Does it make sense to start an LLC with a partner as an LLC?

Question

I am thinking of partnering with a friend,starting an LLC and buying and managing investment properties.  Would it make sense to start my own LLC first, and that LLC would be considered the partner in the bigger LLC. I am wondering for tax purposes, and protection as well.

Basit Siddiqi · Answer

@David RobinsonDoes your friend provide a skill / trait that you currently don't posses?I would reconsider partnering with a friend just because they are a friend and you have similar ideas. I would instead consider partnering with a person who compliments your skillset or has a skillset you don't currently have.Regarding acquiring an asset with another person - Your options are through an entity(LLC, LP, Partnership, Corp, etc) or as tenants in common.Most likely a conversation with a CPA/Attorney would be required to make a best determination.It normally is dependent on several factors such as where are the partners located(All US citizens?), the income type you will generate(ordinary, rental, etc) and quantity of income that you will earn($50,000 or less or more than $50,000), etcGood luck!

David Robinson · Answer

@Basit Siddiqi One partner is in Florida,us citizen, one is in Alabama, us citizen. The property will be in Alabama, and create short term rental income. Income estimated around $33,000 a year.

David Robinson · Answer

@Basit Siddiqi Thanks for the feedback.  My friend would bring resources to the LLC that I dont have and also be able to split the workload. I was thinking me having an LLC partnering with his LLC creating a larger LLC would give me tax benefits and more security instead of us using our personal names together.