FYE Garrett And Ted Sutton | Corporate Transparency Act


Congress recently passed the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act to enhance national security, intelligence, and law enforcement efforts against money laundering, terrorism financing, and illicit activities. It does so by establishing a national registry of beneficial ownership details for “reporting companies.” Although the CTA largely applies to foreign-owned shell companies, domestic companies should review the definition of a “reporting company” to confirm whether they qualify for any exceptions. Today, father-and-son duo Garrett Sutton and Ted Sutton give golden nuggets on this new law that nobody seems to be talking about. Garrett is a corporate attorney, asset protection expert, and bestselling author, while his son, Ted, is a licensed attorney. Tune in to understand the CTA better and save your company from unnecessary penalties.

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The New Law Nobody Is Talking About: What Companies Need to Know About The Corporate Transparency Act With Garrett Sutton And Ted Sutton

In this episode, I’m here with two special guests, a father and son team. I have never had a father and son team on the show so this is going to be fun. Fasten your seatbelts and get ready for the ride of your life because we’re going to talk about something very interesting. We’re going to talk about the new law. The government loves to come up with new laws and then get quiet about it. They love to come up with these laws and then shush so we can’t follow them and then they can penalize us to make us pay a lot of money.

That’s what we’re going to be talking about in this episode, the law that nobody’s talking about. Pay attention everybody and welcome to another episode of the show. Let’s get started with my guests. Garrett Sutton, the father, is a corporate attorney, asset protection expert, and bestselling author. He has sold more than a million books to guide entrepreneurs and investors. For more than 30 years, he has run his practice assisting entrepreneurs and real estate investors in protecting their assets.

The companies he founded, Corporate Direct and Sutton Law Center, are helping more than 13,000 clients protect their assets and incorporate their business. He also serves as a member of the elite group of Rich Dad Advisors from Rich Dad Poor Dad, the book by the bestselling author Robert Kiyosaki. A number of the books Garrett Sutton has authored are part of the bestselling Rich Dad wealth-building book series. He’s written twelve books.

Additionally, he’s appeared in The Wall Street Journal, Credit.com, and other publications. Garrett has been recognized as a Lifetime Achievement Member of America’s Top 100 Attorneys. Ted, his son, had quite the long bio too but I had to shorten that a little bit as we want to get in the talking about the law. Ted Sutton graduated law school in May 2022 and passed the bar for the very first time. Congrats, Ted. Welcome to the show, Garrett and Ted. We’re happy to have you on.

Thanks, Michelle. It’s great to be with you.

You’re welcome. Before we dive into the law, let’s dive into the two of you and talk about a brief snapshot. I want to spend a whole lot of time here because I want to give everybody these golden nuggets and bring people up the speed of what’s to be happening in 2024. Tell me a little bit about it, father and son. You went in a different direction, Ted. You are an electrical engineer, I believe and then decided to go to law school. The two of you are working together. How’s that working out for the both of you?

You pretty much covered the whole thing. I was in Mining Engineering in college. I worked at a mine in Chile before I graduated. I had a great time but realized that it wasn’t necessarily the career path that I wanted. I graduated. With a little bit of advice from my father, I made the decision to go to law school. I graduated in 2022 and passed two bar exams. I’m working underneath him and having a good time.

Not just working underneath him. I don’t like it when somebody says, “I’m just a real estate agent or an attorney.” You have changed the world. Let’s dive into it and talk about the law. Garrett, what’s this new law that nobody’s talking about?

Michelle, it’s surprising that no one’s talking about it because it affects 38 million businesses in the United States. Everybody with only a few exceptions is subject to this new reporting requirement whereby you have to provide the US Treasury Department with information about who owns 25% or more of the company and who has control of the company.

If you fit, and most people do, you have to provide your personal information, a copy of your driver’s license, or passport. If you changed ownership in the company, you need to update that with the US Treasury Department. This is a big law that affects a lot of people and no one is talking about it. It starts January 1st, 2024 and everybody’s going to be subject to it.

Nobody’s talking about it. I’ve talked to a lot of people since we spoke and nobody’s heard about it. I own multiple companies. I haven’t heard about it. My partners have not heard about it. Our clients haven’t heard about it. Why is nobody talking about it?

Part of it is people’s hope that it would be rescinded. They thought that the government couldn’t have this database with all this personal information. All these databases get hacked and this is going to be a target-rich database. People are going to be trying to hack into this one right from the start. People assumed that the government would come to realize that we don’t need this database or law but out of Washington, they’re saying, “This law is coming. You better get ready for it.”

It’s because you have to file the information but there’s no dollar amount you have to include. It’s only filing information. You don’t have to pay anything but if you don’t file Michelle, they can penalize you up to $10,000 and if you’re willfully not filing, they can send you to jail for two years and you know that they’re going to make examples of people like that guy from the Idaho Hills who does not want to file anything with the government. They’re going to make an example of people who willfully fail to file and send them to prison as an example to everyone else.

