John Worley Blog

506 Regulation D—All you need to know about it in Dallas, TX

John Worley - Monday, February 20, 2017

Created under the Securities Act of 1933, which was indoctrinated in 1982, Regulation D is a United States Federal program. It allows companies the facility to elevate capital by means of equity sale or debt securities including public or private stock shares. It is intended to supply an exception for selling securities in a private capital elevation even when the securities are not registered. Moreover, it also provides suitable documentation for complying with and using the capital.

The Regulation D has a total of 9 rules out of which 3 are the basic "Exemption Rules." These 3 exceptional rules are responsible for raising capital while the other 6 rules are Administrative Rules. Together, they make the ground rules essential for an Exempt Offering Reg D bid. These rules are as follows:

Rule 500 - Use of Regulation D
Rule 501 - Definitions and terms which are used in Regulation D
Rule 502 - General conditions that must be met
Rule 503 - Filing of sale notice 
Rule 504 - Exemption for offerings that must not exceed $5,000,000
Rule 505 - Not available for now will be effective May 22, 2017
Rule 506 - Exception allowing for unlimited offering
Rule 507 - Disqualifying provision which are related to exemptions including 504, 505 and 506
Rule 508- Insignificant deviation from any of the terms, conditions and requirements of the  Regulation D

The three exemption rules of regulation D include 504, 505, and 506. They are responsible for allowing different quantities of capital, different techniques of conducting an offer, and different kinds of investors. However, before you ready yourself for following any of the above-mentioned regulations in Dallas, TX, we recommend you understand what private placement means. 

What is the meaning of 'Private Placement'

The word private placement is used in conjunction with security sales to refer to a small number of selected investors that help to raise capital. Most of the investors involved in private placements include mutual funds, large banks, pension funds, and insurance companies. 
Many people confuse private placements with a public issue but the two are different as, unlike private placements, in case of a public issue, the securities are available for sale to any kind of interested party on the open market.

The most important rule of regulation D when it comes to private placement is 506 Reg D Private Placement. Before you start the preparing phase for the 506 Reg D Private Placement in Dallas, TX, there are some details that you must be well aware about. 

Details of 506 Reg D Private Placement 

The 506 Reg D Private Placement is considered in the broad sense to be a “safe harbor”, especially for the private sector in Dallas, TX, as it offers an exemption for Section 4(2) that comes under the Securities Act. The companies, which make use of the rule 506 Reg D Private Placement, are free to raise an unrestricted amount of money. However, in order to make sure that the 4(2) Section is applicable to a company, they must be satisfying the following rules:

The company must not use advertising or general solicitation for marketing the securities unless the only investments they accept are from Accredited Investors that is pursuant to Rule 506(c).
The company is allowed to sell their securities to an unlimited number of “accredited investors” or up to at least 35 other purchases according to the pursuant of 506 Reg D Private Placement. This rule is unlike the Rule 505 and requires all non-accredited investors (whether alone or having a purchaser representative) to be sophisticated. This means they must be in possession of sufficient knowledge and business and financial experience to allow them the capacity to evaluate the risks and merits of the prospective investment.
It is completely the right of companies to decide which information to provide to an accredited investor, as long as it is not violating the antifraud prohibitions set by the federal securities laws. However, the companies must at least provide disclosure of documents to the non-accredited investors. These documents are, in most cases, the same as used in general registered offerings. Moreover, if a company is providing some information to an accredited investor, it must also make such information available to a non-accredited investor as well. 
When a prospective purchaser has some questions, the company must be there to provide them those answers
The requirements for the financial statement are according to the rule 505. 
The purchasers are sold “restricted” securities, which are unavailable for selling for around a year unless it is registered.

Form D

Although the companies that make use of 506 Reg D Private Placement in Dallas, TX, are exempted from the registration process and they may not file reports with even the SEC, they are still required to submit a “form D” after selling their first securities. Form D is an important document containing the names and addresses of the owners of the company and the stock promoters. However, it may not have any other information about the company. 

You must always be cautious when working with a company in Dallas, TX, that claims to have exemption because of 506 Reg D Private Placement as there is a chance that they are not being entirely truthful. To check this, you must investigate if they have submitted the form D to the concerned authorities or not. This will reveal to you how credible the company really is. 

The 506 Reg D Private Placement is responsible for opening up abundant opportunities for any business in Dallas, TX. If you are a resident of Dallas, TX, and are looking for further information about how 506 Reg D Private Placement can help you with your business growth, schedule an appointment with John Worley now. 

