Previous Corporate Coaching
Questions and Other Service
Questions asked by NCP Clients.

Below is just a sample of hundreds of questions that are faxed or e-mailed to our office each year with regard to our service called Corporate Coaching. As you will notice, many questions require the help of an attorney or CPA. Since, we are consultants we can not replace your attorney or CPA, but we can offer opinions on business questions based upon our research and study. This is why so many clients find our service so valuable.

You may also notice why we recommend working with a company that can support you before AND after you form your entity. Many people are tempted to save a few dollars by forming the entity themselves; this is something we do not recommend. These questions are in the same"unedited form" as when they came to our office directly from our clients.

Corporation Questions:

1. If I change the name of my entity will the corporate ID number change?
2. You had indicated that it would be in our best interests to file for subchapter "S" status at this time. The IRS form for the "S" election requires that all shareholders sign the form and provide home addresses and phone numbers. We set the corporation up so that Blank appears as the President/Secretary/Treasurer to ensure that only one person is exposed in the event of a lawsuit. Doesn't this "S" form defeat that strategy? Or did we miss something?
3. I have read your excellent article on controlled groups. However, my question is, does this apply only to C Corporations or other entities? In my particular situation I have a professional S Corporation and a newly formed non-professional C Corporation. The president and officers are the same in both corporations. However, the ownership interests are dissimilar in that I own the shares of the professional S Corporation, and the asset protection LLC owns the shares of the C Corporation. According to the IRS, are the current relationships between the entities considered a controlled group?
4. We have recently formed a C Corporation with 100% of the stock owned by our asset protection LLC. The C Corporation has a 60% membership in the LLC. What happens in the future when we close down the corporation and liquidate the corporation's assets? Can the membership interest in the LLC be taken back by the LLC in exchange for the stock and therefore the assets of the C Corporation? Will this transfer of assets (mostly depreciated) be a taxable event?

LLC Questions:

1. As the manager of my entity, do I own it or am I just a manager?
2. If I am just the manager, and the forms in the Company book have never been filled out, and I fill them out now accepting the resignation of the organizer, Then did I really own anything prior to my divorce (meaning my entity) and do I really need another LLC just to be safe from my ex?
3. I am looking into establishing a NV LLC in order to establish a "Commodity Pool" fund to invest in commodities for my clients. Typically, owners sell shares in their funds to multiple investors and invest the pooled money. The owner takes say 20% off the top of any profits and the rest is left within the pool to reinvest or repay investors who may wish to cash out from time to time. Anyway, does it sound practical to establish such a fund utilizing a NV LLC and if so can you help me out in the specific construction of this entity?
4. What I am considering is this. Starting another business (an LLC) that would purchase some commercial property. The property I have my eye on has two tenants. One tenant will leave in a few months. Then I would lease office space to the consulting business (the S corp), run the LLC from the office and lease out the other portion to the existing tenant.

So, I have a few questions.

A) First is my concern about using my home address as the business address for banking purposes etc valid? Does this weaken the corporate veil?

B) Is my idea of the LLC as the building owner, leasing a portion to the S Corp a sound idea? If so, what address does the LLC use to get set up - before purchasing the property? Obviously the LLC would need a bank account etc and end up in the same position until the property is in hand.

C) My wife an I also own a rental house (in Texas). I am considering that IF we set up the LLC for the commercial property to sell/transfer the rental house from us to the LLC. Therefore the LLC would own two properties and end up with three tenants (one being our consulting business). Aside from the LLC, my immediate question is which address to use?

