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