Single Member LLC taxed as an S-Corp
Does the single member LLC that elects to be taxed as an S Corporation need to issue stock, have minutes and basically behave like a corporation instead of using the LLC members certificates and operating agreements?
The LLC taxed as an S corporation is still an LLC, and will use the traditional LLC documents, including an operating agreement and member certificates. I always encourage LLC members to follow the corporate formalities, so meetings and minutes are appropriate for both corporations and LLCs.
Separate LLC on multiple commercial units
We own 9 separate commercial warehouse units in a business park complex. Is it absolutely necessary to have separate LLCs own EACH unit? And have the burden of keeping 9 separate sets of books and filing income tax returns for 9 separate LLC s?
The choice of how many LLCs to set up depends upon the value of the real estate, its liability potential and your threshold for loss. How much is each unit worth? What do they store and who has access to them? Grouping them together simply exposes the value of each to the liability of each. If value and/or liability is low it may not be worth it to house each in a separate entity.
How does a NV or WY LLC offer protection for rental property outside NV or WY
If a rental property in TX was owned by a NV LLC, wouldn’t TX asset protection law be applied in a liability case related to the property?
I have heard other asset protection lawyers say that NV or WY LLC do not offer increased asset protection for rental properties outside NV or WY.
Have there been cases tried where a judge applies NV laws to a TX case? Please try to clarify this for me.
Texas law would apply to the property, WY or NV law would apply to the entity. So, if an accident occurred at the property, Texas law applies. If someone tried to pierce the corporate veil or attach member interests, NV or WY law would apply.
LLC vs. S-Corp
I have just entered into a general partnership and am looking to incoporate. My Accountant is pushing us to form an LLC. We are a service based business. We will be looking at making 150,000 this year and 350,000 in our second year. I feel that an S corp is better because we are going to grow very quickly.
Corporate Direct, Inc. is available to assist you with your entity formation. We incorporate in every state. Because each client’s needs are different, we like to speak directly with our potential clients to discuss the best entity structure for your business needs. Please call Corporate Direct, Inc. and ask to speak with an account representative so we can discuss the LLC or S-Corp choice. Our account representatives are available to speak with you, free of charge, for up to 20 minutes for the initial call. Please call 800-600-1760 when you are ready to discuss your corporate needs.
LLC Ownership Transfer
Is there any tax consequences when I transfer my ownership in (single member LLC) to my child ? What about in the event of death, how will the ownership get transfer ? Should I have a will for this purpose?
It depends upon how much your LLC is worth. There could be a tax consequence or you could structure the transfer to fall under gifting exemptions. If your LLC has value you will want to discuss the best way to gift it with your accountant. Ownership will pass by statute if you do not have a will. There are ways to pass LLC interest without a will (and thus avoiding costly and timely probate) but you will want to speak to an attorney about the best way to accomplish this given the specifics of your situation.
80/20 Ownership and LLCs
My friend and I are buying an investment property with 80/20 ownership. We agreed to form a limited partnership entity and create LLC general partner. Can we give equal right to the LLC so that we have the same voting right regarding the management of this investment property? Or is this advisable since I am the majority owner.
The LLC can be set up as 50%/50% for management if that is what you want, or it can mirror the LP split. It is completely up to you, but remember if it is 50/50 you will have equal say even though you own more of the LP.
I have a question regarding filling a DBA/Fictitious Name
I am going to be incorporating in Nevada. The company will have several websites, all of which will have their own DBAs.
Our office is going to be located in Pennsylvania. I will be getting a ”Certificate of Authority” to qualify the Corporation to do business in Pennsylvania, but still remain bound and protected by Nevada laws.
The DBAs for each website will only exist and be advertised on the web. The office lease will be in the Nevada Corporation”s name (which will be qualified to do business in Pennsylvania). The bank accounts and assets will also be in the Corporation”s name.
The only thing that will be in the name of the DBAs will be their respective merchant accounts to collect payment (which will then deposit into the main Corporation”s bank account).
Where should I register my DBAs? Nevada or Pennsylvania?
Because the DBAs are only for websites and will not have a presence in Pennsylvania (I assume you don’t store and ship items from Penn or anything similar through the websites), I would register the DBAs with the Nevada Secretary of State.
Would a 2 – 3 million umbrella policy take the place of forming an LLC….
Would a 2 – 3 million umbrella policy take the place of forming an LLC to hold land and buildings worth approximately 2 million? Even with an LLC, I am under the impression it would not stop someone from also sueing you personally under certain circumstances. Thanks. Please only send answer by email. Is there a time when an LLC would work better than having an umbrella policy? Thanks, Sue.
