Setting Up Our Systems

One of the few things Ken and I have disagreed about in this process was when to set up our business systems. I hesitate to even call it a disagreement since it was barely controversial but it was something we debated for awhile. Ken wanted to have our business systems (specifically legal entities) in place before we started investing and I wanted to wait until we had a need for the systems before we took that step (i.e. we had properties to protect). We compromised by setting up the systems at the same time we were starting to buy an investment property. One thing we agreed completely about was using a service, Nevada Corporate Headquarters (NCH), to assist us in doing this. Now, a quick disclaimer, this is not legal or tax advice. These are simply the decisions we have made up to this point. NCH was recommended by Rent to Retirement and is who the founder uses for his own businesses. From talking to my friends and neighbors, they are very competitive price-wise and we have been happy with their services. NCH offers a variety of legal and tax services. So far, we have used them to create our Revocable Living Trust, an LLC for investing (passive income), an LLC for my real estate business (active income taxed as an S-Corp) and a real estate privacy trust for the one income property we currently own. Both of the LLCs are Wyoming Entities, foreign filed in California. The Holding LLC is also foreign filed in Ohio. The way it works (at least as far as I understand) is that the LLCs belong to the Revocable Living Trust, along with our primary home and other assets. The Real Estate Privacy Trust benefits the holding LLC while both Ken and I are alive and will revert to the Revocable Living Trust at the time of our deaths (morbid). The idea is to have anonymity so that if someone does try to sue us for unjustified reasons, it is a lot harder to figure out who owns the property and how to get anything out of the lawsuit. Wyoming laws help a lot with this and are very favorable to business owners. Knowing that we are honorable people and plan to do things the right way, I really am just trying to protect from litigation happy people, not valid claims. NCH has been very informative in helping us figure out this process as well as other little things, like how to fill out a W-9 and how to collect a salary from our S-Corp (note: we still need to set up payroll, so our business bank account is just a forced savings account at the moment). Any time I have a question, no matter how small, they are able to quickly point me in the right direction. I know this article reads like I am saying Ken was right. I wouldn’t go that far. There is a lot of debate about whether you should set up these systems right away or if you should wait until you have more assets to protect. I don’t know what the right answer is. What I do know is that Ken and I are ready to let our portfolio grow and we have already completed a step that we would need to complete at some point anyway. And that I am happy with NCH as a service. Have a nice week!