Limited Liability Company Taxes

There are many advantages to the limited liability company (LLC) including the financial and tax advantages. Herein we discuss the other specialized uses and benefits to you for possibly implementing the limited liability company in your estate planning and business strategies.

THE LLC IN ASSET PROTECTION

First-time business owners were first unincorporated proprietorships. As they began to realize the possible loss of their personal assets or as they started to get in trouble only then did they consider other types of ownerships. The limited liability company is the most efficient way to do business. No assets or business should ever be in their personal name.

In other words, you should “own nothing yet control everything-else.” Personal creditors cannot step in your shoes to take control of your LLC and your creditor is precluded by law and with unwanted tax consequences. Under the LLC, members cannot be held personally liable.

Another good asset protection technique to shield your personal and other valuable assets is allowing the limited liability company own a “blanket mortgage” on all your assets – that is, in a sense, you owe money to your LLC. Alternatively, don’t put all you eggs in one basket and have multiple limited liability companies for multiple types of risks or multiple layers of legal entities, depending on your risk.

THE LIMITED LIABILITY COMPANY IN REAL ESTATE INVESTMENTS

LLC’s flexibility allow unlimited number of members. LLCs may register their shares with the Securities and Exchange Commission as publicly traded securities. In other words, Real Estate Investment Trusts (REITS) under the LLC umbrella are at far less cost and with less administrative complications The United States is the “offshore” for foreign entrepreneurs. Foreign investors consider the United States as their “offshore” tax-free, tax-haven jurisdiction due to favorite treatment of their investments and tax-free status afforded to them. For example, there are no capital gains taxes on securities purchased in the United States and sold by foreign investors.

THE LLC IN ESTATE TAX PLANNING AND ELIMINATION OF PROBATE

The LLC is an ideal way to transfer wealth amongst family members. The older generation (i.e. parents or grand parents) can retain control of the assets or business by eliminating third-party interests and restricting membership while eliminating estate and gift tax consequences. The LLC is a much more practical device for this purpose with no mandatory distributions to the younger generation (children).

CREDITOR TRANSACTIONAL BENEFITS

Limited liability companies have a distinct advantage when it comes to borrowing money from traditional institutions such as a bank or doing business.

CHARTIABLE GIFTING WITH THE LIMITED LIABILITY COMPANY

Charitable giving and fund-raising is better facilitated through an LLC. Member gifting is passed through to their individual income tax returns on the federal form 1040. LegalZoom LLC service review

1040 FLOW THROUGH TAX BENEFITS

You can avoid paying both corporate taxes and personal taxes on your profits and expenses with the LLC otherwise known as double taxation. This can be a tax advantage in many cases as the business profits, losses and expenses flow through to your 1040 federal form as a personal tax.

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