Feature Interview: Garrett Sutton, Author of Start Your Own Corporation


With free enterprise, economic freedom and asset management being such hot topics these days, growing numbers of entrepreneurs are setting up corporations here in the U.S. and abroad. In my opinion, there is no better authority on the rules of the corporate-formation landscape than Garrett Sutton.

Garrett is an attorney who has been in practice for over thirty-five years, assisting entrepreneurs and real estate investors globally in protecting their assets. Garrett has the distinction of being a part of an elite group of Rich Dad Advisors, through best-selling author Robert Kiyosaki, who is known for his perennial best-selling book, Rich Dad Poor Dad.

I reached out to Garrett after reading his book Start Your Own Corporation, and he was kind enough to grant me 45-minutes of his time to talk about current and emerging trends concerning business formation. Below is a Q&A transcript of our discussion.

Garrett, thank you for your time. Can you briefly start off by telling us a little about your journey into the world of corporate formations?

Michael. My journey began in Northern California where I attended U.C. Berkeley for undergrad before heading over to Hastings College of Law in San Francisco. After becoming a California attorney and determining that the Bay Area was becoming too crowded for me, I decided to move to Reno, Nevada, and take the bar exam there so that I could be closer to Lake Tahoe, one of my favorite places.

I’ve always had an interest in corporations, but I found there were a lot of people who really didn’t understand them. So in addition to starting my law practice, I decided to write a layman’s guide to corporations. As I was starting to write the book, I became acquainted with Robert Kiyosaki and the Rich Dad/Poor Dad group. My book then became a part of their series.

I’ve actually read Robert’s book Rich Dad, Poor Dad years ago, when it was on the way to becoming a bestseller.

That’s great. I have to say that being associated with Robert and his positive message of financial independence has been a huge boon for me personally. This connection with him has really helped my book – Start Your Own Corporation – gain credibility with a fairly wide audience.

In Chapter 2, entitled Good Entities, you break down the various types of business entities and their pros and cons. Can you offer a brief overview of this?

Sure. When I travel around the country and around the world, I like to frame entities as The Good, The Bad and The Ugly. The Bad is the sole proprietorship. The Ugly is the general partnership where liabilities often exist times-two. In the book, I encourage the use of good entities, which are S and C Corporations, LLC’s, and LPs which stand for Limited Partnerships. The reason they are good, Michael, is because these good entities provide the owners with limited liability protection. This is the asset protection you want when doing business because, unfortunately, lawsuits occur all the time.

So what’s so bad about a sole proprietorship or general partnership?

Michael, the bottom line is that operating as a sole proprietorship or general partnership leaves all of your personal assets exposed. Setting up an LLC, a Corporation or LP, allows you to protect your personal assets – like a house or a car – from being exposed to a claim against your business. So that’s why I always encourage people to use the good entities.

Does this hold true even for new business owners who are just starting out?

With all due respect to the accounting field, you often hear CPAs tell their clients that are just starting out that they really don’t need to set up a corporation or LLC. I personally disagree with that type of thinking because even though you are just getting started, the risk of getting sued is still there. And if you are the sole proprietor and someone sues you, a judgement can be renewed against you every seven years. So if you set up a good entity like a corporation or LLC from the start, you can prevent that from happening. This is why I always encourage people, even if they don’t have a lot of income at the start, to use a good entity.

I remember reading in your book about the various corporate formalities involved with managing a business. So what does a new business owner need to remain mindful of?

You raise a key point. When you separate yourself personally from the business, you have to follow the corporate formalities dictated by the State you filed in. This typically involves paying the necessary fees each year to the Secretary of State’s office and maintaining annual meeting minutes. Moreover, it’s important for contracts and agreements to be signed in the name of the business. In other words, shouldn’t sign a contract with just your name; you sign it with your name as “President of XYZ Corporation, Inc.” For at that point the world knows that they’re doing business not with you the individual (where you could be personally liable), but rather with the corporation which gives you limited liability protection.

