Wealthy & Wise: The Infamous Nevada LLC

Wealthy & Wise: The Infamous Nevada LLC

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About the Video

One of the most important decisions you’ll make as a business owner is choosing where to incorporate your Limited Liability Company (LLC). Many business owners choose to incorporate their business in Nevada for many different reasons. Watch Cort Christie, CEO and founder of NCH, and Ron Sherrod, an NCH Business Specialist, as they discuss how business owners can take full advantage of Nevada LLCs to protect their personal assets.

Prefer to read? A full transcript is provided below.

CORT:

Hello and welcome to another edition of Wealthy and Wise. I’m your host, Cort Christie, CEO and founder of NCH. Today we’re going to be talking about taking advantage of Nevada LLCs to accelerate the growth of your business and to launch your business with speed. I have a special guest with us today, Ron Sherrod, who’s been working with clients at NCH for years now, helping them grow and develop their business strategies and launch successful companies every day. Ron, welcome to the program.

RON:

Thank you for having me.

CORT:

Absolutely. And thanks for taking the time out of your schedule.

RON:

Absolutely. Absolutely.

CORT:

So, Ron, you get the pleasure of working with people day in and day out, forming businesses, helping investors get their, you know, real estate assets protected. Is there a particular type of industry that you’re working with in particular? What type of companies are you talking to, day in and day out?

RON:

You know what? That’s a great question. I work with all types of industries. You know, this the real estate industry is obviously a big industry for us, protecting our assets, protecting your real estate, but from trucking industries, transportation in this day and age, you can’t go anywhere without knowing that transportation is getting pretty expensive. With money comes along liability, right? So, people want something that they can set up quickly they can get into business, they know they’re protected and they know that we protect their assets. So, from trucking, industry, transportation, hair salons, anything in the entertainment industry, people that you know, you’d be surprised, the people that just they have such a high concern over, I want my assets protected. Right? Can you help me? Right. And so it’s nice to see it. So it’s a big education process. So there’s a lot of satisfaction with that.

CORT:

So Ron, what is it that attracts them to Nevada? Why are they even talking to you about starting something in Nevada?

RON:

You know what? And a lot of people don’t even know why they’re talking to me at first. They say, I heard Nevada is where I’m supposed to be. Well, how did you hear that? I don’t know. Somebody told me, my friend told me or a person who has real estate told me. But they come knowing that there’s a difference. Sometimes they don’t know a lot, but they know that there’s something different about Nevada. And that’s where I get to educate them to a point and say, hey, there’s a significantly different approach that Nevada has for protecting the owners, business owners. We offer a lot of protections that other states may not offer and that’s where the education process starts.

CORT:

And so obviously, as they go into that conversation, these are people that are concerned about the risks of going into business. What kind of concerns are they mostly talking about?

RON:

Well, you know, that’s the biggest concern is well, I’ve been told that if I get an LLC or a corporation that I’m protected completely. And then I hear these horror stories of, I had an LLC, I was in California, I was in New York, I was in New Jersey, and I went to court, or I got sued and it wasn’t my fault. Someone sued me and they took everything I had. They said it wasn’t supposed to be able to do that. So, you know, I’m looking for I’m a little leery, right? I How can you help me? How can Nevada help me?

CORT:

And so then you start to explain what’s different about Nevada. You start to explain, you know, the advantages and really how they can live anywhere and have a Nevada LLC. But how does that work? Let’s go to your example. I’m in New Jersey and I want to start a business, or I am a business owner, but I want to use an LLC. How does that work?

RON:

That’s a great question. So, each secretary of state in all 50 states, each state has a secretary of state. They adjudicate administer LLCs, corporations, any sort of a partnership or group agreement at that level. Then everyone needs a tax I.D. because we’re all going to pay taxes. So, the IRS has the tax I.D., they’d give it, but each state has its own nuances and rules, so to speak. Just because you have an entity born in one state doesn’t mean you can’t take it to another state in what we call, foreign file it. It’s like…

CORT:

Move it.