Insurance is necessary as your first line of defense. But what if you have a tenant obtains a judgment against you for 3 million – you would personally be on the hook for 1 million unless you owned the home in an LLC. You may be named personally in a lawsuit but if you owned the property in a properly set up and run LLC than you would be able to have your personal name removed from the case.
Canada and Nevada LLCs
I would like to know if you would offer counseling service or strategic coaching to someone from Canada.
I would, at first invest mainly in BC and Canada but would like to see if I would benefit from forming a Nevada LLC for my main company and of course, separate LLC for each individual acquisitions based on the location.
Unfortunately, the cross border taxes make it difficult. Many Canadians form an Alberta LLC for their Canadian holdings. You should use a Canadian attorney to advise you on this.
Developing intellectual property and holding LLCs
Having been developing intellectual property for the past twelve months and reducing conceptions to practice, is there such a thing as a holdings LLC from which point to spin off other LLCs designed for each product to market and are there ramifications involving LLCs designed to acquire the unusable or failing intellectual property?
Yes. We have set up structures like this before where the parent LLC licenses each market application to a separate LLC. Please give us a call at 800-600-1760 so we can assist you in these formations.
Commercial leases, Incorp and Personal protection
I signed a commercial lease as a dba about a year ago, I have since incorporated about six months ago. Now I am being sued for non-payment under my personal name for eviction. Can they file a suit for eviction if I am now INC.? Do I have any protection under the INC or do my rights not apply to prior contracts or leases?
If you signed in your personal name, you are personally liable under the lease. To not be liable personally you would have needed to sign in the name of your Inc or assign the lease to your Inc. You could have assigned the lease to your Inc if the lease allowed for assignment. However, even if you had done this they could evict the corporation. Being incorporated protects your personal self but it does not prevent suits from being brought against your entity.
1099 vs. LLCs
A job wants me to be a 1099 worker. I know what it means. Want to know if I could create my own LLC an have the company pay my LLC then my LLC pay me. Also would like to talk about me tying all this up in my future profession of Golf.
You can set up an LLC and I recommend that you do so as an independent contractor. It will give you asset protection and more taxing options. If you’d like to talk about your golf profession please call 1-800-700-1430 to set up a consult.
LLCs, Mortages and personal Names
Can a rental property be placed under an LLC but have the mortage under a personal name and still maintain a seperate entity status?
Yes. Taking on financial responsibility for an LLC of which you are a member will not jeopardize your liability shield.
Doing business in multiple states
I soon will be purchasing properties in South Carolina and Hawaii. My other properties are in separate LLC’s in AZ. I want to set up a Nevada or Wyoming entity to add an extra layer of protection and use a nominee service for the new entities. Can I do business in both states as a foreign entity? Should bank accounts (to collect revenue) be in Hawaii and SC or in Nevada/Wyoming?
I would recommend setting up a Nevada or Wyoming LLC that was the member of LLCs that you set up in Hawaii and South Carolina. You could set up a Nevada/Wyoming LLC and qualify it as a foreign entity to do business in Hawaii and also in South Carolina, but if you are going to be setting up multiple LLCs in these states it would be easier to have one main Nevada or Wyoming LLC that was the member of the LLCs set up in the various states. Please give us a call to help you with this structure and answer any questions this structure raises.
CAN A REVOCABLE TRUST BE MADE A MEMBER/OWNER OF A LIMITED LIABLITY COMPANY?
CAN A REVOCABLE TRUST BE MADE A MEMBER/OWNER OF A LIMITED LIABLITY COMPANY?
Yes. A revocable trust can be the member/owner of an LLC.
Umbrella Policy vs. LLC
Why wouldn’t I just get a good umbrella policy rather than go through all the hassle and expense of an LLC? What better protection is an LLC?
Insurance is your first level of protection and you should have a good umbrella policy! But what if you have a judgment against you that is higher than your policy limit? You will be personally liable for what your insurance does not cover. An LLC will protect your personal self from this liability. The minimum hassle and expense of an LLC is well worth their limitless protection. Please give us a call at 800-700-1430 if you have any other questions.
Business Expansion from CA to NV
What is the proper entity to form for a mobile detailing/mobile oil change business starting in California with the intent to expand into Nevada
I need a bit more information in order to analyze which entity is best, but generally speaking an LLC would work well. The tax structure for the LLC would depend upon how much money the business earned, but there is a lot of flexibility with LLCs. You may want both a California LLC and later a Nevada one when you expand, it is best to keep activities in the two states separate. Please give us a call and talk to one of our representatives for assistance with forming the correct entity for your business.
I have two rental properties in Detroit, Michigan (low income area). Which state: Nevada, Wyoming, or Delaware would you recommend to incorporate the properties.
