Is a limited liability company (LLC) the right choice for you? In considering the protection of personal assets, “more real property investors are now using [LLCs]… The LLC is a newer form of business entity and it has benefits that corporations and partnerships lack,” according to Huffington Post blogger Phil Jemmett, CEO of Breakwater Equity Partners.
- “Liabilities of the members of an LLC can be limited to their financial investment,” said Jack Rose, Chief Strategist at Breakwater Equity Partners.”
- “…an LLC member is not required to pay taxes at the business level. The “pass-through” taxation allows the LLC member to report the company’s profits or losses on individual tax returns at a lower rate,” according to Jemmett.
- “…simpler and faster than forming and maintaining a corporation, according to the State California Franchise Tax Board.”
- “LLCs do not issue stock and are not required to hold annual meetings or keep written minutes; however, a corporation must complete those tasks in order to preserve the liability shields for its owners.”
- “…has fewer restrictions than a corporation.”
- “LLCs can be established in any organizational structure agreed upon by the company owners.”
- Can be managed by owners, managers, or members, “while corporations must have a board of directors that oversees the major business decisions of the company and officers who manage the day-to-day affairs.”
“Who can form an LLC?”
- “… Now LLCs are becoming the primary choice for all types and sizes of businesses.”
- Those with significant assets, capital, inventory, or service offering “can benefit financially from an LLC.”
Jemmett concludes that “the articles of organization, including the name and registered agent, and the operating agreement simply have to be filed with the state in which the LLC is created, However, complications can arise when creating an LLC. Many commercial real estate and investors seek out professional help for the creation of their LLC entity and assistance can be found at most commercial real estate advisory firms.
Please read Phil Jemmett’s full blog post “Is an LLC the Right Choice for my Commercial Real Estate Investment?”
- Commercial Real Estate Lenders and Servicers: Changing Faces (huffingtonpost.com)
- Is it beneficial to invest in commercial real estate (rdcappraisals.wordpress.com)