As I understand it, there are also different tax ramifications associated with these various types of entities. What can you share here?

My Rich Dad Advisor colleague, Tom Wheelwright, gets into this whole area in his book Tax Free Wealth. But let me say this, as a business owner, it’s important to have a team of advisors to guide you through all of this. Here you have an attorney giving you the asset protection advice in collaboration with a CPA like Tom who delivers the tax advice. They need to come to the table as a team, working to ensure that you’re getting sound advice.

I’ve noticed that there has been a proliferation of online businesses offering to help a newly minted business owner incorporate in any one of the 50 states. What do you think of these?

That’s a good question. I would say at the start that a prospective business owner needs to exercise a bit of caution here. I’ve seen situations where people have received bad advice on what business entity to use, which can have major ramifications down the road. In fact, in my book I caution readers that sometimes these services don’t offer everything needed to get set up correctly. While the price may be cheap, it may not provide the full measure of corporate formality you need. So just be careful when utilizing one of these services.

Garrett, there is much discussion about the value of setting up a corporation in states like Nevada, Wyoming, Delaware, South Dakota and Texas. What’s the story here?

One of the trends we’re seeing across the nation is that courts are not giving protection to the single member LLC, particularly when that business owner owes money to someone else. However, there are five states that continue to protect single member entities: Nevada, Wyoming, Delaware, South Dakota and Alaska. So setting up entities in these states will continue to be popular.

What about the expense associated with setting up an entity in a particular state?

The State of California definitely stands out in terms of cost, as they are the most aggressive at collecting their annual $800+ franchise fee. In fact, even if you are from out-of-state, and you do business in California, you will likely see a bill. This has become an expensive proposition for those California residents who own a lot of state entities as well as entities outside of the state. So any time you have a California resident doing business outside of California, or a resident outside of California doing business in California, there is much more extra planning needed to meet California’s requirements.

In general, filing fees amounts vary from state to state. Nevada just raised theirs, but at the time of this interview, we don’t know how much it’s actually increasing. Wyoming, which is a very good state in terms of it’s protections, is only $50 per year. So you kind of get to pick and choose where you want to get set up.

So how does it really work if a business owner has an entity in one state but chooses to have a second entity in another?

Here’s how this works. Let’s say you have a Colorado LLC but because Colorado is not the strongest asset protection state, you choose Wyoming which is far better. There are two ways to do this. One way is to establish a Wyoming LLC and qualify it to do business in Colorado. That would require you to pay the Wyoming corporate entity fee and then pay the Colorado Secretary of State for permission to do business there. Another way to do it is to set up the LLC in Colorado, pay the Colorado filing fee, but have the Colorado LLC be owned by a Wyoming LLC. This scenario offers far superior asset protection than having a single entity here in Colorado.

In your book, you talk about a concept called the “corporate veil” where you underscore the importance of following proper incorporation formalities. Can you walk us through this?

Sure. The corporate veil is what protects you as an individual from being held responsible for the corporation’s liabilities. So let’s say you enter into a business deal through your corporation and the corporation gets sued. If you follow the formalities, then that’s where the suit ends. On the other hand, if you don’t follow the formalities, the veil of protection between the corporation and you as the individual falls apart, and the person suing the corporation can get through to you, the individual.

What type of formalities are required?

These formalities include maintaining annual minutes, where each state requires you to have a meeting once a year and a record of the meeting minutes. You also have to pay the annual filing fees to the state as well have what is know as a registered agent that resides in the state. Then there is the issuance of stock certificates, a requirement that not everyone follows. It is particularly important to issue these stock certificates to keep the corporate veil in place. Often the IRS is all over those entities that don’t issue stock certificates or haven’t kept meeting minutes.

So how concerned should a business owner be if they haven’t followed these formalities?

