WHAT IS WEDNESDAY: LLC
Every Wednesday our firm will bring you a series of blogs discussing topics covered in our practice areas. On January 14th someone tagged me to an Instagram post, which stated "Did you know you could purchase property transfer it to a LLC to protect it from creditors and maintain privacy." There were over 166 comments on this post. Some comments disagreed while others agreed. I thought it was important for people to know what a LLC is and the benefits and drawbacks of LLC incorporation.
What is a LLC?
LLC stands for Limited Liability Corporation. This means that if your business is incorporated as an LLC you have limited liability. A LLC is a business structure where you get the tax benefits of a sole proprietorship/partnership and the liability benefits of a corporation.
Why Choose a LLC?
The LLC protects your personal assets from the liabilities of your business. When you form a LLC you can have one owner or multiple owners called "members." Under the LLC all members are protected and only have limited liability. Many LLC's start off as a small business. The LLC is beneficial for small business owners because it creates pass-through taxation. Pass through taxation means that the government will only tax your LLC once and your taxes can be filed through your personal tax return. This is different from corporations where the owners are taxed twice, once personally for the income received from the corporation and again for the amount of income the corporation generated for that year. The LLC achieves the duality of liability benefits and of tax benefits.
Choosing a LLC for your Property
The post on Instagram is correct regarding transferring your property to a LLC to protect it from creditors and maintaining privacy. However, like anything this is situational and depends on a lot of aspects. It maintains privacy because the LLC is listed on the deed of the property instead of the LLC owner. Privacy is limited because all someone would need to do is look up the owner of the LLC, which is public record. Forming the LLC will protect it against the creditors of any other LLC that you own. If you own multiple properties creating LLC's is a great way to ensure each property is protected against the other.
The drawback of placing your properties in a LLC is that the more properties you obtain the more fees you end up paying to form and maintain your LLC. For every situation it is important to contact an attorney who deals with business planning and entity formation.
To learn more on business law or to incorporate your business contact our firm today. Business consultations are $75.00 and hour. Feel free to contact us by email (email@example.com), Instant or direct message @theblackfirm, or by phone 678-537-6833. Mention the promo code WIWLLC for $20.00 off your consultation fee/ Offer expires January 21, 2020 at 11:59 pm EST. Consultations can be completed in person, over the phone, or virtually.