Where Do I Form My LLC?

By Lee R Phillips

I have usually recommended that a person establish their LLC in the state where they are doing business. I am still a firm believer that the “secrecy hype” and all the other sales pitches that Nevada makes are basically bogus. It costs a lot more to do your LLC in a foreign state (one where you’re not doing business), because you have to pay the registered agent, pay all the fees in the foreign state, pay all the fees in the state where you’re actually doing business, etc. You have to pay income taxes in the state where you are making money, so there isn’t any tax advantage to doing business in Iowa and having your LLC in Nevada or Delaware.

The whole “incorporate or LLC in my state” thing is basically nothing more than a great business for the registered agent. All he has to do for his $500 or $1,500 a year is forward a couple of letters from the state to you each year and hang around to see if anyone wants to serve a lawsuit on him directed at your corporation or LLC.

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What Your Teller Can’t Tell You

By Lee Phillips

I recently made an IRA transfer from one trustee to another one. I was searching for an extra 0.1 percent return. I might just say that interest rates banks are paying aren’t good. (The real way I feel about it isn’t best put in writing, because it would get this blog rated as adult only.) At any rate, when I got the little girl at the new accounts desk to finally help me, she had no clue. I had to walk her through it step by step. In her words, “We don’t do a lot of IRA transfers.”

The real sticking point came with the naming of the contingent beneficiaries. You are actually the primary beneficiary of your IRA. Your advisor doesn’t know what an IRA is. It is actually a 408 trust. There has to be an IRS approved trustee. (IRA trustees have to pass an IQ test, and if they score above 60 they aren’t qualified to be an IRS approved trustee.) Then there is a beneficiary – You. Can you see how it could be a trust? Trustees, beneficiaries, all the language sounds like a trust, but nobody ever thinks of IRAs as trusts.

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