If you have little equity in the properties I would recommend simply holding them in a Michigan LLC. This will provide you with individual asset protection if the LLCs are ever sued. If you have a good amount of equity in the properties than I would recommend holding them in a Wyoming LLC qualified to do business in Michigan. The Wyoming LLC will better protect your equity from any personal liabilities that you may incur.
Real Estate in TX
We live in Texas and are looking to invest in multi-family properties. Should we get an LLC in Wyoming or Nevada to hold these properties? Or should we get an LLC in Texas? Please advise us on the best entity for holding real estate in Texas. Thank you.
The answer depends upon how much equity will be in the properties and what your personal liability exposure is like. Wyoming and Nevada both have strong charging orders that protect the equity of your investment from your personal liability. If this is not a concern, setting up a Texas entity would be simpler and would protect your individual selves from any liability associated with ownership of the properties. Please give our office a call if you need any further clarification or assistance with setting up the structure. 1-800-700-1430
Refinancing and investment properties
I have multiple investment properties in multiple states.
I currently hold these properties in a Living Trust, I am looking to more the title in to individual LLC’s for liability reasons. How do I transfer the title without alarming the mortgage comapany of a change of ownership ? in which case they can call the loan due ? Should I hold each LLC in the state that they are located ? (Texas, Kansas, Ohio,) Is it dfficult to refinance if the property is held by an LLC ? Regards Steve
Steve, the easiest thing to do is to set up an LLC in each state where you own property and deed the property to the LLC. Your living trust can be the member of each LLC. If any of your properties are particularly valuable you will want to consider it being owned by a Wyoming LLC qualified to do business in the State where the property is located or you could have a Wyoming LLC be the member of each individual state LLC and your living trust the member of the Wyoming LLC. So long as you continue to be current on your mortgage payments the mortgage company would not be alerted that you transferred the property to an LLC. It is not difficult to refinance should you need to, a good resource is llcloan.com.
I recently formed a C corp. in which an investor puts an amount agreed upon in a corporate bank account for the months expenses. The question that I have is that I have a future partner (as she just filed personal bankruptcy and is not an officer or partner yet) and in order to help her personal situation the investor is also putting funds to help her personal expenses in the corporate account-the funds are then deposited in her bank account. (This person did in the past spend money developing the product that we are going to be selling so she does have past expenses). The investor says it is okay to do this as it is a loan. (The investor also has no legal document to this loan) but says if we make money she will accept the loan payment but if we do not she will consider it a loss. My question is -this seems an odd way of doing things to me but I do not want to question the investor on this and my accountant says it can be considered a loan. Can this creat e a future problem with my assets? or with the government?
So long as she is reporting the money that she is receiving than there should not be a problem.
Manager-managed LLC vs member-managed
What is the advantages/disadvantages of a manager-managed LLC vs member-managed? Is one preferable over the other in certain situations?
The difference largely depends upon the LLC’s Operating Agreement. Many member managed operating agreement’s provide for a “member manager” who has the same rights and responsibilities as the “manager” in a manager managed LLC. If you want to hire a manager that is not a member of the LLC you would want a manager managed entity. If you only have one or two members who will be doing equal work you would have a member managed entity.
S-Corporations and living trusts
My wife and I recently created an S-Corp for our property management business (formerly a sole proprietorship). Our business primarily manages our own rental properties, but we also manage one of my father’s properties. Our rental properties are currently held in our living trust. For liability protection, we are considering transferring the rental properties into our S-Corp, and then our living trust will hold the S-Corp stock shares. Does this sound reasonable or would you suggest something else?
I would not suggest holding property in an active business such as your S-Corporation. If your S-Corporation is sued for its property management activities (and there is definitely liability associated with this business) your property will be on the line. You need to segregate your property assets from your business. I would suggest forming an LLC to hold the properties (at least one) and the member of the LLC can be your living trust.
How do you separate liabilities in a single LLC through a series of LLCs
We have an LLC which is an IP company owning multiple websites, domains, and copyrighted material. Is there an easy way to separate each website under the LLC so one is not liable for any of the others? Kind of like offline real estate properties.
And does Corporate Direct have “Serial LLC” services in addition to your LLCs mentioned on your site? I’ve never heard of these before so thought I’d ask
Example, this is from a registered agent site in Delaware:
Delaware Law allows for a version of the Limited Liability Company often called a Serial LLC. An LLC is normally very simple to create. The major difference between an LLC and a sole proprietorship or a partnership is the limitation of liability an LLC brings to you. But say that you wanted to conduct more than one type of business, and you didn’t want to create a separate corporation or limited liability company for each. The “Serial” LLC allows different lines of business to be treated separately from each other from a liability standpoint. So, for example, an LLC that owns several apartment buildings may insulate the LLC from liability for each individual building, if the operating agreement allows for it, and the operating agreement is followed. For more information take a look at the Limited Liability Company Act of the Delaware Code (especially, Title 6, Section 18-215; Series of members, managers or limited liability company interests). The Series LLC law was originally designed to allow money management funds to operate effectively as limited liability companies. It is now being adapted to real estate and estate planning purposes.
