Limited Liability Corp (LLC) info

[Paula]

This has been very helpful. I'm meeting with our lawyer sometime this summer to see about an LLC for our two rental properties. Two things I didn't know before reading this thread:

1. An LLC may not protect personal assets (however, would the LLC protect the rental properties if someone was hurt in our personal home or slipping on ice in the winter on our sidewalk -- by the way, we spend more every year hiring people to shovel our driveway and sidewalks throughout the winter than we spend on rebuilding beach accesses after hurricanes... and we've had to replace our roof and fix our leaking basement because of the melting snow and ice).

2. We may need to get a Florida attorney involved as well as our Michigan attorney. We trust our attorney, so I'll pass the information I learned on this thread by her.

Thanks.

 

[wetwilly]

This has been very helpful. I'm meeting with our lawyer sometime this summer to see about an LLC for our two rental properties. Two things I didn't know before reading this thread:

1. An LLC may not protect personal assets (however, would the LLC protect the rental properties if someone was hurt in our personal home or slipping on ice in the winter on our sidewalk -- by the way, we spend more every year hiring people to shovel our driveway and sidewalks throughout the winter than we spend on rebuilding beach accesses after hurricanes... and we've had to replace our roof and fix our leaking basement because of the melting snow and ice).

2. We may need to get a Florida attorney involved as well as our Michigan attorney. We trust our attorney, so I'll pass the information I learned on this thread by her.

Thanks.

Please let us know what your attorney has to say about the LLC. I am glad I asked for help via this board and thanks to everyone who has/will contribute on this topic. It is kinda confusing and with lawyers making money on this ($500-1,000 a pop) I'm not sure they are the best ones to ask "should I do this....?". When I asked one that I was referred to, he said "it is up to you...it depends on your situation...".

No dis on lawyers so I hope no offense is taken...

 

[Paula]

I may not get to this until the end of summer or early fall, but I'll definitely pass on what I learn. I've heard that you're better off using an attorney rather than your account to create an LLC, but I can't remember who my sources were. Sounds like I need to be sure the attorney is well aware of the tax implications. We have no plans to sell our cottages and hope to just keep them in the family for decades (if possible, of course). So, ideally we won't be worrying about selling them. Although the issue of trusts may come into play.

 

[Kurt]

You can register your LLC online in just a few minutes for less than $100 in FLA:

https://efile.sunbiz.org/corpweb/efiling/corefile.html

 

[Smiling JOe]

You can register your LLC online in just a few minutes for less than $100 in FLA:

https://efile.sunbiz.org/corpweb/efiling/corefile.html

A friend of mine, and former attorney in Atlanta encouraged me to set up an LLC for my properties, and he gave me easy to follow, step by step instructions (maybe 5 steps in total) to set up an LLC. As Kurt mentioned, the fees to the State are about $100 per LLC when filing yourself. Some protection is better than no protection.

I think there are possible tax benefits from creating an LLC for your investment properties upon which your accountant should advise you. However, unless you know what you are doing, your Attorney should prepare your LLC docs, not your accountant.

Since TravelsToMuch is not an Economics Professor, but perhaps a Law or Real Estate Professor, perhaps he/she could help us out with some better answers regarding liability.

 

[30AOnline.com]

My CPA and my attorney have both suggested LLCs for several reasons. Of course, don't take my advise as legal advise. I am just conveying what I was told. My lawyer and my accountant are both old friends. The lawyer doesn't specialize in this area but he did work with some high profile DC firms that represented corporations defending against class action suits. My accountant friend was a very interesting person who had a habbit of saying "well you can do this, but I won't sign your return." Using him I alsways made sure that he'd sign the return... Anyway....The reasons I was given for setting up an LLC.

1) The ease of establishing and maintaining them.
2) They do offer protection of your personal assets. Nothing is 100% but they are supposed to offer as much personal protection as incorporating which is the point to an LLC.
3) You can form a separate LLC for each home preventing multiple homes from being at risk from events in another.
4) As a "Member" of an LLC(you are not an owner, a partner, a coporate executive or a sole proprietorship). You are technically a member. I was also told to set my wife up as as a member with 51% of the company. Then if there were ever any specific benefits for woman run companies we'd be eligible.
5) You don't have to keep board meetings, minutes, all that. The companies that form the LLC for you maintain anything required to keep the status of the LLC active. In some states like Nevada, the owner of an LLC is not public record.
6) As an LLC you can choose to be taxed as an individual or a corporation. Contrary to what was posted earlier in the thread, you do not have to file a separate return. You can simply file a Schedule C profit and loss from business form with your regular 1040. Obviously, none of you who'd be looking into this are going to be doing a 1040EZ or anything and you're all already filing deductions. Most likely, a good percentage are filing Schedule Cs already. So, no you don't have to file or pay tax or should I say your DOUBLE tax as a corporation. When I setup my LLC one of the main reasons was to replace my corporation. I was double taxed as a coporation because I had to file and pay corporate taxes on the corporations adjusted gross and then I had to pay personal taxes on what I personally was paid out of the corporation. The LLC gives you the personal perotection of a corporation as far as protecting assets and the anonymity but allows you to throw your income from the LLC on to your Schedule C and be taxed all together on your 1040 as an individual.

I know, I am sure there are lawyers out there that can penetrate the protection but those same lawyers can do the same with a corporation. It makes it more difficult. Let's face it, if someone has enough money for a legal battle they could probably find just about anything to focus in on and ruin you. I'm glad to see some judges slapping some serious frivolous lawsuit fines on people.