The Pros and Cons of a Checkbook Control IRA LLC in Dallas

John Worley - Tuesday, January 17, 2017

When investors enter an Individual Retirement Arrangement, known as a Checkbook Control IRA LLC, or just Checkbook IRA, it allows them to use IRA’s cash for investments. People use Checkbook Control IRA LLC in Dallas because it transfers the direct access to IRA assets and cash to the account holder from the IRA account, allowing them write checks for transactions. You gain this control when the IRA buys all the shares of an entity, in this case Limited Liability Company (LLC), which is then managed by an IRA holder. By doing so, you can easily manage your account assets and cash directly as the manager of the LLC/entity.

In order to understand whether a Checkbook Control IRA LLC is the right option, you must know the advantages and disadvantages so that you are able to make an informed decision. 

Why you should Consider Checkbook Control IRA LLC

Some of the main reasons why investors consider choosing a Checkbook Control IRA LLC is to avoid administrative fees and the ability to quickly disburse funds. Once the transfer of assets from the IRA to your LLC is complete, the responsibility for the assets is transferred to the manager or account holder of the Checkbook Control IRA LLC. Since management, buying, and selling of assets can be done without interacting with the custodian, the transactions take place quickly and do not require any oversight. 
The Checkbook IRA manager is responsible for handling the bookkeeping and paperwork of all transactions. Due to this, the fees for those transactions from the IRA provider are considerably less after the establishment of Checkbook Control IRA LLC. Checkbook IRA holders enjoy the benefit of investing in different types of assets that are allowed by the IRS just like with all other self-directed IRA accounts, except for collectables or life insurance, as stated in section 4875 of the IRA code.  

The Pros of Checkbook IRA 

While there are many benefits of opting for Checkbook Control IRA LLC in Dallas, the top three are as follows:

1. High Flexibility

When you are making an investment through a custodial account, you, being the account owner, have to submit a lot of paperwork in order to get approval. Not only that, you will be charged for paperwork review, as well as for transferring the requested amount to the receiving entity. All this is accompanied by back and forth of documents and delays causing frustration, especially in those situations where investments are time sensitive. In other words, it is practically impossible to make immediate transfer of funds through a custodial account. 
On the other hand, when you use a Checkbook IRA, you get much more control and flexibility over your investments, and can make transfers to take advantage of opportunities in a timely manner. With a Checkbook Control IRA LLC in Dallas, you have the checkbook control and can immediately make decisions and make transfers. 

2. Cost-Effectiveness

The law requires every qualified retirement plan to have a trustee or custodian that fulfills the requirements of IRC section 408 and is approved by the IRS. Typically, banks and similar financial institutions are to handle retirement funds and are compensated via an asset and fee structure. For example, if an account is worth $100,000, the fees may be from $400 to $1000 per year, which depends on the number of transactions made during the period and the custodian chosen. 

While it may seem less costly to open a custodial SDIRA, you can save a lot of money down the road if you pay a one-time set up fee for opening a Checkbook Control IRA LLC account. When you shift your assets from a custodian account to an LLC, all recurring or ongoing fess are either greatly reduced or eliminated altogether. The amount of savings is further increased when there are multiple investment properties or multiple IRA accounts. 

3. Protection of Assets

Since an LLC is a hybrid of a partnership and a corporation, it combines the aspects of both legal business entities. It has a legal existence which is considered separate from its members.  If the LLC is sued or its assets are endangered in any way, the liability will be applied only to those assets that are held within the company. But the assets of the IRA account holder within and outside the LLC are completely protected.  And, if a Series LLC is used, all assets in others Series of the LLC are protected as well.

The Cons of Checkbook IRA

Like every other thing, a Checkbook Control IRA LLC has disadvantages for investors as well. When you opt for a Checkbook Control IRA LLC in Dallas, you should keep in mind that the freedom you get comes with a lot of responsibility. If a self-directed IRA investor goes for Checkbook IRA, they should know that it doesn’t eliminate the primary requirement of compliance with all the rules and regulations pertaining to the IRA. This means that you will have to be diligent with how you use the additional control in order to avoid potential pitfalls that are typically overlooked by uninformed investors. Make sure that you consult with a knowledgeable attorney with considerable experience in Checkbook Control IRA LLC in Dallas, and learn about all the possible implications to keep from overstepping the legal boundaries.

The Ultimate Guide On Self Directed Checkbook Control IRA LLC

John Worley - Monday, December 19, 2016

Self-directed checkbook control IRA LLC
is a term used to define when an individual has signed authority over their retirement funds. This gives them more freedom at their disposal and can manage their assets with ease. Although self-directed checkbook control IRA LLC is not a requirement in order to invest with the IRA, it poses many different benefits that help people reach their saving plans.

Checkbook control IRA LLC has many different names including Checkbook control IRA, Checkbook LLC and single member LLC. In essence, a checkbook control IRA LLC gives an individual direct access to the IRA assets that have been afforded to them by the IRA provider. The account holder will be given the freedom to utilize the IRA funds which means the check book IRA requires a high degree of responsibility from the IRA holder. Due to the many different benefits of self-directed checkbook control there has been a rapid increase of the people setting up these flexible accounts.

