LLC or sole proprietorship

6 Replies

Good evening fellow friends/investors 

So I have been reading a lot and wanted to see what your take on was setting up an LLC or just keep properties under my name. Now I do know there are legal or business advantages of getting an LLC tax breaks, liability etc. but are there other advantages to doing an LLC vs my name?

The main reason is for entity protection. Just make sure you file the LLC in the state where the property is located at.

An LLC or other entity like a corporation can offer you some liability protection. However it is by no means complete protection. In many cases it will offer you NO protection.

There is no particular tax advantage to an LLC for rental properties vs your own name or a partnership.

An LLC will cost money to operate and Financing will definitely be harder.

Do I use LLCs? yes. Are they the right choice for everyone, Not necessarily.

This is a complex question and NOLO Press website is a good place to get some basic information.

I did an S corporation for my business. It gives you credibility but it costs you a lot more to run. The cost every year (LLC or Corp.), at least in Mass, is $500 plus accountant fee. The dwelling insurance that you buy for the property also costs about $500 more (at least it did for me).

If you only have a couple of properties, I would keep them under your name and buy an umbrella policy.  If you are looking to get really active in real estate, then you need to speak to your accountant as to which is best.

Tom

I was thinking an LLC would protect me a lot more then just leaving it under my name, but I do work in the Insurance field now and I know its a few more hoops you have to jump through to get the insurance. @Ned Carey  

An LLC's purpose is to protect your personal assets from claims/lawsuits against your business.

I have done a few posts on this topic, you can read one of them HERE

Originally posted by @Phillip Gonzales :

I was thinking an LLC would protect me a lot more then just leaving it under my name, but I do work in the Insurance field now and I know its a few more hoops you have to jump through to get the insurance. @Ned Carey 

An LLC is by no means a substitute for insurance. You absolutely must have insurance. An LLC without insurance equals no LLC at all.

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