What’s the motivation here? What’s behind this Transparency Act? Is it because people are avoiding paying taxes? Is it money laundering?

It is money laundering and terrorist financing. The idea is that by having this database of everybody’s ownership information and substantial control information, the Treasury Department will be able to more efficiently be able to understand money laundering and terrorist financing. Many nations have this kind of law in effect. The US is one of the last countries to have such a law but the thing to realize is the bad guys are not going to tell the truth.

FYE Garrett And Ted Sutton | Corporate Transparency Act

Corporate Transparency Act: The idea is that by having this database of everybody’s ownership information and substantial control over this information, the Treasury Department will more efficiently be able to understand money laundering and terrorist financing.


The other 38 million business owners have to file their information. It’s quite an onerous law. We don’t know. I don’t know enough about the intelligence systems in the United States if this is going to allow them to catch people. Once you file that information, the IRS, CIA, INTERPOL, and all sorts of people investigating money laundering and terrorist financing crimes will have access to this database.

The whole idea is to allow these super law enforcement agencies like the FBI and the CIA to have access to this information. Will it work? I don’t know but, in the meantime, no one’s talking about this and this is something that is coming on January 1st, 2024. If you have an entity already in existence, in 2023, you set up an entity, you have to file this information within the first year. From January 1st to December 31st of 2024, you have to file this information or you’re in violation.

Do you have to file it as of that date, just to clarify?

It depends on when your business is formed. If your business is formed before January 1st, 2024, these are all the businesses that you have set up and all the ones that Dad has set up. Anyone else out there reading that has a business, if it’s set up before January 1st, 2024, you have an entire year to report this information to the Department of the Treasury.

We don’t have to do it by January 1st, 2024. We have to do it by about December 31, 2024.

It changes if you form your business after January 1st, 2024. If you form it after that date, then you only have 30 days to report this information to FinCEN which is the Financial Crimes and Enforcement Network at the US Department of Treasury. If you already have a business set up, they’re going to give you a little bit more of a grace period but if you set up a business after January 1st, the clock starts ticking on you.

Attention all readers. Set up that business. Go get your LLC operating agreement and all your paperwork. Get all your ducks in a row. Reach out to Garrett and Ted so you can get all that lined up. I have 2 to 3 more businesses I’m starting. I was going to wait until 2024. I’m going to do that now. Why would I wait?

That’s a good idea because it’s going to take a while for the government to get all this worked out. To have that period or that extra year to file makes sense.

We’re not pushing a panic button here. We’re just educating you to let you know that if you’re about to start a business, start it. If you’ve been in business, make sure you file before December 31st, 2023, or before 2024. The criminals are not going to tell the truth. How is this going to work? How is this going to happen? They put all the onus on us and as business people, we’re going to do what we need to do because nobody wants to pay a $10,000 fine or end up in jail for not reporting something. How is this going to change anything?

The criminals are going to use nominees. They’re going to maybe use unincorporated associations. You could be a sole proprietor. You could be a general partnership and you don’t have to file under this.

You said something very important. Let’s back that train up. Let’s talk about the different corporations, who have to file, and who doesn’t have to file.

For the new Corporate Transparency Act, the entities that have to file are any entity that’s filed by filing a document with the Secretary of State.

Does a partnership need to be filed?

Yeah, if it’s a limited partnership. You don’t file with the state so you wouldn’t have to file with FinCEN.

Which partnerships?

It’s a general partnership. A general partnership though offers zero asset protection. I’d rather see you file than operate as a general partnership.

FYE Garrett And Ted Sutton | Corporate Transparency Act

Corporate Transparency Act: A general partnership offers zero asset protection, so you’d rather file the report than operate as a general partnership.


Just so you know, we’re going to have them back on the show, Ted and Garrett, to discuss asset protection because we have a lot right here to discuss. How do you eat an elephant? One bite at a time. Let’s get past this law and we’ll then get into asset protection. What about sole proprietorships?

They don’t have to file.

Sole proprietorships and general partnerships don’t have to file. Partnerships, LLCs, S corps, C corps, and everything else have to be filed.

Including some homeowner associations. If you have an HOA, there is a requirement for the HOA to file.

It’s good to know. Is there anything else that real estate investors and business owners have to file? You go back to the corporation.

Most people are going to hold their real estate in an LLC, in some cases, an LP but in an LLC, you could have 10 owners each owning 10% of that LLC. You don’t have to file the member’s names because they don’t own 25% or more but someone in that LLC, one or more people have substantial control. They’re the manager. They make the decisions. If you’re a decision maker like that or you’re a manager of an LLC, despite what the ownership is, you still have to file as a manager of the LLC. This hits every LLC that owns real estate.

