This is sort of related to REI. How do people protect other assets? I know people use the LLC to protect their real estate. What about stocks, mutual funds, s-corp shares, etc? Is it best to create a LLC to hold these things for you?
well, the LLC protects your personal assets from liabilities arising in the properties you own.
There are a variety of other strategies available to further protect your personal assets. Trusts, FLP, LLC, holding companies.
The LLC won’t protect your real estate, it protects your personal assets. The real estate remains partitionable and is still subject to liens and encumbrances. I place the prop into a land trust, then take title in my LLC.
Would you be taxes twice then if you put property into a Land Trust, and an LLC?
be sure you have enough liability insurance. i carry $25 mil and itcost about $1500. the llc will not give you as much protection as you think. if you are a single person, the llc is a disreagrded entity and the irs will not allow you to file with only one member. also mant states, like calif, charge a gross receipts tax
No, you won’t be taxed twice. The LLC provides the protection of a corporation, but is more like a partnership arrangement in many ways. LLC "members” (versus ‘share-holders’ or ‘partners’) participate in the day-to-day management of the company without incurring personal liability. All taxing agencies (state and federal) tend to “look through” the LLC to its member’s as the responsible parties in terms of accounting for, and payment of, income tax. Profits and losses relative to passive activities within the company flow to the members who remain free of individual self-employment tax.
A single member may choose to have the LLC taxed as a corporation rather than a “disregarded entity”.
Note that this does NOT affect the asset protection that an LLC affords. It is ONLY a tax matter. There is simply no tax law for an LLC, so you have to tax it either under individual or corporate tax laws. Having your LLC taxed as a disregarded entity does change the nature of the LLC for asset protection purposes.
Having said that, taxing the LLC as an S-corp does offer many benefits.