The only way to [potentially] separate liabilities in a single LLC is through a Series LLC. A handful of states offer these but they have never been tested in court to prove that they will indeed separate liability. The best way to separate liabilities is to house the liabilities in separate LLCs.
Investment Properties and LLCs
I am enrolled in the rich dad coaching program and recently got in contract for 2 investment properties in Rochester NY. I would like to put those properties under an LLC.
It would be a good idea to put your property into an LLC, especially if it is rental property. If you have some substantial equity in the property I would suggest placing it in a Wyoming LLC qualified to do business in New York. Otherwise, you may simply want to place it in a New York LLC to simply protect your individual self from any liability associated with ownership of the property. Give our office a call and we can help you with either option.
Sponsors and Taxes
If someone aquires funds from another for nothing but “inspiring” them to give them money (aka – for nothing in return) from a numerous number of people over a period of time (basically like random sponsors) does this have to be ran as a business entitiy? And what about in the way of taxes?
A non-profit is not the correct entity for you since it seems as though you are making 100% profit. It is hard to advise you on so little information, but LLCs are the most flexible entity for tax purposes and also provide good asset protection. Perhaps what you are receiving is in the realm of a gift, which if it the gift is under a certain amount of money would be tax free. Also, there would be little liability if you are truly doing nothing in exchange for the money (unless malfeasance or misfeasance is an issue). Please give our office a call if you would like to speak further.
Which entity is best?
I am looking into starting my own corp. or LLC; I am a real estate agent and investment property owner. Which entity would be best for my situation?
As a real estate agent you are a self employed independent contractor. If you are making upwards of $50,000.00 as a real estate agent you are paying a lot of self employment tax, some of which can be avoided if you set up your own S-Corporation and become an employee and shareholder. Your investment property should be held separately from this corporation, most likely in its own LLC. If you would like further information or help with setting up these entities please give us a call at 800-700-1430.
Living Trust and Asset Protection
Does my living trust offer asset protection?
No, living trusts offer no asset protection. The purpose of a living trust comprises many issues such as planning for management and control of assets during any period of incapacity and minimizing taxes, expenses, delay and inconvenience in settlement of the estate. Asset protection is best achieved utilizing limited liability entities, such as corporations, limited liability companies and limited partnerships, as well as certain trusts to minimize your personal exposure.
Difference between trademark and a corporate name
What is the difference between a trademark and a corporate name?
bThey are completely different. A corporate name simply has to be discernable on the books of the secretary of state’s office for the state in which the corporation is filed. You could have an Amco, Inc. in Texas and someone else have an Amco, Inc. in New York. However, if the name “Amco” was trademarked no one else could legally use that name. If you have a unique name that you plan on branding than you should have it trademarked.
Wyoming Dynasty Trusts
Do people really use Wyoming dynasty trusts and if so, why?
Yes, people really use them. Wyoming Dynasty trusts provide extraordinary estate tax savings, as well as asset protection for the assets placed in the trust. As long as the assets stay in the trust they can pass from generation to generation without estate or generation skipping taxes. Additionally, a Wyoming Dynasty Trust is not liable for any state income tax, nor does it pay any federal income tax to on assets distributed to beneficiaries.
If I open a Wyoming corporation, can I bank elsewhere?
I am doing business in CA but want to use a NV bank. If I open a Wyoming corporation, can I have my bank account in Nevada?
It is not necessary to have a bank account if you are simply setting up a Wyoming corporation that will be qualified to do business in other states.
Investment properties in other states and Wyoming LLC
What is the advantage of holding my New York investment properties under a Wyoming LLC? What’s the disadvantage?
Wyoming LLC law provides for a particularly clear and strong charging order. Although a correctly managed LLC in most states will provide asset protection to its members, an LLC set up in Wyoming will better protect the equity of the investment(s) it holds. The charging order is the exclusive remedy in Wyoming for a creditor trying to gain control of a debtor’s LLC property. This means that if a creditor tried to execute on a judgment against a member of a Wyoming LLC that creditor would not be entitled to receive anything but distributions that the members of the LLC may elect to give. If the members elected to not distribute money earned (which would likely be the case if a charging order were in place) the creditor would still be deemed to have earned money (phantom income) and the creditor would have to pay taxes on the money earned but not distributed. Thus, rather than gaining money, the creditor would lose money. The charging order therefore has the effect of protecting the investment from creditors.