All Forum Posts by: Ramsin Jacob

 Don't why you keep talking.  You're not saying anything positive or helpful.  Just wasting your time looks like.  

@Katie L.

Thank you. That was exactly my thought when I filed the 2nd one directly with the state. They e-mailed a electronic copy of the Articles which was very basic and said that was it besides the LLC-12 within 90 days. Comparing it to the 1st one I filed though that company, I was thinking there should be more in place to be fully legit. Definitely don't want to be cutting any corners. Just was curious was is the correct path. I see people setting up LLCs left and right with just basic, short documents, so I wondered.

My first LLC has all the proper documents filed and recorded internally. I have them all in a binder which the company sent to me for the service. The forms seems to be pretty generic/broad, seems like I can simply change the entity name on those documents and replace with a newly recorded LLC name. What are your thoughts on this? Would that be able to work? Essentially, that's what I would be paying this company for again, same set of documents only with the new entity name. Filing with the state, EIN, license, I can do all of that.

Hello BP community, 

Seeking clarification if possible in regards to the internal documents held within an LLC. I've been speaking with my CPA (who obviously isn't a lawyer) & my compliance coach from the business who set up my first LLC. Also spoke with the state of CA office in regards to this. Everybody seems to have their own interpretation.

I went through the e-file process for a new LLC in CA. Within 2 days was approved and received my Articles of Organization. My first thought was, are they going to give me the Operating Agreement [OA] and other supporting docs (I had received a huge binder of these docs thought the company I used to register my first LLC). Quickly, I learned that the [OA] and other supporting docs are not to be turned into the state, but are to be kept internally. The [OA] and supporting docs I received through the company who set it up, were very extensive, had great detail, etc. When I filed the 2nd one with the state of CA, I saw how the Articles were straight-forward and one page. Different from the 1st I had filed with the company. So my question then was, does the [OA] need to be extensive as well? Or can it be simply one page? Since it is kept internally. My CPA said yeah, the [OA] can be however long you wish. The company who set up my first LLC, included additional documents like certificates for members, minutes information, etc. Is all of this necessary? Could I essentially take the documents from the first LLC, change the entity names and then use that for any new LLC? The compliance coach that was given to me through the company for the 1st LLC I filed with, says that all these documents are important to have in case if I were to get sued, a judge will see that the LLC was operating like a proper LLC, rather than a individual who simply registered a LLC form with the state. How much truth does this actually hold?

I would be thankful for any input and experience with this if you have the time to share.  My thinking process right now is that I don't want to fork over all that money to this company (or another) to prepare these documents if there is not much need for it because they are kept internally and not even submitted to the state.  Does it really give a upper hand advantage (having these documents) if there were to be a worse case scenario and someone wanted to sue me?  

I was able to successfully register my 2nd LLC with the CA, as mentioned, and was re-directed by them to file the LLC-12 which will state all the members. Essentially, that is all that is needed correct? The rest of the documents like Operating Agreement, is whatever the members of the LLCs agree upon, correct? The "minutes" "membership certificates" etc are all optional docs?

Thank you. 

@Account Closed  the annual return on investment rentals in cities like San Jose/San Francisco are amongst the lowest in the country.  The focus would be to buy properties in neighborhoods which will experience appreciated value in the years to come.  If you are still looking let me know.  

Hey Gary, how is this coming along?

@William Coulter contact me either by email or phone and lets talk.  Thanks. 

I was a Realtor before I figured out the whole investment side of RE. It happened by accident when a wholesaler reached out to me and told me if I found the deals, that he would bring the buyers, cutting not much for me, my thinking at first was that is how it is. Quickly I realized this wholesaler was basically short shifting me, as I was the one putting the leg work in and finding the deals, not to mention handling the legal transaction. So with out much knowledge in the beginning, I set out to find as many investors as I could. I learned a lot along the way and now I am fixing and flipping properties on my own through my entities. Also still working with other investors, not at a place yet where I can handle each deal that comes my way. So I present them to the network I have & if someone like the deal, we move quick on it! You won't learn from just reading books, forums, watching videos; the real experience comes and then the lessons follow after that. It's always the best way, through all my years of business, not just in REI but through my other companies, that is how I always learned, by getting my feet wet! Good luck @Tiffany Milan

@Shawn Ward  Sure thing, I'll get back to you when he replies.  Thanks.

@Michael Plaks  Thanks.  

Yes, 1908 Form is for expenses. Also, 1099 Form should be given to the investor as well. 1099 Form doesn't have the details such as capital gains/loss. CPA says it's a lot cleaner to run the investment this way. It's not complex really to do, for my particular situation I am set to close escrow by the end of November, so I don't want to risk time for switching the buyer's entity on the contract if I don't have to. CPA also mentions investor pays ordinary income rates versus capital gains rates on his tax return, if simply handing him a check with 1098 & 1099 forms. It seems like it's the proper way to go about it. Currently have a client in SF selling a 5-unit commercial/residential and the name under title is the 'the property address LLC'. So that tells me they have their business structure set up the same way. An LLC was created for the individual property investment & they'll write out K-1's to each member after the sale and from there close the LLC. Repeat.

@Shawn Ward  thanks.  My CPA asks several questions regarding the differences.  I would much prefer to keep it as the method you are currently doing.  But check out below what he said to me in regards to this: 

"First, there are depreciation issues among many other possible factors on the tax return which would be calculated into the K-1 numbers, along with the fact that there would be capital gain/loss rather than ordinary income. Form K-1 has a separate line for capital gain/loss and your partner could be understandably upset if he has to pay ordinary income rates versus capital gains rates on his tax return. In all likelihood, the amount you pay him will be different from the tax numbers he has to report on his tax return. What if you do a 1031 exchange? We know for sure in that case that the check amount to him will be different that the taxable income numbers. My point before was how will you know the correct amount to put on his 1099, and how much of it is capital gain versus ordinary income? A 1099-Misc form doesn't even have a line for capital gain/loss."

Thoughts?