If you’re a sole proprietor or a general partnership, you don’t have to file. However, you do need to call Garrett and Ted to protect your assets because you might lose everything. Let’s back up on that real quick, Garrett. Talk about the partnerships and percentages one more time to make sure we’re crystal clear about that.

The requirement is for shareholders or members, owners of an entity. If you own 25% or more, you have to provide that information to FinCEN.

If you own 25% or more, you have to report that to the US Treasury Department.

If you have an LLC that has a 40% owner, a 30% owner, and two 15% owners, you have 4 owners, 2 of them are above the 25% threshold. You have to report the information on the two that own greater than 25%. The two that each own 15%, you don’t have to report on them.

You don’t have to file on the minorities under 25%.

There are two prongs to that requirement. The first is if you own 25% but the second one is if you exercise substantial control over the entity. It’s either/or. You can either own 25% or more or exercise substantial control over the business. Going back to the example that Dad said, if those two 15% owners were managers of that LLC, they would exercise substantial control over the business. They would have to report their information to FinCEN. They’re trying to encompass as much as they can and gather as much information as possible.

How do we protect ourselves from a security standpoint? The likelihood of this database being hacked is pretty likely. Where’s our protection?

The US government when they came out with this information said, “We are going to not let anyone hack into this. If anyone hacks into it, it’s five years in prison.” Michelle, when do hackers ever get caught? Have you ever heard an example of hackers from other countries ever being brought to justice? It never happens.

It should be able to reverse, Garrett. If we get hacked, the government should spend five years in prison.

Many people would agree with that, Michelle. The thing is this database is going to be a big target because there is all sorts of sensitive information on this database. It’s for a US citizen. If you’re a foreign business owner and you are qualified to do business in the US, you have a Swiss company that’s registered in Switzerland but you are qualified to do business in the State of New York, you still have to file. It applies to foreign companies doing business in the US as well.

The database is going to be a big target because there is all sorts of sensitive information in it. Click To Tweet

How are they going to catch them? Are they going to get on a plane and arrest them? They should file against their entity here.

They’re going to crosscheck with the IRS. If that Swiss company is filing a tax return within the US, the FinCEN guys are going to crosscheck with the IRS and see if you made the filing.

What about the business owners out there that never file? They’re making money. They have cash. They never filed. How are they even going to catch them?

They haven’t caught them for not paying their taxes. How are they going to catch them for not filing? I agree with you.

Is this under the Biden administration?

It was brought as part of the budget under the Trump administration in 2020, the closing days of his administration. Trump vetoed the bill. He didn’t like this Corporate Transparency Act. Congress overrode his veto because they needed the budget, not because they were especially interested in the CTA but because it was vetoed by Trump. That led some people to believe that the Republicans would overturn it but it hasn’t happened.

It could get overturned in the next election.

It could but there’s this element in Washington where both sides of the aisle want more information and control over us. I don’t know. Our situation is that this is the law. We have to help our clients follow it. We’re getting ready to do it. If they change it, fine but our job as lawyers is to help our clients get through this.

How might it affect the US in terms of its standing in global business and finance?

Most other countries have these kinds of rules. You can make money in the US. I don’t see it having that big of an effect on international business. I will say though to your point, I’ve had two clients that were based in foreign countries operating in the US and because of this new law, they stopped operating in the US so it will have some effect.

Stefan asked, “How does the Act contribute to the border efforts to combat money laundering, terrorism financing, and other financial crimes?”

It would allow the FBI and the CIA to find out information about money laundering efforts. Will people tell the truth though? I don’t know how effective it’s going to be because the bad guys are not going to tell the truth. It’s an open question whether this will be successful or not.

How does the Act require businesses to disclose their beneficial ownership information? What is the expected impact of this?

There are two different types of information that FinCEN is going to require. They’re working on a database. It’s not complete but there are certain fields that they have that require certain information. We here at Corporate Direct, when we help our clients set up their business, we’re going to report this stuff to FinCEN for them. There are two different types of information that you’re going to need to report.

The first type is the reporting company information. These are the LLCs, the limited partnerships, the corporations, and all of those. What’s required is the legal name, the tax ID number which is the EIN that the IRS issues, the county, your jurisdiction or state where it’s formed, and then also, a business address. It’s not a registered agent address but a physical business address where you’re conducting business. There’s also information called the company applicant information. At Corporate Direct, we are going to be the company applicants for people. We’ll report that information on behalf of the people.

The second type of information that Stefan asks is the beneficial ownership information. This is what we talked about before. The beneficial ownership definition is the two prongs. If you meet 1 of the 2, then you’re going to have to report that. The first prong is a beneficial owner or somebody who owns at least 25% of the company. If you’re there or above, you’re going to have to report your beneficial ownership information to FinCEN.