RON:

You can move it. It’s like being born. If you’re born here in Nevada, I got a birth certificate because I’m born here. But honey, I want to go to Florida. So, I go to Florida and I get a driver’s license. Well, I’m still born in Nevada, but I get a license so I can operate in Florida there. But I’m still born in Nevada. The LLCs and the business structures work a lot that way. Except that when I go to Florida now with my driver’s license, this Nevada birth certificate, the LLC or the Corp-, I’m protected under the Nevada laws.

CORT:

Okay. So those laws in Nevada still benefit you, even though you’re in New Jersey or Florida or wherever you end up running your business?

RON:

Absolutely. As long as you take the time, which we do here at NCH, to want to go through the proper steps to make sure that this entity that we’ve born here in Nevada, that we can take to a different state, we can register there. And then anything that occurs as far as business, business transactions and even liability that’s because that’s business times, people sue you. It just is. These folks that are over here in this other state, the New Jerseys, is the Floridas, Maine, Alaska. They’re subject to the state the LLC was born in, which in this case would be the state of Nevada. So, unlike some of the states like, let’s be frank, California, New York, they’re pretty tough states to deal with. You take on a legal battle there in a Nevada entity, you’re protected by Nevada laws.

CORT:

So, it actually gets transported with you. You get certain attributes of Nevada wherever you’re operating.

RON:

Absolutely.

CORT:

Let’s talk about accelerating the business as you’re on the phone talking to people and they want to know about, you know, how long’s is going to take Ron? How does this happen, this LLC registration that you at NCH are you having a consultation with them on? What can you do to accelerate their business?

RON:

Well, super common question, because they will a lot of time have fished around to look at other places and the DIY guys. I could do this myself and they’ve realized, oh, my gosh, it’s going to take me six weeks and 63 pieces of paper filed in 19 places and two stamps. You can do that. What we do is in the state of Nevada, we’ve got the process down to we’ve done it for so long, 32 years. We know the digital presentation. We know the forms to fill out where we can do it in as little as 24 hours.

CORT:

So, you can get a new LLC filed, registered and launched in 24 hours? 24 hours, that’s amazing.

RON:

24 hours and the only people where we’re waiting on after that is the IRS to establish your tax I.D. Maybe another 24 or 48 after that. When someone says I need to get this done, I can get it done.

CORT:

And I know that a lot of people are just, you know, they’ve got an idea or they’ve got a transaction or they’ve got a piece of real estate that they want to purchase. And you know, things are already moving in their world and then they’re like, Okay, I need to get something done yesterday. And they’re talking to you on the phone so you’re saying in 24 hours you can have an LLC formed and set for them, a legal structure for that, and then you can quickly get their E.I.N. which they need right away to get a bank account set up in addition to that?

RON:

Absolutely.

CORT:

And does NCH help with banking too?

RON:

They help with banking. It’s a good question. So a lot of folks will come and say, wait, I need, they have a transaction process there in escrow, or you know, I try to tell people, give me a couple of days and that inevitably is the lady or the gentleman they call up and say, well, we close, we’re closing in two days. Okay. So, in that part, we play a little hostile offense, hurry up offense. We get the entity formed, we get the E.I.N. done, and then we get him in front of some of our banks that we have, and we can without even going into the bank. Over the phone, we have a representative get a hold of you that we can share those documents to them. Your formation papers, your E.I.N. and then we could get you behind so you have a bank account, got your E.I.N., got your articles. You’re ready to take that property on, you’re ready to take that business on.

CORT:

So, what can happen very rapidly.

RON:

Very quickly.

CORT:

Because I know every state is not that way and I know that some can take weeks to go through the process, You know, especially with a lot of remote workers in today’s environment. And many secretary of state’s offices don’t have the staff they once had it. So, they’re really backed up.

RON:

Oh, incredibly.

CORT:

So, you know, somebody can say, well, if I need it now, I can get it to set up here in Nevada right away, and then I can register, you know, back in my home state. And that’s always another process that they can go through. Well, let’s talk about clients of NCH that you talk to that have been clients of NCH for a period of time. You know, what are their main concerns? What are you having conversations with them about?