5. As you know, the charging order is at the heart of the asset protection strategy for an LLC. However, are there any cases of creditors faced with charging order protection, in which the judge was asked to force a distribution of a portion of the partnership or LLC assets?
6. Along the same lines, are there cases where a judge in another state like Tennessee can, to give relief to creditors, order the dissolution of a membership interest in an LLC formed in Nevada? Would the Nevada courts be required to recognize another state court's judgment and thus liquidate the LLC membership interest?
7. We plan to transfer our brokerage accounts to the LLC. When capital gains and dividends are distributed to the LLC, this income will pass to my wife and myself and reported on our joint tax return at our current tax rate of 36%. This amount will be 40% and the other 60% will be passed to the C Corporation and reported on the corporation's tax return at its corporate tax rate. Is that scenario correct and therefore could this produce some tax advantages?
8. As you know, corporations painstakingly adhere to good record keeping, including stock ownership ledgers. The LLC, on the other hand has relatively little paperwork and record keeping involved beyond an operating agreement and a list of membership interest. Since assets such as cash will be constantly added to the LLC, is there need for records to adequately reflect this change in percent membership among its members? Or should a constant proportion, based on the original membership interest, be used when new assets are added to the LLC so that no records need to be kept regarding this transaction? Furthermore, each time assets are transferred to the LLC will we need an attorney?
9. When an equity stripping strategy is in place from a friendly entity, we plan to have documents for that loan be in accordance with arm's-length terms, including a promissory note and security agreement. It will be secured by the inventory equipment, furniture, accounts receivable and other intangible assets of the business. In my research, I have found that it is strongly recommended that an UCC-1 should be filed to put the world on notice of the presence of the lien. Can you explain to me what an UCC-1 is and how I can obtain this form and where to file it?
10. I have read your articles on ERISA'a anti-alienation protection but it does not address the issue of whether these provisions will apply in plans where the only participants are the owner employee and spouse employee. In the book by Brette and Meckes, Asset Protection Planning, the authors state, "There is a line of decisions that also appears to indicate that ERISA's anti-alienation provisions will not protect corporate, LLC or other plans that include owner-employees when the only participants of the plan are owner-employees and their spouses (and perhaps other immediate family members)". Does this mean that individuals who are owner-employees of their entity, and the sole employee, who have a SEP IRA cannot claim the anti-alienation protection? More specifically, if my spouse and I participate in an ERISA qualified VEBA in our C Corporation, as employees, and not owners since our LLC owns 100% of the stock, are we also exempt from ERISA's anti-alienation provisions?

Taxation Questions:

1. Is it necessary on the SS-4 application to put a title on line 7 after the persons name?
2. Why is NCP's fax number and phone number on the SS-4 where it indicates business fax and phone numbers? Shouldn't it be the individuals?
3. On the SS-4 can I use an individual as an agent only to sign off on the application without the person having any responsibilities to the entity?
4. How long does it take to get my EIN# once it has been sent in to the IRS?
5. Is it necessary for me to have my EIN# before I may begin to do business?
6. Is it necessary for me to have my EIN# before I may open a corporate bank account?
7. Does the State of Nevada Department of Taxation Business License have to be renewed on a yearly basis?
8. Is there an IRS document (similar to a 2553 for S Corps) that is required by the IRS in order to file for prior IRS permission (or just notification) to the IRS that we are an LLC? If there is, what form is it? If there isn't...why do we have to file a 2553 for S Corps, but not a similar document for LLCs?
9. Question 2: What tax form (1120-C Corps, 1120S-S Corps, 1065-partnerships, etc.) are we required to file as a tax return with the IRS? If it is a 1065 (which is for partnerships), then what form do we file if we are not a partnership, but are a single-member LLC instead?
10. In Utah we had to file a TC-69 to get a state ID number. Is that the case in Nevada? If so, do you file it or do we? What form is it?
11. Since I am not a resident of California, can I still be a resident agent? I live in Tennessee even though I plan to do business in California.
12. I do have an address in California but do not live there and have not been paying California state tax. So, does that NOT make me a California resident?
13. So is it necessary for me to appoint someone else as a resident agent or can I still be a resident agent? (assuming I will pay CA Taxes in the future, for my CA income)

General Questions:

1. What happens if I just let my entity lapse into revoked status?
2. Why can't I just be my own resident agent and get the forms off the SOS Website?
3. How do I go about dissolving my entity?
4. Is there a limit on the number of directors/managers/general partners that I may have on my annual or initial list?
5. How long does it take from the time that I put my order in for an entity to the time that I can begin to do business?
6. When filling in the "Type of Business Activity Conducted" on my Nevada Business License Application, how specific do I have to be and what happens if I put one thing and later on I start doing something else but it is not listed on my License?
7. What is the Apostille, and is it needed?
8. I am concerned with operating the business, on paper, from my home. I do, personally, have assets that I want to protect. This makes it difficult getting a business license, opening a bank account etc - what address should I use?
9. On the Nevada Business License application, it asks for the date and amount of first payroll. We have not had a payroll yet, nor do we anticipate paying salaries for at least a few weeks yet (probably 3-4 weeks). Can we hold off filing this form for now and wait until we are ready to pay salaries? Or should we just make up a number? If we make up a number, do you have a suggested amount? We are NOT trying to get out of applying for a business license, I'm just not sure how to fill out this portion of the form.
10. On the "Resolution to Open Bank Account" form (from the corporate book you put together for us) there is a space that needs to be signed by the "agent". Is this supposed to be signed by someone from NCP? The only information I could find regarding this agent was that he/she should not be a corporate officer. Any clarification you can provide would be appreciated.
11. How do I determine if I need a business license in the state that I am registering as a foreign entity?

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