Well, let me put it this way. If you fail to follow these formalities, the veil of protection comes down, and you can be held personally responsible in the event of a lawsuit. The fact that the percentage of successful veil-piercing cases is 50% suggests that business owners need to pay close attention to this.

I’m curious as to whether assets like physical gold and silver can be protected through corporate formation?

We have a number of clients who have bullion – physical gold and silver – and that’s very easy to record as an asset through an LLC. I also know people who have auto collections, trademarks, and patents recorded in an LLC. So there are a number of ways to use an LLC to protect personal assets. And here again, it is particularly helpful to have this entity set up in a protected state like Nevada or Wyoming.

In closing, can you offer a few ‘crystal ball’ predictions in terms of emerging trends in the business formation space?

I hope my crystal ball is not cracked [laughter]. The trend that I mentioned earlier about the decline in asset protection among single member LLCs is one that I think will spread. We are keeping a close eye on this and have alerted our clients so that they are aware. Another trend I think we’ll increasingly see are states like Nevada raising their filing fees because, frankly, I don’t see states becoming less hungry for tax revenues.

At the end of the day, I hope there continues to be an interest in corporate formations and entities because we need people starting businesses and employing their fellow Americans. That’s something which will help this country prosper, over time.

Michael Scott is a book publicity content strategist located in Denver, Colorado. http://allthatbookjazz.com More on Garrett Sutton can be found at sutlaw.com. And his book can be easily found at Amazon.com

Zimbabwe Ditches Hyperinflated Currency

Zimbabwe is infamous for its hyperinflated currency, with its citizens carting wheelbarrows full of money to the market just to buy a loaf of bread. The country’s hyperinflation hit a peak in 2008, reaching 5 billion percent, making the Zimbabwean dollar virtually worthless. After that, citizens began using foreign currencies, such as the U.S. dollar and the South African rand.

640px-Flag_of_Zimbabwe.svgNow, the Zimbabwean government is finally ditching the currency, offering a deal to citizens in which they can convert their bank account balances to USD. Accounts with balances up to 175 quadrillion Zimbabwean dollars will receive USD$5; accounts in excess of 175 quadrillion Zimbabwean dollars can convert their money to USD at an exchange rate of USD$1 for 35 quadrillion Zimbabwean dollars. People who still hold old Zimbabwean dollar notes can exchange 250 trillion old notes for USD$1.

Zimbabwe’s disastrous hyperinflation is a textbook example of the dangers involved with using fiat currency. Granted, Zimbabwe’s monetary horror story occurred because of extremely irresponsible policies that are not present in the developed world. However, strong currencies like the US dollar are not very different from the Zimbabwe dollar in terms of fundamentals. Both currencies are managed by a central bank and can be printed at will, with no restriction on supply. The only real differences between the two currencies are that the Federal Reserve is better at managing its money supply, and the political climate in the U.S. is much more stable than in Zimbabwe. But those two things could change at any time, placing the U.S. in a similar situation to Zimbabwe.

The only way to guarantee a reliable currency is to completely get rid of central control over money. Arguably, the best way to accomplish this goal is by adopting a currency with a limited supply, as well as preventing banks from issuing money substitutes in excess of real cash. That way, the money supply cannot grow beyond the amount of cash the banks have in reserves. Under such a system, not only would it be impossible for banks and government to create destructive inflation, but volatile business cycles would likely be prevented as well.

Historically, “sound money” has been synonymous with gold. However, as modern technology progresses, the market has produced potential alternatives to gold. Zimbabwe’s move to the United States dollar will undoubtedly be a welcome change for the country’s economy. However, Zimbabweans should understand that the USD is not fundamentally different from their own failed experiment with fiat currency. In the future, they should seriously consider a sound money alternative to fiat currency.


Is Apple Pay All Bark, No Bite?



Alternative forms of money transaction are all the rage these days. Or are they?

By most accounts, Apple is the new trendsetter in this space. CEO Tim Cook made an audacious prediction at their January earnings call with investors, namely, that “2015 will be the Year of Apple Pay.”

