Questions about forming LLC

[Bennie Overton]

Hey Everybody,

First time poster. I'm almost about ready to start jumping into investing, but I wanted to get my LLC formed first. Had a couple questions:

1) I know the whole purpose is to separate the individual from their business, but how deep do I need to go with this separation? For example, I'm brand new so I don't have my own office space yet. When forming my LLC, would it be ok to use my personal residence's address for now? Or should I use a PO Box? What about using my personal phone number? For now, I want to focus on rehabbing and possibly rentals later down the line.

2) I finally came up with a name for my LLC. I'll be both filing and conducting my business in NC only for the time being. After doing a search, my LLC name isn't taken in my state. However, doing a quick Google search shows that there is another LLC in Tennessee with the exact same name. Could I run into problems with this, even though we've formed our LLC in different states? Could I run into issues if I ever wish to expand outside of NC? What about problems with marketing down the road (i.e. I start making websites with my LLC name attached to it)?

[David Dachtera]

@Bennie Overton,

You'll want to talk to an attorney about how to build your business entity structure.

Here's what we do in my investing group...

Establish a personal trust for estate planning. The trust will be one owner of each of your S-Corp and LLC.

Use the S-Corp for short-term transactions like rehabs and fix-and-flips, use the LLC(s) for long-term holds like rentals.

Your trust is a member of your LLC. Your S-Corp is the other. Your LLC is part owner of your S-Corp and your trust is another owner. This lays the foundation for good protection if the all the entities are properly maintained.

The only publicly-available info re: your trust is the trustee, not the beneficiary (you). So, don't call it the "Bennie Overton Family Trust" or anything like that.

Your LLC is multi-member, and so is well protected as long as the regular maintenance is done properly.

Likewise, your S-Corp. (I'm not an attorney, and this is NOT legal advice.)

You pay yourself from the S-Corp's income using the salary / dividend split technique. For example, you want to pay yourself $60K thru your S-Corp. Split it as $40K dividend (taxed as regular income) and $20K salary (taxed as earned income; you only pay "self-employment" tax (income tax, FICA, etc.) on the $20K, not the full $60K).

If someone's LLC got audited, it wasn't because of the street address, it was due to some tax shenanigans.

Again, I'm not an attorney, and this is NOT legal advice. Seek proper legal and financial advice from competent professionals.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict