Two member LLC vs single member LLC?

[Ben C.]

was told that a two member LLC is more favorable for flipping activities for two reasons: 
1) much less likely to be audited vs a single member llc 2) much more difficult to pierce the corporate veil compared to a single member (many cases recently have not honored single member Llc's in terms of protecting and separating personal assets from company assets). Thoughts?

[Basit Siddiqi]

@Ben C.
1) It is true that there is a higher chance that the IRS will audit a SMLLC's schedule C/E over a multi-member LLC.
The reason for this is there is likely statistics that SMLLC's are less organized than multi-member LLC's.

With the IRS - you are guilty until proven innocent. Therefore - if you get audited and you are not organized - chances are that IRS is going to win the audit; a reason they target SMLLC's more.

2) In regards to rental investing LLC's; as long as you do the following - you have a smaller chance of having your corporate veil pierced.

1. own the property in the LLC
2. have the mortgage in the LLC
3. have a separate bank account
4. obtain insurance in the LLC
5. have the tenants issue rent payments to the LLC