let’s say it’s his wife, Let’s say it says partner, whatever. He could just provide her with his credentials to access the account.
21:10
So the only thing she wouldn’t be able to do without a banking resolution or a formal, being formerly added as an authorized user in disclosing all her ideas. Do the KYC process.
21:22
The only thing she could not do.
21:25
If she were just to be to be using John’s credentials, she couldn’t walk into the bank and clear the funds out.
21:31
Right, because it wouldn’t matter how she identified herself, even the bank would require.
21:36
Let’s say John died, the bank would require her to get, go through a probate proceeding, and that’s kinda costly.
21:45
So one thing Mary Smith could do is simply write a check on the account, so let’s say jaws no longer available. Let’s say he’s lost at sea or something, or maybe lost his mind or something.
21:55
All right.
21:56
So, what she could simply do is get a check or go get a check or make a check, It’s not hard to do this and she can literally, uh, write a check on the account and she can forge John’s name or she can use John’s signature stamp. We can get into that too.
22:15
And she can disburse funds however she wants.
22:17
But why do that, so you can just continue operating the LLC account the same way she may have been before John disappeared.
22:25
It’s not that complicated.
22:27
You don’t have to have your name appearing. Remember?
22:29
Whenever you’re using a legal document to get to gain access to something, you’re probably gonna end up using the court and attorneys, you don’t need to do that, you’ll, you’ll discover more as we as we go along.
22:40
But I just wanted to cover some of these basic concepts when you’re setting up your company.
22:46
All right.
22:46
So, we cut this off here.
22:52
That’s good for now.
22:53
And I think we’re just going to make this, like, the first video in the series.
22:59
I’ll see you guys in the next one.

Summary

1. John Jay is creating a series of videos explaining the setup of Limited Liability Companies (LLCs) for risk management and investing purposes.
2. The LLCs can be used for managing cash flow in a non-taxable way and as a part of estate planning.
3. John walks through his thought process when setting up an LLC and emphasizes the importance of a physical address for the registered agent.
4. The registered agent’s role is to receive process on behalf of the company and could be a paid professional, but John recommends using oneself as the agent to save cost.
5. A physical address is required by the state for the registered agent, it cannot be a PO Box, it must be an office space or a real business location.
6. The articles, filed with the Secretary of State, determine the rights and liabilities of the company and should include the owner’s name for property rights clarity.
7. The articles should also establish the organizer of the LLC, who cannot be changed and has no property rights.
8. John recommends establishing a private membership association (PMA), like a family, as the 100% beneficial owner of the LLC for maximum power and privacy.
9. The state provides protection to the registered company, which benefits from the statutes provided for its type of business.
10. Bank requires a certified copy of the articles, and while this information becomes public, John recommends using this visibility to advantage while concealing ownership rights within the PMA.

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