LLC , multi member company

[Triston Blodgett]

Ive recently learned about the pros and cons of an LLC, starting out I've figured out creating an LLC is not the best option to begin investing. Ill stick to insurance and leverage. I understand to keep personal and property income/expenses separate, it all makes sense to me... heres the dilemma, (correct me if im wrong) eventually I will have an LLC and have a few partners that I will work with. I learned that a multi member LLC is taxed the same as a corporation... if we aren't able to be tax efficient with a Muti member llc, then whats the point? any guidance, advice and experience is much appreciated! Im not 100% on the way im thinking about it..

[Luis Alvarez]

Hi @Triston Blodgett, to give you my 2 cents:

I started with an LLC and landlord insurance/umbrella policy. I would definitely not ever have a rental property in my personal name. I understand there's a lot out there about LLC v Umbrella, etc., etc. The truth is, they should not be mutually exclusive...it's not a matter of this or that...they serve different functions and I personally suggest both. I may be biased because law degree, working in estate planning/asset protection, etc. But there's nothing like peace of mind. I'm not sure what you're referring to when you say "leverage" as a way of asset protection (in "sticking to insurance and leverage").

To your second issue, I'm no tax expert, but I do know (from personal experience) that a multi member LLC does not only have to be treated as a corporation for tax purposes. The beautiful thing about an LLC is the hybrid ability to be treated as best suits you (for taxes). It can be treated as a partnership or an s-corp (different than a c-corp). And if you are making the revenue to justify an s-corp election (think north of $50k) then you have a good problem...there are tons of advantages using an s-corp. BUT, it needs to make sense to do so because it costs more. Every investor should aspire to get to S-corp level IMO.

Does that help?