How to set up a checkbook control IRA LLC?

Setting up a checkbook control IRA LLC is not a difficult process but it does require a few prerequisites that have to be met in order set this account up. First, an LLC must be established, that is owned by the relevant IRA. After an LLC has been established, a business checking account will be created that will directly be linked to the self directed IRA funds. This checking account requires a tax ID (EIN) and a copy of the articles of incorporation. Once this account has been created you will elect yourself as a managing member, which will put you in control of that checkbook and the self-directed IRA funds in that account. 

Different categories of checkbook control

Generally, there are three categories of checkbook control;

1) Self directed financial institution IRA: This category of checkbook control will allow you to direct your IRA funds towards different investments. Although, this is limited to a certain extent, as the account holder can only direct his or her IRA funds to the products offered by the relevant financial institution. This kind of checkbook control will not allow you to direct your funds to different lucrative investments such as foreign currency or real estate.

2) Self directed custodian control IRA: Self directed IRA without checkbook control allows the account holder to make nontraditional investments that pose a lucrative option, but can only be done with the consent of the custodian. This means that before an investment is made the custodian will have to be informed and without their consent the funds will not be directed. This will increase the time span that it will take you to make an investment and will also have to pay high annual fees along with the additional transaction fees. Not only that, proper documentation will have to be provided to the account holder who will determine whether investing the funds in the project in question is a viable option or not. 

3) Self directed checkbook control IRA LLC: This category of checkbook control offers the account holder immense freedom. These account holders are not limited to investments within any financial institution and neither do they have to get any investment approved by a custodian. This is the most popular category of checkbook control IRA as it eliminates all the barriers of the other categories. This gives the account holder the opportunity to pounce on any opportunity that presents itself without any unnecessary delays or costs. This category or structure has been used for the past 30 years and has become the leading category when it comes to checkbook control.

Benefits of self directed checkbook control IRA LLC

Given below are the most prominent benefits of self directed checkbook control
There is no time delay when you decide how to distribute funds.
There is a chance of a low IRA provider fees when the structure is self directed.
No restriction on investments which provides versatile options to the account holder.
There is no time delay when transferring assets to the IRA for distribution.

Drawbacks of self directed checkbook control IRA LLC

Even though this kind of checkbook control has outstanding benefits there are a few drawbacks that should keep into perspective
The LLC associated to the account is a running entity, in order to establish this you will have to be familiar with IRS rules and the running entities rules and regulations. These rules are often difficult and are versatile in nature.
Grasping these rules may take some time.
Investments will be limited to IRA approved projects.
Infringement of the IRS rules can lead to significant penalties and taxes.

Responsibilities of the account holder

In order to better understand the account holder’s responsibilities, it is vital that you check your local states rules and regulations, as each state has their own responsibilities that have to be followed. Given below are the general responsibilities of the account holder.

Create a corporate bank account
Authorize officers to sign checks
Design a trade name
Understand tax implication of the entity
Fill all the state, federal and local tax forms
Determine the zone for you entity
Obtain a license for the relevant entity
Filling IRS reports

This list is just a concise over view of the responsibilities that an account holder must to adhere to in order to successfully set up a self-directed checkbook control IRA LLC. Although there is no doubt that this process involves a lot of paperwork and documentation it poses many different benefits, as self-directed checkbook control gives an individual investment powers like never before. 

Important Things to Consider before Setting up a Checkbook Control IRA

John Worley - Tuesday, November 15, 2016

If you want to enjoy a comfortable life after retirement, it is important that you think about saving money for retirement early. The earlier you save for retirement, the more comfortable will be your post-retirement life. 

When searching for a retirement account you might have come across words such as “Checkbook IRA”, “IRA LLC Checkbook control”, “IRA Self Directed Checkbook control”, or other similar combination of these terms. 

A checkbook control IRA provides greater control and flexibility in investing the retirement funds. It is referred to as self-directed since it allows you to move the funds around at discretion. The advantage of setting up a checkbook control IRA is that it entails lower administrative costs, greater investment opportunities, and more authority over the funds. 

Here we will talk at length about some of the important considerations when setting up a checkbook control IRA

1. Plan for Long-Term Success 

Before setting up a checkbook control IRA, you must know how you will invest the retirement funds. Just wanting to build up a sufficient nest egg is not a good investment goal. You should know where the funds will be invested to get a high return on investment (ROI). Will the funds be invested in the stock market or the real estate? Do you have knowledge about the finical markets where the funds will be invested? Will you focus will be on growth potential or the cash flow? 

Consulting with an expert who specializes in offering advice for checkbook control IRA can greatly help in creating a solid investment strategy for the retirement funds. The expert can guide you in devising a plan that allows you to safely grow your wealth over time.

