Accountant said to set up an llc to pay medical insurance.. seem ok?

General Real Estate Investing
1

Like many of you, we are considering moving our 8 lease/option properties into an LLC, maybe a serial llc so we just have 1 tax return.
Our accountant suggested today we have me and/or my wife as the only employees of the LLC, and in the partnership papers state that all employees have their medical insurances (and other out of pocket?) paid for by the LLC. We spend $15K a year on medical and dental, so at 30% that could be a $5K tax savings.

What do you guys think of this situation? Any critiques would be appreciated, good and bad.

2

corporations can provide employee benefits. S-corp and partnerships can, too, but the tax benefits are limited.

there is no problem doing this as long as you tax the LLC as a corporation.

I do this myself personally. Mark Wagner, CPA, LLC is taxed as a C-corp. I am an employee of the LLC. The LLC provides very generous employee benefits, including a medical reimbursement plan for deductibles and other costs that aren’t covered by the insurance.

Next you’ll want a 401(k) so you can stash away more than the puny IRA contribution limits allow each year.

3

thanks for the info. Brian

4

Mark,
I don’t have any property on my LLC name yet, but trying to tranfer two of them to llc. I had LLC all along in 2006 and had properties and expenses for investment. Do I saw those in my persona business expesnes or my LLC. What other benefits can I take with this LLC as I am expecting some flips and aquisitions this year from real estates.

Any related help will be appreciated. I am coming to see you later this month.
Thanks,
DFW

5

Brian,

If you can show that you are a legitimate employee of the C-corp, there are many more things than just medical that your Corp can provide as benefits for your employees. We provide our employees with groceries, housing, and medical and housing could include much of the costs of home ownership. ( appliances and the like ). Do your employees need work clothes?

Google the subject, I know that I read a book once on it, but we were already doing most of what the book had to say.

Be careful to stay within the rules in every way.( Get a good CPA that understands how to do this right )

DB