The second prong is that you exercise substantial control over the business. These are the managers and things like that. If you own a 10% interest in the company and your manager, then you qualify as a beneficial owner and you’re still going to have to report that information. The beneficial ownership information includes the individual’s name, first, last, and all that. It includes a date of birth, your residential address, and a photo ID, which is either a passport or a driver’s license.

If you’re a beneficial owner, you’re going to need to report this information in addition to the reporting company information. The expected impact of the disclosure is going to be in a government database. I’m not so sure how secure that’s going to be. When they said that they were going to have this database, I believe that that pipeline got hacked within a week of that. The government comes out and says, “This will be secure,” but hackers find a way to hack into these databases. I don’t know how secure they are. The impact of this disclosure, hopefully, it’s not hacked but I’m not going to put my faith in that. There could be some serious repercussions with this data-rich database that’s available for hacking.

FYE Garrett And Ted Sutton | Corporate Transparency Act

Corporate Transparency Act: If you’re a beneficial owner, you’re going to need to report information in addition to the reporting company’s information, and expect the impact of the disclosure because the information is going to be in a government database.


Michelle, I want to make one point and that is we’ll have some clients that say, “No, I am not going to file this report. I want you to set up the LLC but don’t file the information with the government.” The way the Act is written is that our company, Corporate Direct when we file your LLC with the state of Wyoming for example, we have to file with FinCEN. They don’t give us a choice.

If you’re going to come to us and say, “I want to set up an LLC but don’t report,” we’re going to have to say, “I’m sorry. You’re going to have to go elsewhere.” As the company applicant, we are required to file this information. Anybody out there who says, “I’m going to skirt this,” you’re going to find companies aren’t going to be able to help you because they are required by the law to file the information.

I’m sure attorneys out there will set up their LLCs and not file. That’s not following the law.

They’re also putting them at risk for penalties.

It’s surprising how many other services out there aren’t going to help their clients with it. We’ve called around and said, “The Corporate Transparency Act takes effect in January 2024. Are you going to help people with this?” Most of the time, they say no. It’s unfortunate because they’re doing their clients a disservice. They set up the entity with the Secretary of State, the LLC, or the corporation.

They act as a registered agent but after that, you’re on your own. When that happens, you’re not that protected. You’re going to need to have an operating agreement, meeting minutes, and all the documentation there but also, you need to report this stuff to FinCEN because it’s a new law that’s on the book. If you don’t follow it, the penalties are steep. It’s unfortunate.

Is it so much per day? How’s that $10,000 broken down?

You have 30 days to get this information in. Before January 1st, it’s a year. After January 1st, it’s 30 days. Once that time expires, you can be fined up to $500 each day up until that fine reaches $10,000. If you go 10 days over, then you’re going to have a fine worth $5,000. If you go 20 days over, you’re going to have that $10,000 fine but it stays at $10,000 for every day thereafter.

Do they throw you in jail after that?

We don’t know. The law says that willful failure to file is a two-year prison term.

If people want to read the law, where can they go find this law?

At Corporate Direct, we have a bunch of articles on it. We have a monthly newsletter. We update you on everything.

Where is the law written? Is it the IRS code?

I believe it’s in the US code but if you type in the Corporate Transparency Act and you go online, I believe that the Department of Treasury has the bill right there. If you want to go through the weeds, I’ve done it. It’s not that fun but if you want to do it, I believe the Department of Treasury has it but if you type in the Corporate Transparency Act, FinCEN, or legislation, it should turn up in the search results.

Michelle, can I mention two little wrinkles in this law? A number of Indian jurisdictions will set up corporations and LLCs. It’s not widely known but you can set up an LLC with an Indian nation and the law applies to Indian nations as well. If people out there are thinking, “I’ll set up with the Cherokee,” it applies to the Cherokee nation and all other Indian nations.

Secondly, a lot of people will set up an entity and have it in reserve. They don’t know who the owners are going to be for 60 to 90 days. You’re going to have to set that entity up much closer to when you know who’s going to own what because you have 30 days to identify the owners. In a lot of entrepreneurial situations, you may not know that when you start. You’re better off holding off until you know who are the owners going to be and then file within that 30-day period.

Are there any specific thresholds or criteria that businesses need to meet before complying with this Act?

Why don’t you tell them about the exception?

The thresholds as we talked about, if you set up your business by filing a document with the Secretary of State, most likely, you’re going to have to report that. They do have 23 exceptions in the bill. The most prominent one is called the large company exemption. There are other ones that relate to entities that are regulated by the SEC or insurance companies. A lot of the exemptions relate to companies that are already regulated by other government bodies.

The most important exemption that applies to the most number of businesses is called the large operating company exemption. There are three requirements there. The first is that you have $5 million in gross receipts in a given year. The second is that you employ 21 or more employees. The third is that you have a physical operating presence in the US. You have a brick-and-mortar location. If you meet all three of those requirements, then you don’t have to report.