With that, Apple has reportedly gone full tilt in its effort to attract new retailers to this transaction tool. Questions abound though about whether Cook’s prediction was overly optimistic amid quiet skepticim among retailers, analysts and even consumers. Among the concerns being voiced are lukewarm customer demand, retailers’ lack of access to back-end consumer data and the technological cost borne by retailers in facilitating payments.

Simply An Attention Getter?

Some see Apple Pay as nothing more than a well-orchestrated branding strategy, designed to build loyalty to their iPhone and smartwatch markets. But other industry experts see this as a brilliant move that will slowly take the proverbial bite out of retail transactions facilitated by the likes of Square and others. In the end, it’s apparent that the current buzz around Apple Pay has been less than remarkable, despite the company’s distinction as one of the most preeminent global consumer brands.

Still A Tiny Subset of U.S. Retail Transactions

According to a January 2015 online survey conducted by Verifone and Wakefield Research, mobile wallets account for only about 4% of in-store retail transaction payments in the U.S.

But hold your horses….

It’s still pretty early in the game for Apple. In fact, there are indications at the time of this writing that Apple Pay’s market share is starting to gain traction at a very healthy clip, and that it will demonstrate positive returns by year’s end.

But whether all the pontificating will indeed come to fruition is anyone’s guess. So being the opinionated writer I am, here is my best WAG -“Wild Ass Guess.”

Apple Pay Might Have Bite

And here’s why….

1. Brand Awareness: Apple’s highly recognizable name and worldwide credibility will win out over time. Barring a public relations nightmare, they simply have too much momentum behind them to fail at this.

2. Convenience: Frankly, I am over having to carry all those plastic cards in a wallet that makes the back pocket of my pants bulge. Mobile is the hot ticket these days, and the innovations taking place with the iPhone in this space are too robust to ignore.

3. Security: I asked financial services expert Brett King, author of the book Breaking Banks, for his take on Apple Pay and mobile security. His response: “Hands down, far more secure than credit card transactions.” Okay Brett, we get it!

4. Declining Costs for Retailers: The history of “Moore’s Law” suggests that Apple’s technological advancements in this space will lead to a precipitous decline in costs to merchants and retailers. This will be the tipping point to widespread adoption among businesses and resultant consumer interest.

5. Speed, Efficiency, and Privacy: If they can pull off the triple trifecta of speed, efficiency and privacy, it’s a foregone conclusion that the world will be their oyster.

Now take a bite out of that!

Michael Scott is a libertarian oriented writer located in Denver. He is also a Book Marketing Content Expert for authors seeking to create collisions with readers one book at a time. His work can be found at http://allthatbookjazz.com

Exclusive Interview: William Thomas, Author of the new book ‘Radical For Capitalism’


As a fan of Ayn Rand and her book Atlas Shrugged, I am continually trolling the web for new and interesting reads about her work. It’s here that the new release “Radical For Capitalism: An Introduction to the Political Thought of Ayn Rand” by William R Thomas popped up on my radar screen.

Thomas is the Director of Programs at The Atlas Society, a non-profit organization that through Rand’s work promotes open Objectivism: the philosophy of reason, achievement, individualism and freedom. He is the main contributor to the best-selling book Myths About Ayn Rand, and has published essays on political, ethical and epistemological topics. He has also spoken in various parts of the world on the theory of individual rights as well as Ayn Rand’s philosophy of objectivism.

I recently had the opportunity to interview Thomas on a short list of topics of interest to liberty-minded individuals. Here are a few of his thoughts:

On Why He Wrote Radical For Capitalism

It was originally written for a large compilation of writings called The History of American Political Thought. This book essay is primarily written for a reader who is not familiar with Ayn Rand or Libertarian thought.

And The Book’s Title

The title is a reflection of how Rand described herself. Yes, she believed in laissez-faire and a free society, but Rand was at the same time very thoughtful of the cultural and philosophical underpinnings that all of this required.

