Liability Protection If Just Manged By LLC
Any idea on if would have extra protection for rentals. Would keep title in my name and have them rented to or managed by my LLC.
This would be easy compared to putting in trust and LLc's and changeing name on insurance and worrying about the Due on sale clause.
Thanks
Keeping title in your name...leaves you wide open to personal liable... doesnt it?
DaveREI is right. You having your LLC to rent the property while leaving yourself on title offers no protection under a corporate veil.
Be careful here. If your objective is liability protection, it isn't present here.
Beau
[ Edited by bjsmooths on Date 10/20/2003 ]
Have to agree with all the above. Keep your personal name as deep in the paperwork as possible. The bigger the law suit the deeper they will dig to find a check book or an asset.
That raises a question I've had. Say I want to put all my properties into different LLC's, which might be a little extreme, but I know people who do it. Would each LLC have to have their own records, meaning their own bank accounts, in order to not peirce the corporate veil? (So I don't commingle funds)
And if so, to get around this, can I form another LLC, and transfer ownership of all the other LLC's to the "parent" LLC. Then, I could operate out of only one checking account, and the parent could charge all the subs a mgmt fee.
Also, I know w/ corporations, corporations in a controlled group can file a consolidated return. Can LLC's do that, like in my example above? If so, would the mgmt fee income of the parent offset the mgmt fee expense of the subs, resulting in only rental income. I don't want to show mgmt fee income, because I believe this would result in SE tax, which I don't want.
Doing it this way would bury my personal name as deep as it could get, wouldn't it?
Thats why I was still looking for a less complicated way. From my research the best way is not to have sub LLC owned by the main LLC, what if the main gets sued then it effects sub LLC it owns. So have seperate LLC owned by you and have a agreement one manageing LLC has the right to manage all books and bank accounts of the holding LLCs. If manageing LLC gets sued it does not own the others just manages books.
On tax returns all the LLCs can be reported on your personal return either way so it is consolidated.
Quote:
On tax returns all the LLCs can be reported on your personal return either way so it is consolidated.
True to an extent. The LLC would still have to file form 1065, the income would be taxed on your personal return via a K-1. Unless it's a single member LLC, then it is a disregarded entity, and you're right, everything would be reported on your personal return. In my case, I would own half, and my wife would own half, so it wouldn't be a disregarded entity and we would still have to file 1065.
So back to my question. Would I have to file a different 1065 for each LLC, or could I file one that covers all of the consolidated group?
Regarding the parent/sub relationship...How could the subs legally be persued if the parent gets sued? If I owned the LLCs, and I in my personal name was sued, could they go after my LLCs? If not, why could they if the LLCs were owned by another LLC?
I'm glad to see someone else is thinking about the same thing...
If you got sued they could go after your assests/LLC . Your ownership in a LLC is a assest right?
But cant go other way if LLC sued then only the LLCs assests.
I am not an expert and have been looking for a local attorney that knows all about this. My attorney knows less about than I do.