RON:

That’s a great another question because we do, you know, sometimes a client will come to us, hey, I’m in a hurry. I need an LLC, because I got to get it done right now. They come in and they get it. They get the E.I.N. and they’re happy. We get them filed in their state and then we don’t talk to them for a year or they’ll come to renewal and we’ll try to reach out to them at the renewal time and say, what’s going on? What do you do? Oh, that’s a great question, and I get them. I bought three more pieces of property in two other states. Well, hold on. Well, are you registered there? Well, aren’t you going to help me with that? And we do. And we will walk them through the process. Hey, I bought more property. How do I need to protect my assets in those states? Or, other facets of stuff that we have for trusts, tax help, because that’s sort of the idea. Well, here it’s tax time, have you given any thought to that? Well, I was thinking I was going to call you.

CORT:

Okay. Very important, because you know, you’re a resource for them. But knowing entrepreneurs, they’re running hard and fast. They’re trying to make a buck all the time. They don’t stop to pick up the phone call.

RON:

No.

CORT:

And so you’re actually reaching out to them to check on them, to see where they’re at, what their needs are at that juncture. And sometimes there’s cleanup, like you mentioned, a person that bought a couple of other properties that, oh, yeah, I didn’t do that. Or taxes. Yeah, I haven’t really organized my taxes yet. And you’ve got tax solutions with NCH also?

RON:

Absolutely. And that’s the idea is you always want to try to be a tax planner, not as much of a taxpayer, right?

CORT:

Yes.

RON:

Trying to get an entrepreneur to get ahead of the curve it’s, you know, I always make that joke that being an entrepreneur is like jumping out of an airplane and building your parachute on the way down. Right?

CORT:

Great analogy by the way.

RON:

Because usually, they call me at about 5000 feet and say, well, what do we do now. Well, we better start building some stuff.

CORT:

Right, right.

RON:

So yeah, we get ahead of the taxes, but we can plan to just open this entity up. You know what type of tax election is it? And a lot of times like tax. Excuse me,

CORT:

Right.

RON:

Well, I don’t know what happened. And they realize that now they have a tax election, although beneficial to them and finance and business structure they’re now having to file a tax return a month earlier. Can you help me with that? Well, yeah, let’s make a plan. You know, and I can always follow up. I put them on our calendars and we follow up with those clients. Because those are the clients who just say, I’m busy making money, I’m busy hustling, I’m busy trucking, I’m busy doing real estate, I’m busy raising a family and doing the stuff. And I’m trying to get out of the COVID stuff.

CORT:

Yeah, yeah.

RON:

I want to do my business. I need somebody that can help me. And that’s where we step in. Taxes, banking structure, all the way down to planning revocable trusts and so on and so forth.

CORT:

So how does that come up? So, you’re talking to a business owner and then you’re having a conversation about like estate planning. Have any of them actually done any estate planning or how often do you run into that?

RON:

You know, now we’re about two years post-COVID. A lot more now than before.

CORT:

So COVID has enlightened people, you know, you want a little planning ahead because you never know.

RON:

Yeah. Good, bad or indifferent. And, you know, that’s the reality. The two things that people really don’t want to talk about money and death. And it’s unfortunately the two things that we have to look at, even if you don’t want to look at it, and stare at it. You got to at least glance at it and say at one point in time, maybe this the ride comes to an end. I want to make sure that someone’s taking what I’ve worked so hard for me and my wife, my family, and passing it on to those people I care about. And so that’s kind of how it comes about is they’re hey, I just want to hustle and make business. I want to grow my business, my family. Well, have you got everything handled, if something happens? Oh man, my cousin Ned passed or something along the COVID or everyone now unfortunately has some knowledge of someone that left too early. And those people are business owners and those people have families. And that’s why I said, hey, you know, we structure your LLC to win, if something does happen that it goes to the right spot, that it stays out of the probate courts. And that’s kind of the segue to where they go. Oh, so what can I do? You know, funny you should ask. Let’s have a conversation. It might not be that conversation. Right? This guy’s again just trying, to try to buy a piece of real estate. You know, down the road I planted the seed for this entrepreneur. Let’s get back. Let’s keep in touch.

CORT:

But it’s so important.

RON:

Yeah. I mean, that’s a sobering conversation to have with somebody. Oh, yeah. But I’m an entrepreneur. I’m out there hustling all day long, and then you’re going to stop me and have a conversation about, you know, what happens. Yeah, if something happens, what happens if you die? Who gets your property? Well, you know, my kids, I guess, really? And have you planned that? You know, and it opens a whole other door because it’s not that clean and efficient, and it doesn’t always just flow that way. So, you’re having conversations about estate planning, about taxes with clients. What other kind of conversations come up with the clients of NCH?

