LLC’s Have Great Money-Saving Benefits, but most are Worthless?
Before telling you why, first the “Potential” Power of LLC’s for real estate…
Limited Liability Companies (LLC’s) are powerful entities because they have all of the legal benefits of a corporation; yet all of the excellent tax advantages of a general partnership, and avoid the legal disadvantages of a general partnership while avoiding the tax disadvantages of C-corps, S-corps and limited partnerships.
They also avoid much of the legal complexity of corporations and limited partnerships.
In short, the best of all worlds, unlike any other entity.
LLCs can be used for all types of real estate transactions. Residential rental, commercial, wholesaling, short sales, rehabbing, new construction, sub-divisions, condo conversions, etc.
So powerful are LLCs, they have diminished the importance of limited partnerships, family limited partnerships, C-corporations, S-corporations and land trusts (although they can be combined with land trusts).
Plus, a properly structured LLC should…
— Protect your personal assets
— Save you substantial amounts of taxes
— Defend you against IRS attacks
— Prevent legal disputes and save you legal fees and hassles
— Enable you to successfully operate your real estate business.
But Most do NOT!
Notice the above words “Potential Power”. Below are the reasons why most LLCs never reap the power of their great benefits.
Just about all attorneys, CPA’s and others, who form LLCs, use bare-bones, boilerplate LLC documents.
Consequently, your LLC is set up and operated WRONG, because these poorly documented LLCs:
1. Do not shield you, causing your personal assets to be totally exposed.
You therefore are not protected from legal actions (when you should be).
It is not the size of the entity, but rather the existence of complete and proper documents which provides the protection from personal liability for the LLC members.
2. Do not save you in taxes (when they should).
Having certain Tax Elections and Tax Matters in the operating agreement and other LLC documents can generate for you, yearly tax savings you didn’t even know about.
3. Do not defend you against the IRS (when they should).
IRS auditors typically examine LLC legal documents to see if they support tax deductions and strategies. If they don’t, you are out the deductions and A LOT OF MONEY!
4. Do not prevent legal disputes with partners or others (when they should).
Having the proper language would do this and save you from costly lawsuits.
5. Do not give you important operating guidelines for successfully running your business (when then should).
LLC documents (esp. the operating agreement) should also be your roadmap to help you implement a profitable real estate business.
In short, most LLC’s simply do not give you the significant dollar-saving benefits that a well-designed & documented LLC should give you.
Our upcoming Traction REIA meetings on “The Power of the Right Structure: The Foundation for Keeping What You Make and Protecting Your Assets Without Expensive Lawyers” with Bill Noll, Tax Attorney & CPA.
Learn How to Set up and Operate Your Real Estate LLC for Maximum Legal Protection, Tax Savings and IRS Audit Proofing – Save $1,000’s – WITHOUT Expensive Lawyers
PLUS: How you can resurrect your existing LLC’s with the right system and more.
Don’t miss this golden opportunity to protect you and your family.
Our upcoming training seminars with Bill Noll are worth coming to DC for if you live out of town:
#1. Traction REIA Main Monthly Meeting
TOPIC: “The Power of The Right Structure: The Foundation For Keeping What You Make and Protecting Your Assets Without Expensive Lawyers”
SPEAKER: Tax Attorney & CPA Bill Noll
Thursday November 8th at the SHERATON Tysons Corner.
#2. Training Intensive MasterClass with Attorney Bill Noll
TOPIC: “Total Wealth Protection for You & Your Family”
Saturday November 10th at the Sheraton Tysons Corner.
Reserve Your Seat Now at:
See you there!
10+ Year Recipient of the National REIA “Honors of Merit”
and the “Award of Excellence”
For Best Real Estate Investor Association!