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Lane
Lane, JD, CFP, MBA, CRPS
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Experience:  Providing Financial, Tax & Business advice since 1986
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Ok, I will read over that article, but IN YOUR opinion, as

Resolved Question:

Ok, I will read over that article, but IN YOUR opinion, as a planner. What would you do with this and how would YOU set this up for yourself as a single younger person?

- I own multiple pieces of income property at this time all in my name.
- I plan to own more pieces of income property. Some completely held by me and some held by me and investors
- i own a service business at this time...in my name

Although this is my THOUGHT I dont have to be right, nor does this have to be the best option:
- i need to set up all of my ownership(s) to Real Estate title in one company
- my ownership + investors ownership to Real Estate title in another company
- the management of those properties in another company
- my service business in another company
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Sorry, was just tying to help you maximize ,, (in terms of the idea of the Series LLC for where you're trying to go), but yes, I would d exactly as you have indicated....

NPVAdvisor :

Probably the most important piece of that is to separate the invesotr properties from your completely self-owned property

NPVAdvisor :

And I WOULD use the LLC as the vehicle of choice for all

NPVAdvisor :

Separate liability, very open-ended in terms of what you can do operationally, (doesn't have the articles of incorporation, minutes of meetings, etc. kind of overhead that comes with the S-Corp)m and still allows for that pass-through taxation

NPVAdvisor :

The LLC is the fastest growing business entity type for a reason, its combination of liability protection and flexibility, but that comes with the need to really think through the operating agreement for the LLC, because there ISN'T all that statute law to fall back on as with corporations

NPVAdvisor :

And finally, you MIGHT want to go ahead and consider an S-Corp for the properties where your objective is to raise capital through investors, the ability to issue shares helps with that piece

NPVAdvisor :

Hope this helps ... be in meetings until about 6:30 ea .. should be back on after that

NPVAdvisor :

Lane

Expert:  Lane replied 1 year ago.
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Customer: replied 1 year ago.

i saw the link u gave me it says serie llc are in 9 other states. which of those

have best tax benefkt?

 

also, to be clear it sounds like the series are like corporations but u can pick and choose how to be taxed? is there a limkt to how many investors u can have in each series? how is ownership issued?

 

with me basically being the parent co. i dont want anyone else owning that interest. is s-corp best for.that election?

 

regarding holding title, i heard wyoming might have a good vessel for that? know anhthing about it? if not does it matter what state i set the trust up in?

Expert:  Lane replied 1 year ago.


As usual, Delaware was the first (again Delaware may be a little expensive at first, but they are the best state, in my opinion, to do the kind of thing you are trying to do - raise capital, have multiple locations, access to excellent business attorneys, angel investors, investment bankers & underwriters are familiar, etc., etc.)

After that the analysis starts to have to do with each state's requirements (some, for example, require that the home-office of your business be physically located in that state, and ALL will require an authorized agent in that state or at least registration as a foreign entity if you are not organized there) ... AND ... what it is you are trying to accomplish.




Which tax benefit, as well, is not always a simple question .. Probably the easiest to measure is which states don't have a state income tax (although, when adding issues such as organizational filing fees, ongoing registration costs, etc. ... a state that makes it easy to do business in other ways and has a relatively low income tax may actually provide more value ... and finally, remember that the state tax numbers are not on the same level at all as federal income tax, so again it's net benefit and trade off issue)

But with that said, you can go here to see every single state and it's various tax rates:
(designed initially for those picking a state in which to retire, but provides a map that will take to every states taxes, rates, property tax rates, sales tax rates, ... lots of good information
.
But first just to distill it a bit, here are the states that have NO income tax:

· Alaska

· Florida

· Nevada

· South Dakota

· Texas

· Washington

· Wyoming


But, a word of caution; again, your overall taxes paid may not necessarily be less in a state where there is no income tax. States need revenue to function, and these states will have to make up for the lack of income tax somehow. New Hampshire and Texas, for example, make up for it in property taxes. Both states have some of the highest PROPERTY taxes in the nation. The cost of higher property taxes, sales taxes, fuel taxes, and other taxes could amount to higher overall taxes in some of these states.

Here's the site that will let you look at MANY of those issues, state by state:

http://www.retirementliving.com/taxes-by-state




No, the series are LLC's (Limited Liability Companies). And Limited Liability Companies are, as we discussed before, are taxed as sole proprietorships if there's just one owner (called MEMBERS in LLC language) and as partnerships if there are multiple members (owners). ... HOWEVER, these entities can ELECT to be taxed as an S-Corp or a C- Corp, depending on what you're trying to do.

The LLC, again, taxed in its default fashion, is the best of both worlds (providing the limited liability of a corporation along with the flexibility of a partnership).

Corporations are much more rigid in what can be done ... there must be directors, officers, meetings with minutes, articles of incorporation, by-laws and each state has very specific rules about what corporations can do in their state.

An S-Corp (again a TYPE of hybrid, because it IS a corporation, from a state/business entity law perspective, but is not taxed at the business level ... taxes PASS THROUGH to the shareholders just like taxes pass through to LLC members) ... for example .. MUST pass profits to its shareholders in proportion with the percentage of ownership ( a person who owns 10 shares of an S-Corp that has 100 shares outstanding will always get 10% of the profits and 10% of the losses) ... where in an LLC you can design the sharing of income, loss, return of capital, ability to liquidate, etc., ANY way you would like in the LLC operating agreement.

And remember C-Corps (really the only entity besides IRRevocable trusts that are taxed at their own rates, don't get the benefit of different, lower, capital gains rates, and whose profits are taxed twice by the time they reach the owners back pocket) have a lot of that same rigidity, in terms of the statute law of the state they're organized in.

That's why I recommend LLC as the starting point ... again, pass-through taxation and flexibility like a sole proprietorship or partnership and the limited liability of a corporation.

AND you can always elect to be taxed as an S-corp or a C-Corp in your LLC later ... doing it the other way around requires dissolution of your corporation, merger, or some sort of sales transaction, essentially much more complicated.



Hope this helps

Lane

Positive feedback appreciated :) That's how they pay us here.

Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 4161
Experience: Providing Financial, Tax & Business advice since 1986
Lane and 3 other Finance Specialists are ready to help you
Customer: replied 1 year ago.

thanks. i rated excellent again :)

Expert:  Lane replied 1 year ago.


thanks so much.

You're asking great questions ...

Now maybe you can drill down a bit.

... hard to be completely specific, as you see that you are asking questions that don't always have a simple answer.

Maybe now you can take all this and sit down with a good business atty and have a very efficient meeting.

Thanks again,
Lane

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