FYE Garrett And Ted Sutton | Corporate Transparency Act

Corporate Transparency Act: A lot of the exemptions relate to companies that are already regulated by other government bodies, but the most important exemption that applies to the greatest number of businesses is called the Large Operating Company Exemption.


Will people go back and say this is another way that big companies get away with stuff like tax deductions, write-offs, and things like that?

Most regulations are geared towards the big companies. This one is geared towards the small companies. If you’re a big company, $5 million isn’t that much for 20 employees. You don’t have to file. However, there’s another wrinkle there. Let’s say you’re starting and you know you’re going to have $5 million in revenue and 20 employees but you can’t prove that the first year. You’re a new business. You can’t prove you’re going to have $5 million in revenue so you have to file. It’s going to help some companies but not all.

There are a lot of businesses out that have $5 million in revenue and don’t have anywhere close to 20 employees. Most companies are $10 million and up when they start having 15, 20, 25, or 30 employees. That’s not going to help a lot of people. Hayden asked, “Are there any other laws that the Congress is interested in passing that would be similar to this Act?”

There is one. The New York State is looking at having a similar disclosure law that is open for the public to view. Anyone in the country can go to the New York website for the Secretary of State and find out who the owners are and what their addresses are. This is a bad idea. Entrepreneurs need privacy. You don’t need every person to know exactly what you own. If New York State does pass this open disclosure law, you’re going to see even more companies leaving that state.

We don’t need a microscope up our business.

States view it that way but there’s nothing to add.

It’s ridiculous. A lot of entrepreneurs run their businesses. I understand what the government is trying to do. 1) It’s more money in our pocket. 2) It’s to get more information about all companies. 3) You’re trying to get the bad guys to behave but this isn’t the way because the bad guys are not going to tell the truth. Is there even enough manpower to enforce all of this in the government?

They’re not asking for any money when you file this. It’s not like it’s this self-funding type of mechanism. Do they have enough employees? I don’t know. It’s an open question how they’re going to enforce this. For at least the first year, they’re going to cut people some slack in part because they don’t have the manpower. However, year after year, the FBI is able to access this information and interestingly, your bank can get this information with your permission. A local police department with a warrant can get this information.

The information that’s in this database is going to be used by government agencies quite a bit. You’re going to find them arguing to members of Congress, “This is a useful law enforcement tool. We don’t want to give this up.” You’re going to have 38 million businesses saying, “Why do I have to do this?” You’re going to have all the law enforcement agencies who are close to Congress saying, “We want this.” Who wins in that case?

The information in this database will be used by government agencies quite a bit. You're going to have 38 million businesses saying, “Why do I have to do this?” and have all the law enforcement agencies who are close to Congress saying, “We want this.”… Click To Tweet

What can business owners do to protect themselves?

I don’t want people to have to pay the fine or go to jail. You’re going to have to file this form and hope for the best.

We have all our data and this database is probably most likely going to get hacked.

It probably will.

Are there any states or local governments that do not want this to pass? Is there anything they can do about it?

There are some states like Dad mentioned that are going to pass similar legislation. The thing is I don’t know if there are any states that can do anything about it.

It’s a Federal law so all states have to comply.

They have supremacy over the states but there are other states like New York that are going to pass a similar Transparency Act, which is open to the public so it’s even worse.

You don’t even need to hack it.

You go on the New York Secretary of State’s website and find everything you need. Other states may follow suit. New York did it. Maybe California does it. I don’t know. I’m just speculating.

However, the states are supposed to comply. How about Louisiana?

They’re one of the 50 states.

We’re a bayou country. We’re not part of this Federal law.

You’re the only civil law state there is based on the French system.

Lauren asked, “Can you recommend any resources or organizations that businesses can turn to for guidance in complying with the Act?” You can reach out to Garrett and Ted’s company. Are there any other resources here you can provide?

Corporate Direct is our company and we’re gearing up for it but as Ted mentioned, we’ve called around. Not many other people are going to be providing this service to their clients. Other resources certainly look at the law and understand the law but in terms of other resources, we haven’t found any.

Another thing to add to that is we’re going to have a web page up on the Corporate Direct website that has a brief rundown of the Corporate Transparency Act. Another thing is that I post stuff on YouTube. If you go to YouTube and type in Corporate Direct, you’ll see our channel. Please subscribe to it. I post there every week. I’m going to do some videos on the Corporate Transparency Act. If you don’t want to read anything and you’d rather watch a video, then that’s another resource and that’s going to be coming up in the future here too.

How does this Act balance the need for transparency with concerns about data security? We’ve been talking about this but there is no balance here.

The government has to present confidence that we’re going to create this database that is not going to be hacked. However, the week that they announced this protective government website, they were hacked in the SolarWinds hack. There were sixteen government agencies that were hacked in the same week they announced this. It was ironic but it’s an open question. Can they protect this database? I don’t know.

What database is protected even in the public sector? Can you name one?