RON:

You know, it’s going through they have the tax cut, obviously, when they’re setting up a structure, you know, me and my friend want to set up a structure. Do you know him very well? Kind of what we’re going into business together.

CORT:

Partnerships, oh goodness.

RON:

Partnerships.

CORT:

And we all know what the divorce rate is in the United States. And we’re just dating.

RON:

I just spoke to a couple today about that. I said, you all getting along really good right now and you’re ready to get married, right? I mean, you know, sometimes marriages are the most beautiful things and they last forever. Sometimes they’re the most beautiful things and they have an ending.

CORT:

Yes.

RON:

So, when you have a planned descent into something like this, in marriage they call it prenuptial agreements. In our business world, we call it partnership agreements. And it’s not always for bad dissolutions either. Hey, let’s go into this with a plan. I present that to our clients. You know, there’s three of us getting together to buy a piece of property okay? We going to keep it forever? I don’t know. Well, let’s define that. That’s a great idea. And we can define that with our legal team. You know, even three, four or five, six people want to get together, go to a partnership. Let’s define what it looks like. Everyone’s got peace of mind then, right? We’ve got a tax plan. We’ve got a business plan. We’ve got things that like that. So, they feel comfortable and they also feel comfortable picking up the phone and calling me and saying, I have a problem. Or, I have something and I can help them before with that. So, partnerships. Absolutely.

CORT:

That’s a really big deal, too, because you get into business with someone else and you probably don’t have much happening yet. Right? So, you’re like, well, I don’t need to think about that stuff at this point, you know. We’ll get along we’re buddies, we’re pals, you know, and I think in the past, myself personally, hundreds of calls and personal interventions with situations of business owners that aren’t getting along.

RON:

Absolutely.

CORT:

Someone’s not carrying their weight. And they don’t want to work as hard anymore. One wants to, you know, retire or do something different. And if you don’t have a plan and you haven’t laid it out, that’s when the conversations get really sticky.

RON:

Absolutely. They’re challenging and they don’t need to.

CORT:

Right.

RON:

I heard a great statement from a client the other day, is… making things difficult that don’t have to be difficult, you know, it’s like the high school sweethearts getting married and we’re in love. We don’t have anything. You know, we haven’t made any money yet. And then down the road, there’s money in kids and stuff and things. Right? And, you know, we never planned for that. But in a business, I tell people, you know, let’s plan for that good, bad or indifferent. You know someone wants to retire. Someone doesn’t want to do this anymore. Let’s have a very clean-cut trajectory and plan. And it only takes a little bit of planning. But that’s stuff I bring up with clients, too, you know? Okay, now we’ve got the entity, you know, let’s just see what the plan is for the exit strategy as well.

CORT:

Yeah. And entrepreneurs aren’t planners, so you’re forcing them out of their comfort zone.

RON:

Back to the jumping out of the plane and making the parachute yeah.

CORT:

How do I make money doing this right now? Come on Ron.

RON:

Yeah. And it’s sort of I take the onus on as the consultant. And so as my teammates do to consult you with that, let’s look at this. Let’s take a critical look at what’s going to happen should this occur. Well, it’s never going to happen. You know, I hope not. But let’s do a whatever, let’s play a game of whatever. What if you get COVID? What if you are the peas and carrots? But one person just can’t be a part of the business anymore, of not of your own doing but of someone else’s doing. Your partner is going to want to know, what do I, what do I do here? Right? So, that’s a great benefit that we have. You know, we have all sorts of the conversations always start around structure, though, and this is the right structure and this is why this is the right structure. And what are we doing with the real estate? We have some conversations on that. Protective entities for real estate. I’ve got a partner, well, let’s talk about that partnership, how that’s going to go. And then obviously taxes, everything devolves into taxes, right? Because no one wants to talk about it.

