I woudl go with this. In Ca. it is 800 though, which is what you pay every year, and it goes up based on how much you make, but 800 is the minimum. As for LLC vs a corp, in a LLC you don't have to go through the process of electing a board of Directors, (though there is nothing from just electing yourself and your GF/Wife)
It also isn't taxed the same, as it is sent over to the members. A corporation get's taxed on it's own, and whatever they pay you as gets taxed also. Many people argue that you can get out of corporate taxes, but the way I see it, it is double taxation for that added protection of limiting your personal liabilities. And unless you plan on selling shares of it to raise capital, I don't really see the extra effort in this.
It is also generally easier to maintain a LLC than a corp. In a corp you have to have annual meetings and minutes and stockholder meetings. In cali, you don't need any of that for LLC. Someone told me some states require more things than other, but across the board, it is generally less than what you have to file with a corp. Someone also told me once also, though I never looked into, that you can create a "S" corp, and the restrictions and maintenenace on that is also lower than a standard corp.
Either way, what you describe is tax evasion, and i also suggest seeing your CPA or tax lawyer. Talk to that person about a pre nup too. While I hope nothing ever happens to your relationship bliss, you never know. Think of it like the car insurance you have. you don't expect to get into an accident, but if you do.... You'll be glad you had it in place.
Good luck.
edit: forgot the downside to the LLC/Corp route, MORE PAPERWORK! This is really it. You have to realize, most businesses ARE like this. There are probably many sole proprietorships out there, but mainly because they either don't fill out the appropriate paperwork, don't know it exists, or think it isn't work the extra hassle. With your rental idea, it is a very good idea to limit your own liabilities. Your rental burns down, killing the tenant, they can only go after the assets of the LLC/corp, but not what you personally own. In todays ligitous society, this alone is worth the trouble. So it is a balance game, how much to keep in the company coffers to change your tax liabilities vs. guading against someone suing you to get to it. A good CPA will handle this for you, which will eat into your profits, but I think it is worth it, as they stay afloat with all the changes and regulations far better then what you will be able to do.
Originally posted by: Common Courtesy
Originally posted by: BlahBlahYouToo
Originally posted by: GCS
See a tax professional on this ASAP. A good one.
I am an accountant (been doing it for 13 years) and my own accounting firm.
I own 12 rentals in an LLC.
With what you want to do you really need to set up an LLC for your property ownership. If you want to own them with your GF or anyone else you will need to do this as an LLC Partnership and it will need to file it's own Tax Return (Form 1065) and maintain it's own books and bank account.
Also I hope you have a good lawyer to work with from both a lease stand point and for when you have to start the process to remove a bad tenant.
There is LOTS to know about all of this but you need to work with an accountant to do it right!!
Your current rentals will need to go on Schedule E since you own them personally. You can deduct your mortgage interest on the Sch E. You will have to amortize your points over the life of the loan that you have one them. EACH property gets its own Sch E.
If you were in Richmond, VA I would say come see me to discuss this but I do not know where you are.
Greg
this is great advice greg.
what's the costs involved in setting up an LLC? i would imagine there's some downside to it, or else everyone would be doing it.
It costs about $300 for paperwork filing for the LLC depending on your state
The cost of preparing the paperwork varies.
There are some online sites that will do much of the paperwork/legwork for you for a price.