I have no idea. Here is another thing, Michelle. The IRS database was hacked. People got information out about certain political groups and there was no accountability. No one got in trouble. This was the first time that the IRS was hacked. They used the information that was hacked for political purposes and no one got in trouble.

A lot of the moderate middle-of-the-road people saw that as a sign that these government agencies do not care about protecting this sensitive information. If the IRS cared, they would have gone after these people and found them. The information was used in a political discussion and the IRS never went after these people. That to me was telling the American public that we’re going to allow certain hacks that we like.

The IRS was hacked, and the information was used for political purposes. No one got in trouble, and a lot of people saw that as a sign that government agencies don’t really care about protecting this sensitive information. Click To Tweet

The criminals keep getting away with murder, money laundering, and everything else. It’s us law-abiding citizens that have to pay the piper, the government. It’s terrible. Entrepreneurs are going to keep saying, “It’s another way that the governments have their money in our pockets and they have their eyeballs on our sensitive data.”

Let’s look at a totalitarian system. You make campaign contributions to a certain campaign. You are required to list who you contribute money to. In a future scenario, you could have the government saying, “I want to see what this guy owns.” You’re going to have the government go and find out on the database that you own 50% of this company. Maybe you have a waterway as part of your business. The government sends out the EPA to harass you about this. This could lead to bad scenarios. We have to ask how the government is going to use this information.

Some business owners might be okay with that $10,000 fine but maybe not jail time. Emily asked, “What do you foresee as a potential long-term effect of the Corporate Transparency Act on business and the financial sector?”

The long-term effect is that business owners are going to lose even more privacy. They already have to report stuff to the Secretary of State but this new law adds a burden that they’re going to have to comply with. As we talked about, they say this database is secure but we’ll see what happens there. On top of that, you’re giving more information to the government so there isn’t as much privacy there. Another thing is other states could follow suit as well. You might have to report additional stuff to the Secretary of State for instance.

You open up Pandora’s Box here. It’s a rabbit hole.

Another thing is that criminals are going to find ways around it. Dad said maybe they’ll have nominee managers who will be the beneficial owners in place of them. Maybe they’ll use unincorporated entities that you don’t file with the Secretary of State to launder money and do other illegal activities. The law-abiding business owners are going to be the ones who bear the brunt and lose more privacy. It’s very unfortunate.

Lose more privacy and may suffer more regulations. They pay more fees down the road. It is opening up Pandora’s Box and scrutinizing these businesses as Big Brother is breathing down your neck. Not to be negative here but where’s the positive? What’s the upside here? Is there any upside, gentlemen?

I’ve tried to think of one.

The government handles people’s information. I don’t know.

Who trusts the government? The bottom line is what’s the upside for us?

I’m trying to find one, Michelle. I can’t see one.

I’m going to have you on my show to talk about asset management, both of you. You’ll have one for me.

We’ll create.

It seems like a mess. Maybe it will be determined by who gets in the White House.

When people realize that they have to do this filing, 38 million businesses are affected by this law. Not many business owners realize that they have to file this information at the start and 30 days after they make a change of their personal address and they have a new driver’s license or a new shareholder. Every time that happens, you have to file. When many Americans realize what this entails, you could make an effort to overturn this during a Congressional campaign. I’ve talked to people who are running for Congress. They’ve never heard of the Corporate Transparency Act.

FYE Garrett And Ted Sutton | Corporate Transparency Act

Corporate Transparency Act: Businesses are affected by this law. Many business owners realize that they have to file this information at the start, and 30 days after they make a change of their personal address, have a new driver’s license, have a new shareholder, or every time that happens, you have to file.


Do you talk to people in Congress who have never heard of it?

Correct. I’ve had to educate two congressmen on it.

The politicians don’t know.

They’re going to hear about it in November 2023.

The large $5 million businesses with 25 employees are exempt from this. It’s the small entrepreneurs who are going to be affected by this law. Small entrepreneurs operate on such a low profit margin, to begin with. This could be detrimental for a lot of our small businesses or entrepreneurs.

We’re going to charge a very affordable fee to file this for them.

I wasn’t talking about that aspect. I was talking about the aspect of more regulations coming down the pipeline once they have your data. It’s all about putting money in their pocket. I love the police officers saying, “Don’t get me wrong but why are we issuing tickets and parking tickets when we could be out there catching murderers, rapists, drug lords, and sex trafficking lords? Why are we worried about speeding tickets and parking tickets? Let’s go out there and catch these criminals.” This is low-hanging fruit to line the pockets. I don’t know. It squeezes the entrepreneur, which makes up about 98% of those 38 million businesses.

A lot of people will have 5 duplexes in 5 separate LLCs. They have to report for all five LLCs.

What if you have set up a series LLC? Can set those up in Texas, Florida, Nevada, and Delaware where you have one corporation and all those entities underneath that one corporation so you can have Tucker Real Estate and there are maybe 100 LLCs underneath that?