On Capitalism And Rand’s Relevance To Modern Times

I wanted this book to appeal to contemporary readers and say to them that there are certain fundamental values that they really ought to have on their radar and to consider. My goal was to write this in an academically respectable way, without sounding like a raving nut from some fringe group. In terms of its applicability to modern times, I hope that readers come away with a recognition that the left/right political dichotomy doesn’t make sense; that the cultural ideas underlying those two sides are disjointed.

On Rand’s Controversial Philosophies Regarding Individualism

Rand believed that it is the individual who matters. In other words, YOU ARE WHAT MATTERS….. Your life is to make of it what you will. Anyone who tells you that whatever your background is determines you; anyone who says that you’re defined by some trait you had nothing to do with, now that’s injustice. Martin Luther King believed that people should be judged by the content of their character. Ayn Rand dreamed of the same thing.

On Supreme Court Justice Clarence Thomas And His Love For Rand’s Work

I have a very positive view of Justice Clarence Thomas and his principled jurisprudence. Many criticize him as simple-minded, but he’s not. He’s just principled. Sadly, Justice Thomas has been slandered and attacked because he was identified as a black conservative. The left just went after him tooth and nail, but I think he’s done a nice job on the Supreme Court. He’s been sort of a quiet voice for reason. That’s been really positive.

On How Rand Defined Capitalism and Selfishness

For Rand, “capitalism” was defined as a “free market economy.” Rand spent her life trying to rescue capitalism and the free market from it’s attackers. She had a rhetorical tendency to try and grab a term that a lot of people took as negative and, if she thought its real meaning was positive, she would take that term and use it to beat her opponents. She did that with selfishness too. Her book The Virtue of Selfishness was very controversial for that reason. She knew her readers would look at the word “selfishness” and immediately cast it as an oxymoron. Her view was that “selfishness” meant a concern for one’s own interests, pure and simple.

AynRandOn Her View Of Big Business

Rand thought that big productive businesses and industrialists, the kind lionized in Atlas Shrugged, were being attacked as inherently corrupt and evil. When Rand said that she was for capitalism, she meant that she was for industry. She championed world-changing creations. Apple Computer is a modern day example of this capitalistic spirit.

On Radical For Capitalism’s Value For Innovators and Young Creators

After reading this book, I sincerely hope that innovators and creators will recognize that they don’t have to apologize for creating something and that they are not robbing anybody. They shouldn’t be ashamed of their productive achievements and their desire to make money; for this is an honorable and a great thing. They should be principled in defending their acts and the effort that was required to achieve them.

Michael Scott is a liberty-minded blogger located in Denver, Colorado. More on the book Radicals For Capitalism can be found on Amazon

The Chinese Stock Market is a Bubble

China Finance and marketThe figures and stories on China’s stock market keep getting higher and crazier. The Shanghai index is now up over 140% in the past year, while the Shenzhen Index is up 185%! Among the slightly more than 1,700 stocks on the Shenzhen Index, only a mere five have declined this year; and individual stock rallies of more than 500% “are not unusual.”

IPOs in China are so hot that recently a company seeking $2 billion attracted bids totaling $273 billion, virtually equivalent to the entire economic output of Hong Kong. Further, shares of the 144 firms that went public this year have averaged a return of 539% so far.

Valuations are looking frothy as the Shenzhen index now trades at approximately 44 times projected earnings, compared to the Nasdaq’s current 23 and the MSCI World Index of 17. The entire market capitalization of the Shenzhen index is now $4.7 trillion, surpassing the U.K.’s entire stock market value.

What’s driving the index to these nosebleed levels? It doesn’t appear to be fundamentals or an improving Chinese economy; rather, it is individual investors opening new brokerage accounts and trading on margin.

