Crowdfunding sites such as crowdstreet, the deals are always structured using limited partnership or LLC, and investors are limited partners or members of an LLC. Theoretically they're protected from the liability perspective. This brings a question if there is a necessary to form single-member LLCs to invest in those deals to provide an additional layer of protection. Advices are greatly appreciated!
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
4y
Most of the folks I speak with who do this do it for either privacy or try to shield their investments from their own liability. One common example is a doctor aiming to shield their assets in Colorado or Wyoming LLCs.
Attorney · Birmingham, AL · Member since 2022 · 220 posts · 83 votes
4y
Yeah, I would recommend investing through an LLC. Crowdfunding can be a low risk activity but its good to have the extra layer of personal proection with an LLC. It can also help streamline your oeprations such as accounting and could possibly open up tax benefits. LLCs can be easy to set up and maintain so I would do it to have the extra piece of mind that comes with using your own LLC in conjuction with the GP/LP structure in place for most crowdfunding.
Crowdfunding sites such as crowdstreet, the deals are always structured using limited partnership or LLC, and investors are limited partners or members of an LLC. Theoretically they're protected from the liability perspective. This brings a question if there is a necessary to form single-member LLCs to invest in those deals to provide an additional layer of protection. Advices are greatly appreciated!
No because you cannot lose more than what you put in anyway. It would be totally useless from a liability POV. Also, there are no tax benefits whatsoever if you were in invest via an LLC. If you wanted a privacy shield as mentioned by @Taylor L., then yes I would agree on its utility. But from a financial liability perspective, it's not gonna make any difference at all.