CORT:

Nobody loves talking about taxes, I know I don’t. So, you know, it’s interesting because there are, there are solutions out there and people know of them, online companies that I can just simply go and form an LLC through, you know, some website out there. And you’re talking about a consulting relationship with a client that has more things to consider than they actually realize. Of going in and saying, I just need an LLC Ron, what’s the big deal here? You know, and it’s easy to think that way that this is just that simple. But there’s always more to it.

RON:

Oh, there is.

CORT:

As you unpackage, who’s involved, what they’re trying to do, where they’re trying to go.

RON:

And I see that as a lion’s share of folks. I couldn’t give you the number of people that will go form an online entity and be so confused or frustrated or upset. Not to say that they can’t just give you a piece of paper and article and say, there you go. But they didn’t really have that consultative approach. They didn’t really have anyone to say, well, did you think about the partnership? I didn’t think about that. Or taxes? They get so frustrated, upset that they’ll just throw it away and start over. They just get and try to say, hey, let’s work with what we have sometimes. But yeah, the idea that you don’t know the questions to ask until someone starts pulling the string a little bit. And no partnerships wait, wait continuity, woops, tax and huh. And now all of a sudden, like you stated, we started out forming a trucking company for our one fellow LLC and realizing he’s got no estate planning because he had partners he didn’t know how to be on there. He doesn’t really even know what tax category he is. And those are the people I feel bad for because they come back to us and they say, oh, I didn’t know what an S election is. I’m ready to file my taxes on April 18th. Not realizing they missed the deadline by, you know, 33 days as we just had recently. Right?

CORT:

Yeah. And I know that those calls have come in from people who say, hey, oh by the way, I saw those emails and you told me I needed to do something. Now I’m calling.

RON:

I’m calling in.

CORT:

And you’re like, well, we’re a little late now. Let’s talk about what we can do now that you’re a little late.

RON:

And, you know, that’s always a great I always try to make clients, as everyone else does, make them feel better. There’s nothing out there that we can’t fix. You bring me something that Uncle Ned did online a year ago, and nothing works, and everyone’s frustrated. Just give me some time. Let’s talk it over. Let’s see. Sometimes we might need to start over. Sometimes we can provide solutions by talking to them and saying, this is a better solution. This is how we can solve that tax liability issue. This is how those abatements work. I find my clients, I tell them, you know, if you think hiring a professional is expensive, try hiring an amateur.

CORT:

And it’ll come back to haunt you in many ways.

RON:

And again, you don’t know what you don’t know, right?

CORT:

And those are lessons that every entrepreneur has to learn. And hopefully you can listen to an advisor like yourself to save them the misery, the cost, the pain of having to do some things over which often times is what we end up doing. But I think what’s so cool about this consultant relationship is that you have the clients is, you’re a resource for them.

RON:

Absolutely.

CORT:

And things they don’t even know that you’re a resource for. You start opening the door to things that they haven’t thought about. And I remember, you know, you mentioned we then we’ve been doing this at NCH for over 30 years and I’m often asked, you know, what inspired you, Cort, to add these additional services? And I say, it was easy. I was an entrepreneur myself. I know who knew what I didn’t know, I knew what I needed after I found out afterwards. And then here we are working with, you know, tens of thousands of clients, and they need somebody to help them with their taxes. They need somebody with a legal background to help them with a partnership agreement. You know, they don’t know which bank to go to. They don’t know how to fill out the forms just to get the entity filed correctly. And then if they’re going to work in different states, in addition to that, there’s requirements for that. You know, you can’t get that with an online provider. And you’ve got to have someone like you in their corner to help them through that process. Because, you know, when you’ve worked with as many people as you have now, it’s like, you know where all the pitfalls are, but they don’t even know about. They just want to launch their business, make a bunch of money and never look back.

RON:

We’ll just hope and pray.

CORT:

Yeah, right.

RON:

And that’s totally correct. It’s after seeing as so many times in so many, written in so many different colors and inks, but the same pitfalls keep coming up. And so I try to really slow down and say, okay, well, it’s do that, but let’s think about this. And I’ll have clients call me back on a regular basis. The last few days, last week, several times, oh I’m a bad client. You’re not a bad client. You’re an entrepreneur, you’re working? Well, I didn’t do this. Well, let’s fix it. People think it’s like a self-deprecating thing, like, well, I’ve screwed everything up. I said, nothing’s not unfixable.

CORT:

Sure. Yes.

