Starting LLC & Holding Company with Partners

[Melanie Blazek]

Hey BP ! 

I am starting up a holding company and LLC with Prime Corporate Services. I am dividing my Real Estate investing company into three groups ( Fix n Flip, Wholesale/ Lending , and Buy and Holds) each with their own LLC. I have partners specifically dedicated to Fixing n flips, and partners focused on being lenders and raising private capital to leverage.

My question is, does it matter who is a member of my holding company? Should it just be myself for tax purposes?

How do you differentiate a partner in your company from a partner in one income stream ? 

[Chelsea Monk]

Ah, I love making entity structures. You've got an interesting one going on here for sure.

Your holding company will be a partner in each of the 3 groups, yes? And each of the 3 groups will have a different partner makeup? (i.e. fix n flips will have 4 partners: you, John, Susie, & Bob. wholesale/lending will have 3 partners: you, Fred, Susie. etc) If so, you're looking at 3 tax returns already.

Do you want a partner in your holding company to share your portion of the income? If not, have yourself be the sole member. Easy peasy.

Also, I definitely recommend sitting down with your tax+legal team to make sure all i's are dotted and t's are crossed in the creation of this entity structure and that you're not making it overly complicated. I've never worked with Prime Corporate Services, but I know a lot of the "big name" companies make their money off creating way more entities than are needed. Not saying that's the case here, just saying that another opinion isn't a bad thing.