What do you guys use for seperating your assets, protections, tax savings? From what I gather LLC’s are a waste of time. Is anyone using S or C corps? What would be best for tax savings?
Never do anything for asset protection when you mean shielding assets from judgment creditors or potential judgment creditors. That makes the LLC worthless. People use LLCs for many reasons such as estate planning, tax planning, risk management, capital segregation business continuity, and many others. It is just anther tool to get a job done. You have to understand what the tool can and can’t do before you can apply it properly.
From a tax standpoint, an LLC can be taxed as an s-corp, a c-corp, or a partnership. C-corps have an advantage that their treatment is well established. Partnerships distributions aren’t taxable like c-corp distributions. Someone else will need to explain the uses of the s-corp.
All i used to hear was that llc provide your protection from a property or business. Example being, guy slips and breaks leg on me deck, only that LLC can be sued not my personal property. Let me ask you guys this. Lets say I get into a car accident and someone wants to sue me. If my properties are in seperate LLC’s can they go after them?
Would you buy the guru’s program if he told you that you are personally responsible for your own actions, that LLCs don’t protect personal assets from personal judgments, that LLCs don’t protect business assets, that LLCs must have a legitimate business reason to exist and that asset protection isn’t a valid reason, that LLCs must be represented in court by an attorney in most states, that putting property in an LLC triggers the due on sales clause of mortgage and transfer taxes, that LLCs have annual filing requirements, that an LLC needs a tax return if you plan to take full advantage of it, and that most lawsuits settle for the insurance limits whether or not an LLC is used?
The statement you made is correct if you take no part in the operation of the LLC. You merely collect a check like a stockholder collects a dividend. If you plan to make business decisions and act on behalf of the LLC, then you risk the protection of the LLC. LLCs were created to protect owners who take no part in the operation of the business. They were not created as means for a business owner to protect his personal assets from injuries he caused in running the business.
You are all done. The plaintiff’s attorney will try to seize your member interests in the LLC and if you used a single member LLC, he will get them quite easily. There are ways to set up the operating agreement that limits the creditor to a charging order, but that wording is not found in the cheap LLC agreements found in stores, in books, and on the Internet. The people who provide them don’t even understand the issues involved. They are looking for easy money and you won’t know your LLC is crap until it fails.
There are ways to protect assets from lawsuits based on personal actions, but that is advanced planning that is not found on the Internet or in books. You may be able to find someone who can set up such a plan, but it won’t be cheap. Guru programs are good for general education purposes. They aren’t a good solution if you want real protection.
That makes the LLC worthless.
compared to what? The LLC is a stronger form than a corporation of any flavor.
No entity: LLC, corp, s-corp, GP, LP, LGLPLDCCC is going to “protect” you or your assets from personal negligence. period.
What would be best for tax savings?
Depends on what you are doing. Different investments are taxed differently, resulting in different strategies. Everyone’s personal circumstances are unique.
Yikes. Lots I didnt know. So let me ask you this. If I owned a rental and put it under an llc, then had a property managment co handle the property would I be protected then? I just dont want someone saying they “tripped” just to sue me and then go after my personal property as well.
As far as my question to what corps are best for tax savings I would want to get the best tax benefits if I was renting out units. What do you think may be best for that? thanks guys, I am getting more info here in a few days then months of reading book lol
That situation creates a buffer between your personal assets and the property liability. The equity is at risk and all your personal assets are at risk from your personal liability (e. g. car accident). There’s also the wealth destruction from taxes and the fee the PM will take. Asset protection isn’t about LLCs. It covers estate planning, tax planning, financial planning, and a host of other issues.
That depends on your whole situation. If you are younger, you may want to structure things to minimize estate taxes and transfer wealth to your heirs. If you are older with no kids to support, you may want something that will help build a true passive income for retirement.
I don’t think you can get these answers from a forum. You should sit with a qualified planner to review your entire situation.
A single member LLC is disregarded… Example, if an individual owns a business which operates as an LLC, the LLC gets treated as a sole proprietorship.
a single member LLC can also be taxed as a C-corp or S-corp (mine is). C-corp will lower income taxes, but only if you leave the profits in the company. Removing them triggers other taxes at the personal level. However, corporate taxation also offers other benefits not available to partnerships or sole proprietors (full deductibility of health insurance, for example).
you need to evaluate your entire situation to determine what’s the most effective way to achieve your goals.
What would you all suggest (for liability protection) for someone who owned AND actively managed his/her own rental properties? Anything other than adequate insurance/umbrella liability coverage?
Thanks.
It requires a multi-layered approach that is created by a qualified planner based on your individual circumstances. It’s not a DIY project.