RON:

It’s pretty rare.

CORT:

We can go back and we can clean it up.

RON:

Let’s educate that we’re not going to do this for it. And that is, again, that approach that I really love with our clients is by the time I’m off the phone with them, like, I just feel better. I just feel better you know, that’s it’s really nice to see because it’s stuff that probably you and I made mistakes when we were younger in business. Oh, I wonder taxes? We don’t need to do that. Partnerships? We don’t need to do that. We don’t worry about the later. Well, as we know, later never comes.

CORT:

Right. Right. It’s the same. So I mean, I had a call the other day from a friend and they’re not a client of ours. And the friend was telling me that they just realized that they forgot to pay their state fees over the last three years. And this, this woman was very emotional about it. She thought everything was going to fall apart.

Ron:

Yeah. Everything’s for not.

CORT:

And I know her husband well, too. And I could just hear him in the background saying, I told you so. You shouldn’t have done this. You should have done that. And I just put her at ease and just told her, here’s what you do.

RON:

Yeah.

CORT:

You know, and we gave her the process and it was so simple, but to her, it was the end of the world. She thought she had screwed things up so badly, she wanted to throw away the entity that she had. And I’m like, no, no, no, no, no. Yeah, don’t do that. That’s more complicated than you think. Yes. Because you had to change your business license. We have to get a new tax I.D. You have to go shut down the bank account that you have right now that you’ve been operating with and get a new bank account because everything starts over. And she said, I don’t want to have to do that. And I’m like, okay, then we’re going to pay some fees and you’re going to pay some late fees to the state. And we have to rectify it. But, you know, it wasn’t a long conversation, and I sent her some information and she was so happy just having that resource available to her. And, you know, I know that our clients in these situations, when they get ahead of themselves, they can just pick up the phone and someone like you is going to be there to work with them.

RON:

And we do it so often, we don’t really validate. We don’t take it into account sometimes that I can go click, click, click and send them two or three emails of data. And then on the other line, like, wow, I could do this? You just got to pick up the phone. So many people sitting out there staring going, but my situation is different you can’t fix it. Give me, give us a shot. You’d be amazed at the crazy stuff that people, I haven’t paid taxes in ten years. I didn’t know how to license or it’s just creating solutions. And that’s what I love about our company is, we just create solutions. You bring me your problems, bring your entity structures, trusts, your tax issues, I’ll create a solution. Chances are it’s not the first time I’ve seen it, maybe the first specific instance, but chances are most problems are repeats of the same stuff that we see right? Everyone feels like I can’t do this. I made it. I made a horrible mistake.

CORT:

We’ve seen it all.

RON:

We’ve seen it all.

CORT:

We’ve seen it all. And it’s rare that I get stumped today. And it’s rare that somebody brings a new situation, and we don’t have an answer.

RON:

Absolutely. And that’s a challenge on both streets. So, if we can do something to help you live a better life, work on your business, work on your family, get past the post COVID stuff. Get to where I feel comfortable and I’m moving forward. I know I have somebody like NCH behind me. That’s what gives people that it makes me happy at the end of the day.

CORT:

Peace of mind.

RON:

Peace of mind.

CORT:

We talk about it all the time.

RON:

Yeah.

CORT:

That’s everything. Ron, thank you.

RON:

Absolutely.

CORT:

Thank you for sharing with us today. And really, you know, just letting people listening know that it’s not a complicated process to get started. In fact, you can accelerate it to such an extent by getting somebody formed in 24 hours and getting a tax I.D. and a bank account set up within a couple of days after that. That if they’ve got an, a pending transaction or they’ve got the super-hot idea, but they finally have the investors to back them, they can come to us and we can launch it and get it done quickly.

RON:

Absolutely. They can have it in their email box. Their articles, their E.I.N., their bank account done. It’s a Monday. Let’s go to work on Thursday or Friday.

CORT:

That’s awesome. That’s really cool. And the way that we’ve developed it is really cool helping thousands and thousands of people.

RON:

Absolutely.

CORT:

A lot of fun here. And I want to say thank you to each and every one of you for tuning in today to another episode of Wealthy and Wise. I’m your host, Cort Christie, CEO and founder of NCH. Thank you for tuning in.

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