2. Know about the IRS Rules and Requirements

You must have full knowledge of IRS rules regarding checkbook control IRA. Keep in mind that you are responsible for the checkbook control LLC that is formed to manage your retirement funds. All the actions that you take regarding the investment of the funds must adhere to the Employee Retirement Income Security Act of 1974 (ERISA) that pertain to the investment of the retirement funds. 

Moreover, you have to adhere to the IRS rules regarding bookkeeping rules that relate to accounting for the income and expenses relating to the checkbook control LLC. Not adhering to the IRS rules regarding investment and accounting of the retirement funds can lead to penalties and fines. 

3. Build a Team for Investment Success 

While you can manage the checkbook control LLC yourself, you can greatly increase the odds of earning a large return on investment by getting the help of professional experts.

With the checkbook control IRA, the prime responsibility of managing the funds will be yours. But the self-directed retirement IRA does not need to be solely directed by you. It’s advisable to get the help of a team of experts that consist of realtors, lawyers, property assessors, and financial experts based on the avenues where you plan to invest the funds. In this way, you will be able to successfully manage the funds that result in earning optimal returns on investment. 

Make sure that you consult with an expert that have years of experience in business planning and strategies, tax consultation, estate planning, and contact and corporate agreements. The expert can help you in achieving success in the investment of the retirement funds so that you can live a comfortable and even luxuriant post-retirement life. 

4. Know about the Long Term Exit Plan

Self-help expert Stephen R. Covey had advised in his book titled ‘7 Habits of Highly Effective People’ that you should  always begin with the end in mind. The same is applicable when setting up a checkbook control IRA LLC. 

You will be more successful if you begin with the end result in mind. Remember that retirement investing is not just about earning returns for the next month or the next year. It’s about building a solid financial platform for your golden years after retirement. 

That’s why it’s essential that you have a longer term investment horizon for the retirement account. Determine how much amount will be suitable to lead a comfortable life after retirement. Consider whether you will be able to get by on the income earned from the investment or liquidating the LLC. Will you rely on the income from the checkbook control IRA as your sole income or do you want to complement the income drawn from the social security and other IRA account? 

Knowing about the long term exit strategy will help you to take the required steps at present that will help in achieving the retirement objectives. 

5. Find out the Beneficiaries of the Checkbook Control IRA

An important long-term consideration is deciding on the beneficiaries of the checkbook control IRA LLC. Remember that the beneficiaries of the IRA LLC cannot be specified through wills. You need to fill a special form when setting up the account. Also, you can add or change the name of the beneficiaries later on by filing another form. You can name trusts, charities, children, or your partner for the IRA beneficiary. 

In conclusion, it’s recommended that you speak with an expert before setting up a checkbook control IRA LLC. The expert should have an expertise in not just the regulatory aspect of setting up an IRA LLC but also guide you on the best way to build your wealth according to your post-retirement financial goal. The expert can help you select the best financial strategy and identify opportunities that result in earning maximum returns on the invested retirement funds. 

Remember that checkbook control IRA offer the perfect opportunity to maximize the earning potential of the investment. However, there is also a risk that you could end up losing all of your retirement funds. By thinking things through before setting up the checkbook control IRA, you will increase the chances of success in building a large enough nest egg to support your post-retirement life. 

How You Can Create the Best Private Placement Memorandums for Your Business

John Worley - Wednesday, October 12, 2016

Sometimes, people confuse business plans and private placement memorandums as the same thing, but these in fact, aren’t the same things. A business plan is simply what the business creates in order to promote them using various marketing strategies. A private placement memorandum, on the other hand, is a disclosure document that is not persuasive in nature but is more of informational or descriptive that lets investors make decisions about merits of the investment.

A private placement memorandum (which is also known as PPM) has solid facts and figures and consists of internal and external risks that the company may be facing. A private placement memorandum can also be used for marketing purposes if it is made in a professional manner. So now that you know a brief description about the difference between a business plan and a private placement memorandum, here is how you can create one of the best private placement memorandums for your business.

What Is a Private Placement Memorandum

To briefly give you an overall definition of the document, a PPM is simply a legal document that is given to investors when you are selling them stocks or other securities of your business. It is also known as an ‘offering memorandum’ or also an ‘offering document’. These documents are always used in private transactions because they are not indexed under the valid state laws, but they are sold under exemption from one of the registrations. The private placement memorandum basically tells the investors about what securities your business is selling them, what the offering terms and conditions are and what are the risks that are involved in this investment. 

What Do You Need To Include In Your Private Placement Memorandums

You have to make sure that your private placement memorandum cannot consist of any statements about your business which are misleading or untrue, you should not give any false claims about what securities are being offered. The basic purpose of this memorandum is to inform the investors about each and every aspect of your business, the management, the financial performance of your business and what other future prospects your business may have and what risks you may face.

