Is it necessary to pay your LLC rent?

[Louis Basel]

Hello folks, 

My wife and I bought a warehouse. We created a LLC whose sole purpose is to own/operate this warehouse. We occupy a portion of the warehouse with our sole proprietor businesses and rent out the remainder.

Is there any reason we must pay the LLC rent? Is there any reason we might want to pay the LLC rent?

A friend who is also occupying part of a different industrial property that he owns in a LLC mentioned 'self dealing' as the reason he was told he must pay his LLC rent for space he's using. Does this apply to us?

Thanks for your help!

-Louis

[Matthew McNeil]

Originally posted by @Louis Basel:

Hello folks, 

My wife and I bought a warehouse. We created a LLC whose sole purpose is to own/operate this warehouse. We occupy a portion of the warehouse with our sole proprietor businesses and rent out the remainder.

Is there any reason we must pay the LLC rent? Is there any reason we might want to pay the LLC rent?

A friend who is also occupying part of a different industrial property that he owns in a LLC mentioned 'self dealing' as the reason he was told he must pay his LLC rent for space he's using. Does this apply to us?

Thanks for your help!

-Louis

The question is; who are you paying rent to if not the LLC? If you have the asset in an LLC then EVERYTHING involved with the asset must be processed through the LLC. Otherwise, you "pierce the veil" and the LLC serves absolutely no purpose. ALL rent, taxes, utilities, insurance, bank accounts, contracts, etc must be processed through the LLC.