What's the deal with CPAs advising against LLCs?

[Sam Erickson]

I have recently seen multiple post by people saying their CPA has advised them against putting their investment property in an LLC and to own them personally.

Am I missing something because this seems crazy to me? 

I could understand CPAs advising against an LLC for each property because they don't want to file all the deferent schedules ( I don't agree with that but I understand it). At the very least I would think you would want at least one LLC to protect your personal assets.

[Brandon Hall]

Sam Erickson the reason that us CPAs advise our clients against LLCs is because most people don't treat the LLCs appropriately to be granted the asset protection they are seeking. Just because you have your assets in an LLC doesn't mean that liability protection can't be pierced if the LLC isn't appropriately operated.

You state people should not rely on CPAs for entity structuring advice, rather they should rely on lawyers. Yet we act as a 3rd party advisor as we don't receive direct compensation from the formation of LLCs. Additionally, when a lawyer pierces the corporate veil in the event of a lawsuit, who will the client blame for not advising them how to operate the LLC appropriately? That's right - their accountant. Our opinions on the matter are valued as they should be.

As others have said, it's situation specific. You are brokering $8MM deals so it's no wonder you can't wrap your head around not having asset protection. You can't relate to the little guys who buy one sub-$100k property per year and have a $500k net worth. Those guys don't need the hassle of an LLC, they need solid insurance.

I always advise my clients to speak to a lawyer to confirm my thoughts on whether or not they need an LLC or how to structure their entities. Sometimes they come back and say that their lawyers were impressed on my creative entity structuring they had never thought of before. Not advising my clients on entity structuring would be a disservice.

And Linda Weygant is right - I've never heard of a CPA who advises against entities simply because they don't want the extra work. If you have, they should be reported to the state association and if appropriate, the AICPA as they are acting unethically and unprofessionally.