The Outline of a Good Private Placement Memorandum

 A good private placement memorandum follows a strict set of rules and guidelines that help you create this document in a professional looking manner. Here is a simple outline for you to follow.

Introduction: The first few introductory pages of the document outline what the basic terms of the offering consist of. This also includes a short statement about the business itself and also includes legends which are mandatory by the law.

Offering Terms Summary: The summary of the offering terms section includes a term sheet that consists of information about the capitalization of the business before and after the offering. There will also be other terms included in this section such as liquidation preferences, anti dilution requirements, conversion rights, voting rights and other protective provisions that the investors would like to know and see.

Risk Factors: Every private placement memorandum must include all the risk factors that are involved in this investment and could possibly have a negative impact on the investors. These risks could be general risks, investment risks, and also risks that are rare to the issuer and the security. These risks could also include competition and strategic partnerships.

Company and Management Description: This section is about: 
Your businesses history and what products and services your business will provide its customers
What your businesses performance history is, 
What industry your business comes from, 
What are your business goals, 
Who is your competition, 
What are your marketing and advertising strategies, 
Who are your suppliers, 
What intellectual properties you own, 
What are your customer descriptions and other relevant information about your business that you may find worthy to add in and would be of use to the investor. 

Your management information will consist of things such as your businesses biographical information, your businesses special skills and background information about your business.

What Are the Use of the Proceeds of Your Business: This section in the private placement memorandum needs to show your business will use net proceeds which will be raised in the connection to the offering and how much will be used for different purposes. This lets your investors know about how this money will be used when they are investing.

Description of Business Securities: In this section, you will describe what restrictions, right and the class of securities your business will be offering. You should also add in your businesses capability of changing its capitalization.

Subscription Procedures: This section will give a summary and overall explanation to the investor about what are the instructions for investment in this offer.

Exhibits: In this last section, you will be giving your investors extra information and documents regarding this investment to help them make their decisions. These exhibits could consist of copies of investment contracts, financial statements, issuer’s organizational documents, licenses and key contracts and many other things you may find useful for the investors to have a look at.

Benefits of a Private Placement Memorandum

Here are a few benefits that a PPM can give you and your investors:
A PPM can give the issuer a sense of security and protection even if it is not required by the law itself

A PPM will also help issuers avoid potential fraud claims about securities in the future because the document states exactly what was told to the investors about the offering

If your PPM has a professional outlook to it, it can also be used as a sales document for investors, which shows that directors and the business are serious about their work and know their industry really well

How Can You Use an IRA LLC Checkbook Control to Your Advantage

John Worley - Wednesday, September 14, 2016

Do you know what an IRA LLC Checkbook Control is? An IRC LLC is basically what self directed retirement account owners, especially the ones who buy real estate, use to hold their account assets. An LLC consists of an IRA which invests all its cash into a newly created LLC. The LLC is managed by the owner of the IRA who then controls the investments from the LLC making it entitled to the assets and ends up paying the expenses to the investment and receives whatever income from it. It is usually a good idea to hire an attorney or consult with one about the laws and regulations regarding the restrictions of the IRA owner being a manager and also establish an IRA LLC Checkbook Control.

 An IRA LLC checkbook control is also another term for when a self directed IRA owner creates an LLC with the IRA as a member of the LLC and the IRA owner as the manager. The IRA LLC checkbook control manager then has the ability to carry out transactions for the IRA LLC checkbook control without having to involve the IRA custodian, which in turn reduces the fees and gets rid of transaction delays.

How Does an IRA LLC Checkbook Control Work

If you plan to set up an IRA LLC checkbook control, you will first need to establish an LLC which will be owned by your IRA. When you have set up the new LLC, a business checking account will be opened, which will require a tax ID number and a copy of your Organizational Docs. You become the managing member of the LLC by electing yourself and take control over the checkbook for your self directed IRA funds.

So, how does this work?

Each and every IRA account requires a custodian. The custodian is the one who takes the role of reporting and is usually in the background most of the time. All the transactions regarding the investments are held within the LLC.  So you will only need to interact with the IRA Custodian when you need to add or remove any IRA capital in the future, things like contributions, distributions or funds between different IRA plans. The IRA has 100% ownership over the LLC and the LLC has a purpose as your own IRA asset holding business. The cash that comes from IRA is then invested into the LLC and remains in the IRA where it can grow tax free. You are responsible as the manager of the LLC and will have the authority to sign on behalf of the LLC.

Simple Steps to IRA LLC Checkbook Controls

Here is a simple step by step process on how to manage and use your IRA LLC checkbook control.

1. First, start off by opening your account.  You can then fund your account with a transfer, contribution and a rollover. This could take a few weeks to process, so you will have to manage that time from your busy schedule.