We’re not a fan of a series LLC. They’re not tested in court but let’s say you have a series LLC. In series 1, you have a group of 3 owners. In series 2, you have different owners. You’re going to have to file for each one of those series.

Even if it’s under the series and you have all these portfolios underneath that series, you still have to do it?

Yeah, because you may have different management and ownership. You’ll have a parent series but each bucket underneath it, in most cases, is going to have to file.

I own businesses and invest with partners. I am investing my money and becoming an equity shareholder with them. I grow their company to exit rich. What about I own a company in my series LLC and they own a company in their separate LLC? Are those independent LLCs filing or are we filing for that corporation that we own together?

Let’s say you have a corporation you own together. You’ve got to file the form.

I own it but not under me personally. I own it under my separate LLC for asset protection.

What will happen is that the corporation is going to have to file and you’re going to have to identify that one of the owners of the corporation is an LLC but they’re not going to rely on that. They want to have the next layer of information which is who owns the LLC. You’re going to have to provide that information.

We’re going to have to provide my LLC, my partner’s LLC, and the actual corporation’s LLC.

They need to know who the individual owners are so you can’t hide behind an LLC.

I’m not trying to hide. I’m saying that’s another extra work and money.

You file a corporation owned by an LLC. For that corporate filing, you have to say the LLC is owned by this individual. They’re getting at the individuals.

“Are there any anticipated challenges or adjustments that businesses should be prepared for?” We’ve been talking about most of that on the episode. Do you have any additional comments?

Know the ownership requirements of your business. With some entities, it can be a little bit hard, especially with real estate syndications for instance. There are different ownership percentages there and sometimes they may fluctuate. Having that down before you file your report is something that businesses should look into. Have everything lined up before you file your report.

Businesses should look into having everything lined up before they file their report. Click To Tweet

Also, with a limited partnership. Let’s say you’re in syndication and you own 5%. You don’t want to become a manager of that. You want to have no management control and that way, you don’t have to file because you’re under 25%. Get ready for the Act. Know you’re going to have to file unless you qualify for that $5 million exclusion.

If you do have the $5 million, go hire a bunch of employees. Interns and contractors do not count. It has to be the W-2 folks. efore I dive into your books and YouTube channel, are there any last-minute go-to nuggets that we have on a law that nobody’s talking about?

The golden nugget is you need to know about it. No one’s talking about it. People need to know about it. It’s a good service you’re providing your readers, Michelle, to let people know that this is out there.

Garrett, tell us about your new book, Veil Not Fail, and why is it so important. What year did this book come out?

FYE Garrett And Ted Sutton | Corporate Transparency Act

Veil Not Fail: Protecting Your Personal Assets from Business Attacks (Rich Dad Advisor Series)

It came out in 2023. It’s about piercing the corporate veil, which is one of the biggest and most overlooked problems of asset protection, whereby, you set up the corporation. You want that protection so that someone can’t sue you as an owner. What you do is set up the corporation and follow the rules. You pay the annual fees. You have a registered agent. You do the minutes every year. If you follow these simple rules, the veil stays strong.

If you don’t follow these rules, someone can go to court and say, “Michelle didn’t follow the rules of an LLC. I’ve got a judgment against your LLC but she didn’t follow the rules so I’m going to pierce through the veil of protection and get at her personal assets.” We don’t want that to happen. Michelle, it happens in 50% of all cases. People who have a judgment will go to court and argue to the judge that they didn’t follow the rules here so we are entitled to go after their personal assets. Piercing the veil happens in 50% of all cases. It’s important to understand this book and follow the rules.

We’re going to talk a lot about that in the asset management portion. Now, that we’ve wrapped our brains around this law, whether you like it or hate it, which most people are not going to like, it is what it is and we have to comply. We’ll have them on again to talk about asset management and dive into the book but I encourage everyone to go get the book first. Where can they get the book?

It’s on Amazon. It’s at CorporateDirect.com. It’s pretty much everywhere. We’ve got it in Kindle, audio, and print. It’s pretty accessible.

Some of those things that he mentioned, I guarantee you that business owners are not doing it. I might be guilty of some of those and I know better.

If you haven’t done this work, don’t tell anyone and we’ll clean it up for you.

Is it too late if you haven’t done the work and you’ve already been sued? You can’t unring the bell, can you?

No. You can’t do certain things. You can’t transfer assets once you’ve been sued.

You can’t put the genie back in the bottle.

I would encourage you to take care of this before there’s ever a problem.

We’re going to dive into asset management and asset protection. If 50% have fallen into that trap, then 50% are not doing the work to protect their assets. You spend your life building your business and you can lose it like that because we didn’t do the work. More importantly, we did not hire the experts to help us and do it for us. Ted, let’s talk about you and your book. You’re writing a book.

