I’m trying to figure out the best way to set up my LLC’s. I’m about to start another one as I already got 5 properties in my current one. I like the single member as I have a full time job and like to get the flow though deductions, but recently someone (mike) on this board has stated that single member LLC’s are useless for liability reasons…I am married and wonder if adding my wife would help?
Single member LLCs fail because they don’t have charging order protection in some situations. Being the sole member and manager of an LLC has little liability protection because you will get sued personally as the individual who caused the injury. If there is a judgment against you personally, the LLC can get liquidated. People use multi-member LLCs to avoid this situation. Set them up to be taxed as partnership and you get the flow through deductions to your personal return.
All that being said, I use the SMLLC when an entity will be the single member, but I prefer business trusts to LLCs. They have the same liability isolation with fewer requirements, lower filing fees and little public disclosure.