2. Second, create an entity for the account.

3. Third, fill out paperwork directing the Custodian to invest your funds in the new entity.

4. Last, name yourself as the manager of the entity.  You can then set up a checking account for the entity and direct the Custodian to wire funds to the account

What Are The Advantages Of Using An IRA LLC Checkbook Control

When you want to use a checkbook control, you will be gaining some advantages from this such as the following:

Control of Investments: You will have full power and control over your investments and you won’t have to keep getting approvals from the custodians of your account. Since you will become the manager of the self directed IRA LLC, all the IRA investment decisions become your responsibility and of your choice. If you want to make an investment all you have to do now is write a check from your self directed IRA LLC bank account.

Administrative Costs: When you have the checkbook control, you can avoid the fees that comes along with the administrative and transactions associated with the self directed IRA. If you do have more than one investment in your LLC, your administrator will only charge you for one asset being the LLC. The administrative fees can vary depending on what kind of investment you have.

Investment Opportunities: Having a checkbook control will give you the advantage of letting you invest in any kind of investment opportunities that you will come across, things such as real estate, private businesses, foreign currencies, stocks, hard money, lending and so on. You can even make traditional investments like mutual fund investments like you did with the IRA.

Self-Directed Checkbook IRA LLC

John Worley - Monday, August 15, 2016


The primary advantage with a self-directed checkbook IRA LLC is the level of management that it provides the account holder.  With checkbook control, you will not be required to get in touch with a custodian in order to make investments. With checkbook control, the account holder can act immediately.  For example, possessing checkbook control eliminates the two to three day review period that is standard with any investments through a custodian.

A self-directed checkbook IRA LLC can also provide significant savings when it comes to custodial fees. Typically, a custodian will charge a fee associated with investments and transactions made through an IRA. When you possess checkbook control, there is no fee involved.  However, a custodian may still be required to oversee the account, but only a small annual fee will be charged.

Establishing Checkbook Control

Attaining checkbook control requires the establishment of an LLC that is owned by your IRA. The next step is to apply for a Federal Tax ID Number for a bank account in the LLC’s name. Finally, the Articles of Incorporation are prepared and filed. As the managing member of self-directed checkbook IRA LLC you will receive both a checkbook and its control.

Your Responsibilities as Manager of the LLC

With the removal of custodian approval, you are responsible for recognizing qualified investments, making the decision regarding the amount to invest and recognizing when it is time to divest. These decisions rely heavily on your close observation of the portfolio in order to ensure the capital is preserved.

Furthermore, it is your responsibility to ensure compliance with all state laws that apply to the LLC, and IRS rules associated with the IRA in order to avoid sanctions. The self-directed checkbook IRA LLC is a legal entity, and the requirements are the same as with any other business entity.

Adding Funds to a Checkbook IRA LLC

There are a variety of reasons a manager may want to add funds to their self-directed checkbook IRA LLC. Providing an annual contribution is a common reason. However, you may want to close other IRA accounts and move them into your Checkbook IRA for the convenience of access and investment potential. Other reasons may include moving a 401 (K) into the IRA LLC after retirement.

Why a Self-directed Checkbook IRA is Ideal for Real Estate

Those with a typical self-directed IRA custodian may have attempted to invest in real estate only to discover the process is costly and often a burden. In fact, you may have lost out on a fantastic opportunity while you waited for the process through a manager to be completed.

A self-directed checkbook IRA LLC provides a variety of potential investments, and is especially ideal for real estate investors. The checkbook IRA provides the freedom to act immediately within the legal boundaries. You will never again need to watch a deal slip through the cracks while you dealt with the paperwork of going through a custodian. With a checkbook IRA LLC you simply write a check and close the deal immediately. If you are buying foreclosures, drop by the bank and pick up a cashier’s check for the courthouse or sheriffs auction. With checkbook control, you can cash in on potentially valuable auctions.

If you are interested in gaining greater control over your IRA funds, contact us today for a no-obligation consultation. We can assist you to grow your retirement funds with a self-directed checkbook IRA LLC.

Rule 506 Regulation D

John Worley - Monday, July 18, 2016

General Solicitations in Rule 506 Regulation D


To offer and sell securities in the United States, an issuer must comply with the registration requirements of the amended Securities Act of 1933, or must offer and sell the securities pursuant to an exemption from the registration requirements. Rule 506 of Regulation D is commonly used as a private offering exemption.  In 2013 the SEC lifted the ban on general solicitation or general advertising in specific private offerings of securities. Considered the “final rule”, it represents a compromise in many respects. Businesses who wish to raise funds will have greater opportunities for fulfilling their goal with the lifting of the ban. However, compliance requirements must also be satisfied in the process.

