LLC Tax Quesion

[jmolayal]

Looking to buy a property via an LLC. Should I wait to form the LLC and buy the property till after Jan 1st? If I form the LLC prior to the new year, do I have to file taxes for 2006? Thanks for the advice!

- Jaison

 

[dirtboy]

Why do you want to purchase it inside an LLC?

 

[jmolayal]

The LLC protects me from personal liability. if the business fails, I still get to keep my stuff.

 

[JS80]

Originally posted by: jmolayal
The LLC protects me from personal liability. if the business fails, I still get to keep my stuff.

beware piercing the corporate veil

 

[dirtboy]

I already knew that, but I wasn't sure why type of property you were buying. 😉

 

[gsethi]

Originally posted by: jmolayal
The LLC protects me from personal liability. if the business fails, I still get to keep my stuff.

not necessarily. LLC is Limited Liability Corporation (so you can still have some personal liability).

Make it a corporation if you dont want personal liability. (well, you can still have personal liability but atleast your personal finances/stuff will be secure - or is hard to get taken away)

 

[RKS]

Originally posted by: gsethi

Originally posted by: jmolayal
The LLC protects me from personal liability. if the business fails, I still get to keep my stuff.

not necessarily. LLC is Limited Liability Corporation (so you can still have some personal liability).

Make it a corporation if you dont want personal liability. (well, you can still have personal liability but atleast your personal finances/stuff will be secure - or is hard to get taken away)

LLC doesn't expose you to any more liability than a S Corp/corp. As with piercing the corporate veil in a corp setting there are some factors that can expose the LLC to personal liablity such as :

--personally and directly injures someone
--personally guarantees a bank loan or a business debt on which the LLC defaults
--fails to deposit taxes withheld from employees' wages
--intentionally does something fraudulent, illegal, or reckless that causes harm to the company or to someone else, or
--treats the LLC as an extension of his or her personal affairs, rather than as a separate legal entity. (copied from nolo.com)

LLCs are the new preferred way to setup a business usually because it is usually easier paperwork wise.

edit: nolo.com does a good job of breaking down LLCs, S Corps, Corps as well the advantages/disadvantages of all. They recommend a LLC for startups.