Forgive my ignorance: I have read several posts and noticed a recent stream concerning the use multiple LLCs for each individual property. This makes sense. The same string discussed corporations in NV.
My question is this: Is it possible to form a NV corporation which would allow me to also give myself medical benefits and certain tax deductions, while forming several LLCs under that corporate structure? This would be similar to a series LLC in DE. I am thinking that I could then enter into a management agreement with that NV corporation to manage the assets of the individual LLCs thus reducing the need for several different bank accounts.
I am new to this and considering this type of structure. It is my understanding that there is no corporate tax in NV. Would it be advisable that I have a corporate address in that state as well? I live in CA.
I am trying to think of the best way to hold properties in multiple states while protecting assets and keeping income from being taxed too heavily.
yes, a corporation can provide benefits, insurance, retirement, etc.
However, you don’t have to be a “corporation” to do this. You can choose to have your LLC taxed as a corporation or S-corp. This means that in the eyes of the IRS, the LLC is a corporation and is subject to all the same tax rules that allow benefit plans. That’s good news: the stronger protection of the LLC with the tax advantages you desire.
Yes, one LLC to manage them all (one ring to rule them all…). Each one will still need a bank account if for no other reason than the LLC must be “funded” to make it “official”.
Avoiding CA taxes is advisable, as they are pretty onerous. Not using a CA bank or address would be required.
corporate stock is considered an “investment” and as such is available to satisfy judgement creditors in the event you are personally sued and lose. So when you rear end someone in a pinto, they sue you and win, they can receive your corporate stocks (both Microsoft AND Larz, Inc.). They now own the corporation and its assets, including the rental property.
Member interest in an LLC is considered “personal property” by statute. As such, it is NOT available to satisfy judgement creditors.
Both the corp and LLC protect the individual from liability arising within the company. Only the LLC protects the company from your personal liabilities.
mark, you mentioned that you can choose to be taxed as llc or s-corp. lets say i purchased a home in my personal name and wanted to sell it 2 months later. Would deeding the property to the s-corp save a little on the self employment tax, provided that the s-corp pays out a reasonable salary and takes the resulting profit as a distribution.
We have a rental property and we were told to setup an LLC with Husband and Wife as managers and our Living Trust as members of the LLC, is this another way of doing it? Or is there a better way of doing it?
Also to setup the LLC in NV and register it in CA? Not so sure if this is the way to go.
Wigglers,
I think what mcwagner was trying to say was to reduce your taxable liability in CA, tax avoidance might be considered fraud or evasion - punishable by prison time I believe. A Nevada Corp can and will save you money with regard to tax savings. It can be set up as a C-corp and just as you have stated, enter into a management agreement with your CA corporation(s). This type of entity structuring will allow you to reduce your overall taxable liability. Definitely seek the advice of a competent actuary (CPA, Tax attorney etc …).
The state of Nevada does not require you to live NV in nor have a local address in NV to have a corporation in NV. If you do not have a local address, you are required to have a registered agent where process can be served.
in the State of NV there are:
no corporate income tax
no personal, state, city, or county income taxes
no gross receipts tax
no tax on issuance of corporate shares
no stock sale or transfer tax
no inventory tax
no franchise tax
no capital stock tax
no succession tax
no stamp tax
no gift tax
no inheritance tax
no estate tax
in regard to the stock issues that mcwagner spoke about, in NV you don’t even have to issue stock. who will benefit from satisfying a judgement if no stock is issued? figure that out!
if you absolutely have to have stock issued, NV is the only state that allows for “Bearer” shares to be issued. this means that whoever has physical possession of the “paper” is the owner. so think about this … lets say you get sued and someone trys to take your stock in the corporation to satisfy a judgement, who has the “paper” ??? do you see where I am going with this … no one will ever take control of your corporation or assets. Not even a Federal judge!
mcwagner,
are you trying to say that if you make money in CA but do not have a bank account or address in CA you will not have to pay taxes in CA???
can you explain what you mean by that?
hyde1,
if the property is located in CA there is no need to set up an LLC in NV and then register it in CA. That is a waste of time. If you make money in CA you will have to pay CA taxes and be subject to the horrendous francise tax regardless if it is a NV or CA Corp/LLC. What you could do is set up a C-corp in NV and use the privacy of Nevada to place a “Friendly Lien” against your CA property. Now if someone sues you and trys to go after any equity in you property, there won’t be any, or at least not on paper!
mcwagner,
excellent … that makes sense. but are you saying completely invest in out of state properties or are you saying you can have a combination of “in state (CA) and out of state” properties to meet this criteria?
when it comes to banking out of state … does the bank have to be completely an out of state bank or can you sidestep the rule with internet banking?
last things first. i don’t think internet banking will necessarily do it. You need an out of state bank. Using the internet to transact business with such bank is fine. Banks report things to the state and that’s what will get you “noticed”. that’s what you’re trying to avoid. Once CA finds out that you live there, they will tax it; you don’t want them to know you exist.
having said that, having everything out of state (except you) is obviously the best way to go. a CA property will probably be reported somewhere to someone…and that gets you “noticed”.
At the very least, I would transact my Ca properties in a separate entity from my other properties.
Ca will tax EVERYTHING, not just CA properties.
OR, you can just suck it up and pay the $900 a year minimum.
I would have to agree with using a separate entity for CA properties. CA has ridiculous tax laws. It’s pretty easy to setup and out of state account. You just need a bank that has a local branch and branches in NV. They can register it as a NV account for you. You just have to make it clear that that’s what you want.