Hey guys.
In this video, I'm going to cover
what the Corporate Transparency Act means to your LLC operating agreement.
You know, this federal law is going to go into effect
at the end of this year, and you should be planning now
to update your LLC operating agreement to make sure you're in compliance.
Now, if you want to learn more about how to properly structure your limited
liability companies or real estate investments and protect your assets,
you can register for a free tax and asset protection
live event at the link below.
But right now, let's dove into the rules that you need to know about right now
in updating your LLC to be compliant with the Corporate Transparency Act.
All right.
So if you're not
aware of the Corporate Transparency Act, what rock have you been under?
Listen, this is a new federal law that has gone into effect that requires
all business entities, what we call reporting companies, to report
not only on the business entity itself, but also on the beneficial owners.
You check out some my other videos on the Corporate Transparency
Act on my site where I've been covering this, talking about how the rules apply.
You got to know about this stuff
because there are serious penalties if you're not going to be compliant.
But everyone that I've followed thus far has been talking about
what the Corporate Transparency Act does and what it means to you as have I.
Well, what I'm not hearing, which I think you need to know about, is
what does it mean to your LLC operating agreement?
Because the Corporate Transparency Act, all members that hold greater
than 25% ownership interest in that company or people who exercise
substantial control those are considered to be beneficial owners.
And the company needs to report on the beneficial owners
of that limited liability company and supply that to FinCEN.
Now, here's the problem.
You've got an LLC, you have a couple members in there
that are either controlling it or they old at least 25%
and they're not complying with you in order and providing the information
that's necessary, because you've got to give they
you know, the federal government, you got to give me your name.
You got to give me your address.
Got to give them a copy of your driver's license or your passport.
So you've got to provide them some personal information.
If you've got some partner in your LLC that decides,
Now, I'm just not going to do that. I don't believe in this.
Well, here's what happens.
That rolls up onto you, onto your company.
And there are civil fines that come from not complying with that law.
So what I'm doing right now for our clientele, we've already drafted
into our operating agreements, and I highly encourage you to do
the same, is you need to put a provision inside of your limited liability company
that requires every member of that LLC that either
has control, let's say they're a manager
or any member that owns greater or 25% or more of that limited liability company,
either directly or indirectly, must comply with the Corporate Transparency Act.
Any request for this information to be recorded as a beneficial owner?
If they don't, then they risk expulsion
and they must agree to indemnify the company.
And you, if you're the person that is submitting this information to FinCen.
Now, I also have different provisions that I would suggest you consider
putting into your operating agreement.
Let's say you're going to go out and borrow money from a third party,
and if that lender has any ability
to control converting that debt to equity or they can exercise any control
over your business as far as how the business is run,
then you have to make sure, again, there is a provision
in that agreement to ensure that that lender will comply
with your reporting requirements under the Corporate Transparency Act.
These are really important things that if you if you got to a company
right now, it's best that you get the operating agreement amended.
If you want more assistance with that, you can contact Anderson.
If you want to learn more, I invite you to join us at our Tax
and Asset Protection Workshop, where we're going to talk about
how to set up your business the right way, how to use it in real estate investing,
how to utilize land trusts throughout different types
of strategies, corporations, all of that, plus much, much more,
especially when it comes to tax planning for real estate investors.
And most importantly, you're going to have the ability
to bring your questions to that event.
I'm going to have attorneys and strategists
that be on that event that will answer those questions live for you.
So we make this specific to you in your individualize situation.