LLC - Asset Protection Service
Asset protection service to protect you from business liabilities and transactions. Limited Liability Companies, in this discussion, are domestic structures and are strong liability protection vehicles. That is, when you are sued personally, there are provisions in the law that protect the assets inside of your LLC from being taken from you. In addition, when your business is sued the LLC can also shield you from the liability related to business transactions. LLC's are an exceptionally beneficial tool when used to safeguarding real estate.
A limited liability company ("LLC") is a non-corporate business entity, in which all members have limited liability protection, all members can participate in management and control, and which, if appropriately structured, is taxed as a partnership rather than a corporation for federal income tax purposes. By combining limited personal liability with partnership tax classification, the LLC can provide advantages that are unavailable to corporations, partnerships or limited partnerships thereby affording investors the latitude to participate in business ventures.
Additionally, the LLC offers asset protection benefits and is an appropriate vehicle for real estate investments. This is because it combines liability protection with favorable partnership tax treatment. Although real estate ownership crates potential liability with tenant and guest injuries, leases and other contracts, environmental laws, mortgages, and other laws. However, real estate investors had traditionally have avoided using corporations because they are not advantages when used to own assets that create passive income. They have also considered taxation on in-kind contributions of real estate to be disadvantageous and because accountants have desired flow-through treatment of losses, enhanced by the increased basis provided through debt financing.
Taxes and LLC Asset Protection Services
Accordingly, an LLC, if appropriately structured, can be classified as a partnership for federal income tax purposes. Therefore, it will be permitted to allocate tax items including income, gains, losses, deductions, and credits among its members in accordance with its "operating agreement" (a written agreement among LLC members, which is provided when Asset Protection Planners establishes an LLC).
There are no major differences in the federal income tax treatment of LLC's that are taxed as partnership and limited partnerships themselves. The principal advantage of the LLC over the limited partnership is the limited liability protection afforded all LLC members and managers. Limited Partnerships are required to have one or more general partners, who are personally liable for partnership debts and obligations. The LLC affords asset protection to its members regardless of the extent to which they participate in management and control of the LLC business affairs.
A very affective and useful service plan would entail the use of an LLC, depending on the client's needs. The specific arrangement would depend on your particular circumstances, business activity, and the type of assets owned. If you are engaged in any business or if you own property, we recommend that you take necessary steps to arrange your affairs in order to maximize the income tax, properly structure your estate planning and maximize the asset protection that is currently available.