I’m going to publish a new eBook that’s going to come out later in 2023. It’s going to be titled The Five Tricks to Teach Your Kids about Money. The reason I wrote it is because they don’t teach kids about financial education. They already don’t teach parents about it. It’s very unfortunate.

They don’t teach it in preliminary schools, high schools, or colleges. There are some high-profile people whose kids have gotten in a lot of trouble with credit card finance. There have even been children who have taken their lives because they don’t understand finances. They got into a hole that they felt like they couldn’t crawl out of. They were very embarrassed because their parents were extremely successful. They ended up taking their life. I’m so happy you’re writing this book, Ted. Tell us more.

Finances are a very sensitive topic. It’s very unfortunate that people have killed themselves over financial stuff. It’s sad. This book is titled The Five Tricks but it’s just the five ways to educate your kids about money. One of the chapters is teaching them history lessons, having them invest in stocks, or setting up a lemonade stand. It’s different things that you can do to teach your kids in a fun way.

Finances are a very sensitive topic. It's very unfortunate that people have killed themselves over financial stuff. Click To Tweet

It’s not like you’re using the stick so much but they’re things that parents can do to boost their kids’ financial IQ. These are things that my parents did with me that other people I know have done with their kids. It’s a quick read. It’s probably only going to be twenty pages when it’s said and done. It’s going to be a free eBook and will be available on SunnStream.com.

I told him not to do it for free.

It’s his first book.

It’s my first one.

We’re building it on.

I’ll charge. Don’t worry.

Everybody needs to pick up that book because they don’t teach financial literacy. Sharon Lechter’s big thing too is financial literacy. Everybody needs to understand it. There are a lot of adults who don’t understand financial literacy. That’s powerful. Tell us about the YouTube channel.

It’s the Corporate Direct YouTube channel. If you type in Corporate Direct, you’ll see it. Please subscribe to it. It would mean a lot to me.

There’s one other channel. Ted mentioned SunnStream.com. We’re giving away the free eBook there because one of the focuses of this new streaming platform is kids’ financial education. We have a number of TV shows that will help kids understand money. We have gold and silver for kids. We have a history of money for kids. We have a cartoon show on financial literacy. If parents want to get their kids watching something positive, it’s SunnStream.com. You can sign up there but you can also get Ted’s free eBook from the website.

My eBook will be ready by the end of 2023. The illustrations are still coming along but once it’s done, we’ll have it up on SunnStream.com.

It’s easier to teach financial literacy now than it was back decades ago. Garrett, probably even when you grow up. There are so many ways. Now, you have the internet and all this eCommerce business. They can take their old shoes, toys, or clothes and stick them on eBay, Craigslist, or Amazon. It’s much easier now than it used to be like, “Do a paper route.”

My parents did not talk about money. It was just something that parents didn’t talk to kids about. We had three TV channels and they didn’t have money shows on there. You’re right. We need to make it accessible for kids and make it fun. Ted’s book on tricks and strategies, when he says to start a stock brokerage account, you do that with imaginary money. You don’t have to set up the account. You can do it without money.

That’s what they’re doing in school in college. They set it up with imaginary money. Ted, talk to us about Corporate Direct. Is there anything else on that?

The YouTube channel that we have, I started a series there called Direct Answers From Corporate Direct. The whole idea is that people can post general questions. I stay away from the specifics because that can border on legal advice. I don’t want to get into trouble there. For legal advice, there’s a different way to get the answer for that. If anyone has any general questions about corporate law, the business world, finance, real estate, or anything that we help people with, they can leave a comment on one of our videos and eventually, I’ll get around to answering it for them.

He says eventually. I don’t know if he is going to underpromise and over-deliver.

That’s the goal. It’s a cool resource. I post videos every week. We have a guy who comes in, does the videos, and edits them. He does a good job. If you want to use that as a resource, I’d appreciate it. Head on over to Corporate Direct’s YouTube channel. Subscribe to the channel. If you have any questions about anything, feel free to leave a comment.

Gentlemen, thank you so much for being on. Any last-minute comments?

No. Thank you, Michelle. This is great that you’re educating your readers on this new law that no one’s talking about.

I try to keep my readers in business so I can help them exit rich. I can’t help them exit rich when they go out of business or in jail. These have been brilliant information. I’m so grateful to you two for sharing what nobody’s talking about, this Corporate Transparency Law. Everybody, thank you so much for joining. I know you found it as valuable as I did. It’s extremely important. It boggles my mind why nobody’s talking about it because it sounds like nobody knows about it even politicians, which is scary.

I know you love this episode and this has great value for you. Please share this with all of your entrepreneurial friends and network or anybody that you know who’s in business or starting a business. Please get the message out and subscribe to the show. Thank you for reading. Thank you to my wonderful guests. Until next time. We’ll see you again for another episode. Have a wonderful productive day.


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