Newly opened brokerage accounts have spiked in recent months, while margin financing (borrowing money to trade) has also gone parabolic. A recent Bloomberg story recounted a 28-year old office worker in northern China who travelled 1,000 miles to set up an account in Hong Kong in order to get cheaper trade commissions and lower margin finance charges saying, “I can make more money if I can borrow more.”

Perhaps Chinese citizens have just gotten stock market fever and are getting caught up in the euphoria. Alternatively, it also appears the Chinese government actually had a direct role in creating this hysteria. Last August the state-run media started urging the Chinese public to put their savings into stocks, “espousing the wisdom and patriotism of owning equities.” The government has also reduced fees and now allows individuals to open 20 accounts instead of only one.

But that begs the next question, namely, why does the government want its citizens in the stock market so bad? According to Anne Stevenson-Yang of J Capital Research, a Beijing-based research group, there are two main reasons. First, a bull market will allow heavily indebted firms, many of them state-owned, to swap out debt for equity which they won’t have to pay back.

The second is to provide an alternative to the sagging Chinese property market. It wasn’t too long ago that Chinese savers and investors were stashing their wealth into empty apartment buildings, trying to earn a return or at least keep their principal safe as they didn’t trust the banking system. But the real estate bull market has run its course and now they are turning to the stock market as an alternative.

This is the unfortunate outcome of a country that continually tries to centrally plan economic growth and inflate its economic statistics. Instead of allowing real wealth producing activities to take place, which is messy and takes time and hard work from entrepreneurs, the Chinese government bounces from inflating one asset to the next in order to juice GDP numbers. Chinese citizens are then forced to play the same game in an attempt to preserve their wealth and earn a return on their money.

Chris Kuiper, CFA is currently a student and researcher at George Mason University pursuing a Master’s of Economics. His previous experience includes asset management, investing and banking.

Texas Repositories of Gold


Fort Knox and the New York Federal Reserve are the most highly recognized gold depositories in the U.S. Legislation approved in Texas will soon allow the “Lone Star State” to store precious metals like gold and silver through a bullion depository for public agencies, business and nonprofit corporations, banks as well as individuals. At the time of this writing, this legislation is expected to be signed by the governor.

All of this is the brainchild of Rep. Giovanni Capriglione, R-Southlake, who has championed this measure for two years. It authorizes the state comptrollers office to establish the depository, making Texas the first state in the nation to take this unprecedented step. Undoubtably one of the catalysts prompting this measure are investment funds connected to the state’s public universities and other entities, including over $1 billion dollars in gold that Texas has currently stored in other states

Somewhat surprisingly, news of this has led to a global groundswell of interest among individuals desiring to secure gold in this mecca of the American Southwest. Some surmise that maintaining gold within the state will allow avoidance of federal oversight, while capitalizing on storage efficiencies that accommodate large amounts with minimal space.

This new legislation could foster a new normal for gold and silver deposits thereby fostering an environment of sound money. Here, by tying this to regular, daily consumer transactions, this new initiative could have a broad reaching effect on the economy. Experts believe that gold and silver transactions across multiple states will have a chilling effect on the federal government’s monopoly on money

What Does This All Mean?

For starters let’s give the State of Texas props for this ingenious promotional branding move. It’s no wonder that the economic fortunes of the “Lone Star State” are the envy of the nation. The secret Texas barbeque sauce here: As the state receives it’s anticipated mother lode of gold and silver deposits, it will be able to earn revenue off of the fees. Moreover it allows the state to leverage their own precious metal assets to hedge against an economic downturn or inflation. As the slogan goes, “Don’t Mess With Texas,” particularly as it relates to the state’s repute as a robust economic engine of prosperity.

It’s no secret that the Texas’ fiercely self reliant, independent style is at odds with Washington. Some in fact have suggested that this latest initiative could be characterized as a “middle finger” shot at the feds. Could all of this be signaling rumblings of discontent leading to howls of succession from the union?

It’s an intriguing question that is certainly worth its weight in gold.

Michael Scott, Bookmark Global Connect, Inc