Asset Protection
Not a subject that I have contemplated too much, as I have been focusing on the nuts and bolts of Real Estate. Now that I have completed my first two deals, I have been taking a small break to work on other ventures and prepare myself for this life of entrepreneurship I will embark upon after school ends in three months.
I am seeking to obtain a layer of protection between myself and my companies. This is going to be another entity which essentially is me. The question I am stuck on is what type of entity it is that would best protect me.
First, there is the LLC. The LLC does not allow liability to flow either way from company to owner or from owner to company. This can prove beneficial when working with millions of dollars of real estate. My overall real estate investing company is an LLC, and serves great for buy and hold properties. We are going to hold only 3 houses in each LLC, and create a new entity every fourth property we obtain. This protects us, because liability does not flow from entity to entity.
Since my real estate investment company is an LLC, we do not really have a way to flip or wholesale multiple houses without facing a serious tax consequence, personally. Here is where I am thinking about starting a C-Corporation for myself personally that can be set up as a brokerage, and handle the taxes as its own entity, and have an exit strategy for quick flip properties.
Now, my problem with this idea is that if I am personally sued, stock of any company which I own can be given as an award. This would mean that I could be sued and lose my company and whatever it is my company owns. This makes me a bit uneasy, as I would like to limit my liability affecting my companies.
What I am seeking out now is whether or not I can develop an LLC which is able to have all of the tax benefits I am seeking from the C-Corp. This is going to offer me a buffer between my personal actions and the actions of my company, and hopefully offer a tax benefit to my real estate company, without creating an unwanted personal burden.
As I am going to do early next week, I suggest that anyone who is starting a business should consult with a lawyer and a CPA. All of our needs are different, and there are a variety of solutions, be sure to consult a professional!
I am seeking to obtain a layer of protection between myself and my companies. This is going to be another entity which essentially is me. The question I am stuck on is what type of entity it is that would best protect me.
First, there is the LLC. The LLC does not allow liability to flow either way from company to owner or from owner to company. This can prove beneficial when working with millions of dollars of real estate. My overall real estate investing company is an LLC, and serves great for buy and hold properties. We are going to hold only 3 houses in each LLC, and create a new entity every fourth property we obtain. This protects us, because liability does not flow from entity to entity.
Since my real estate investment company is an LLC, we do not really have a way to flip or wholesale multiple houses without facing a serious tax consequence, personally. Here is where I am thinking about starting a C-Corporation for myself personally that can be set up as a brokerage, and handle the taxes as its own entity, and have an exit strategy for quick flip properties.
Now, my problem with this idea is that if I am personally sued, stock of any company which I own can be given as an award. This would mean that I could be sued and lose my company and whatever it is my company owns. This makes me a bit uneasy, as I would like to limit my liability affecting my companies.
What I am seeking out now is whether or not I can develop an LLC which is able to have all of the tax benefits I am seeking from the C-Corp. This is going to offer me a buffer between my personal actions and the actions of my company, and hopefully offer a tax benefit to my real estate company, without creating an unwanted personal burden.
As I am going to do early next week, I suggest that anyone who is starting a business should consult with a lawyer and a CPA. All of our needs are different, and there are a variety of solutions, be sure to consult a professional!
posted by Miles at 6:29 PM
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