LLC structure and tax advice

[Jerry Alvey]

If I own 2 LLC in Texas and one in Oklahoma would it be best to open one umbrella LLC at a bank and list these 3 LLC's under it? I'm looking for protection and to pay less taxes.

[Jeff Filali]

@Jerry Alvey Search for "Holding Company' in the BP search and Google.  I believe that's what you're wanting to do.  THIS IS NOT LEGAL OR TAX ADVICE.....Consult a good CPA and Attorney prior to doing this.

That's how my companies are structured, where I have one primary Holding Company LLC with all the other LLC entities under the Holding Co LLC. This is set up for Asset protection. I do still maintain insurance on every property and liability on the entities that have potential exposure also. I'm not sure this step alone will save on taxes though, because LLC's are pass through entities in regards to federal taxes, so even by doing this all the profit will still pass through to whoever is the Member/Manager of the Holding Co LLC.

Also, by setting this up correctly, from what I've been told, when you need to borrow money, instead of doing equity refinance, you can get a commercial line of credit, which can be a lot easier and less paperwork, from what I've been told. 

To save on your taxes, ask your CPA if your situation would qualify and should you elect to have your Holding Co LLC taxed as an S-Corp and start paying yourself a salary. This will save on Self Employment taxes.

The other way to save on taxes is ask your CPA if your situation would qualify and should you set up a Solo 401K and have the 401K invest in passive real estate.  Also, you may be able to take advantage of company matching and maximize your 401K contributions as your income and company profits go up.  Instead of being limited to contributing only the maximum for individuals, which is like $18K year, your company can match and contribute up to I believe its 20% of the profits.  This will defer a lot of taxes, if you do not need the extra income until retirement.

AGAIN, THIS IS NOT LEGAL OR TAX ADVICE.....Consult a good CPA and Attorney prior to doing any of this.