The final rule doesn’t apply to all securities offerings. Businesses are required to meet numerous requirements such as selling only to accredited investors, taking logical steps to verify each potential investor is accredited, and follow the other terms and conditions of a Rule 506 Regulation D securities offering. For example, issuers should realize that the amendments to Rule 506 Regulation D do not affect the obligation of the issuer who utilizes the safe-harbor to make full and complete disclosure regarding the offering. All items considered material regarding the offering are still required to be disclosed in writing prior to the sale of securities under the safe-harbor, regardless of whether General Solicitations in Rule 506 Regulation D is used, or general advertising is utilized.

Accredited Investors

While the definition of accredited investors remains the same, businesses will be required to make a decision between the ability to use general solicitation, and being limited to only selling to accredited investors or adhering to the prior rule allowing the issuer to sell to up to 35 non-accredited investors without general solicitation.

Verification Rule for Accredited Investors

The business issuing the securities is required to make a reasonable effort verifying that each purchaser is an accredited investor. The SEC has established four non-exclusive safe harbors that are sufficient, although not necessary, for the issuer to show verification compliance. The SEC has also established a guideline for determining whether an issuer has taken reasonable steps to verify the status of an accredited investor.

Accepted Safe Harbors

1)   Reviewing copies of the purchasers IRS forms that report income, including forms W-2, 1099, K-1, 1065, or a filed 1040 for the two most recent years, and including a written statement from the purchaser of the reasonable expectation of reaching the necessary income level qualifying him or her as an accredited investor during the current year

2)   Review of one or more of the following documents, dated within the previous 3 months, and a written representation from the purchaser that all liabilities necessary to make a determination of net worth have been disclosed to the issuer:

a) Assets including any one or more of the following: bank statements, brokerage statements, securities holdings statements, certificates of deposit, or tax assessments and appraisal reports issued by independent third parties.

b) Liabilities disclosure documents from the purchaser should include a consumer report, such as a credit report from one or more of the nationwide consumer reporting agencies, and a written representation that all liabilities have been disclosed to the issuer. These documents will facilitate the issuer’s ability to make a determination of net worth.

3)   Written confirmation from an SEC registered investment adviser, registered broker-dealer, a licensed attorney, or a certified public accountant that the he or she has taken reasonable steps to verify the purchaser is an accredited investor within the prior three months.

4)   For any natural person who previously invested in a business Rule 506 Regulation D (b) offering as an accredited investor prior to the effective date of Rule 506(c) and remains an investor of the issuer, when purchasing any offering by the same issuer satisfies the verification requirement in Rule 506 Regulation D (c) with respect to the purchaser by providing a certificate at the time of sale that he or she qualified as an accredited investor.

According to the SEC, the issuer may rely on, in addition to other reliable sources, information obtained from publicly available filings with government regulatory bodies, reliable  third-party information (such as pay stubs indicating a natural person’s income for the last two years), or third parties in a position to verify a person’s accredited status. The latter includes accountants, securities brokers, and attorneys.

Furthermore, the SEC explicitly states in offerings involving general solicitations in Rule 506 D, the issuer has not taken reasonable steps to verify accredited status by requiring only that a person check complete a questionnaire or a sign a form, lacking other information about the purchaser indicating accredited status. The allowance of General Solicitations in Rule 506 Regulation D opens up numerous opportunities for businesses. Schedule an appointment today to receive additional information regarding how this opportunity can assist your business to grow.

The Benefits of Rule 506 Reg D Offerings in Dallas

John Worley - Wednesday, June 15, 2016

Understanding the intricate details of Rule 506 Reg D Offerings can be a daunting task for any entrepreneur, considering the long list of standards and the exemptions offered under particular circumstances. The laws and regulations of the United States require an issuer to adhere to the registration requirements stated in the Securities Act in order to offer and sell securities. They must offer and sell them according to an exemption that is mandated by the registration statement requirements.

Rule 506 provides the statutory exemption, which is provided by the Securities Act, to the issuers, and is considered to be a non-exclusive “safe harbor”. If you are an issuer who engages in direct and underwritten public offerings and performs Go Public Direct transactions, you can benefit from the Rule 506 exemption. In addition, if you compare the compliance costs of Rule 506 Reg D offerings with that of the Securities and Exchange Commission (SEC), you will see that it is far less, making it a more preferable option.

Requirements for Rule 506 Reg D Offerings

The companies and businesses using Rule 506 Reg D offerings in Dallas are allowed to raise an unlimited amount of funds. However, a company has to satisfy the following standards if it wants to enjoy the Rule 506 exemption under the Section 4(2) of the Securities Act:

·       The company has the right to sell the securities to as many “accredit investors” as it wishes to and up to 35 non-accredit investors. As compared to Rule 505, in which all non-accredited investors must be sophisticated, meaning that each of them must have ample experience and knowledge in business and finance matters so that they are able to make sound judgments regarding the benefits and risks of the prospective investment. This condition applies to non-accredited investors that are either with a purchaser representative or alone.

·       The company is only allowed to use advertising or general solicitation to market the securities under particular circumstances that are discussed later in this post.

·       The decision on how much information to give to accredited investors is solely in the judgement of the company, but the owner must make sure that investor has adequate and reasonable information to make a decision, so that no securities laws are violated in the process. Moreover, disclosure documents are mandatory for non-accredited investors, which are generally similar to the ones used in registered offerings. The information given to accredited investors must also be made available to non-accredited investors.

·       The requirements pertaining to financial statements are similar to that of Rule 505.

·       Purchasers are restricted to sell the securities for at least a year without registration.

·       The company should answer all the questions regarding the securities that prospective purchasers may have.

The Advantages of Rule 506 Reg D Offerings

Once you have made sure that your company fulfills the above requirements, you can benefit from the following exemptions under Rule 506 Reg D offerings in Dallas:

General Solicitation and Advertising

General solicitation and advertising was banned until 2013. However, the SEC lifted the ban but put forward the condition that issuers must take stringent measures to ensure that parties purchasing the securities are eligible to be declared as accredited investors. This condition comes under Rule 506 (c), while Rule 506(b) is designed to deal with non-advertised offerings.

Lower Risk Losing the Exemption

If your company makes an offering only to accredited investors under Rule 506, you will have a lower standard of disclosure and face less risk if the offering does not do as well as anticipated . In order to protect your company if this should happen, you should carefully draft a private placement memorandum. It will safeguard your company from anti-fraud provisions under the Exchange Act, the Securities Act, and other state securities laws.

Exemption from State Level Registration

As compared to all other Regulation D exemptions, Rule 506 is different. If you properly file for Rule 506 Reg D offerings, you will not have to find any state exemption or register at the state level. The authority of states has been specifically preempted by Congress for reviewing securities that are exempted under this rule or for enforcing additional requirements through the NSMIA. The National Securities Markets Improvement Act took the power from the states to review any offering under 506 Regulation D rule. The issuers are only required to present a notice filing with the state and pay the filing fees, which is generally between $200 and $700 per state.

State Exemptions

The blue sky laws, more commonly known as state securities laws, require issuers to either find an applicable exemption or register their securities. But if an issuer is relying on Rule 506 Reg D offerings for state and federal exemption, states may not impose any additional registration prerequisites.

Filing of a Form D with SEC and State Securities Board?

If you want to avail the benefits of the Rule 506 exemption, you must file a Form D with the SEC electronically after you first sell your securities and then with each state in which you are offering. This form includes information about company’s promoters, directors, and executive officers, along with the details of the offering.

Self-Directed Checkbook IRA LLC

John Worley - Tuesday, May 17, 2016

A self-directed checkbook IRA LLC is an IRS and tax courts approved structure. Furthermore, it provides you with complete signing authority over your retirement funds for the purpose of investing them without the intervention of the self-directed checkbook IRA control custodian. The self-directed checkbook IRA LLC is popular among real estate investors. It offers increased investment freedom, and allows you to manage assets, providing greater freedom in meeting your retirement savings goals.

How it Works

In order to attain checkbook control, you are required to first establish an LLC that is owned by your IRA. Once established a business checking account is established in its name, and also a tax ID number, and a copy of the Articles of Incorporation. You will receive both a checkbook and its control as the managing member of the business checking account that is linked to the self-directed IRA funds.

With a self-directed checkbook IRA LLC, you will not be required to seek approval of each investment by the custodian of your account. All checkbook IRA investment decisions are yours. When investing, you simply write a check or wire the funds straight from your checkbook IRA bank account, allowing you to act quickly when investment opportunities are under a time constraint.

Possessing control over a checkbook IRA enables you to avoid the requirement for custodian consent, and administrative and transaction fees typically associated with an IRA without checkbook control. Even when the LLC owns multiple investments, the administrator only charges for one asset, the LLC. 


The self-directed checkbook IRA LLC enables you to access safer IRA investment alternatives. For example, you can invest retirement funds in real estate, tax liens, franchises, precious metals, foreclosures and other alternative investments. In addition, you can rollover a 401K plan from a previous employer or when you retire. The self-directed checkbook IRA LLC places the control of investing in your hands.


With the control over your retirement funds through a self-directed IRA checkbook control, comes a high degree of responsibility when it comes to possessing the in-depth knowledge of the market for the qualified investment you are considering, making the decision on the amount to invest, when to invest and recognizing when to divest.

The responsibility of successfully managing the investments relies on your maintaining a vigilant watch over the portfolio at all times. As with any business, success greatly depends on your diligence to the portfolio in order to preserve the capital and recognize opportunities to grow it further.

In addition, you are responsible for adhering to all state laws that apply to the LLC, and also, all IRS rules regarding prohibited transactions for an IRA. Remember, the self-directed IRA checkbook control is a legal entity, and the requirements for an LLC owned by your self-directed IRA are the same as with any other business entity.