Partnership with Mother - How to structure business for financial

[Kyle Allen]

I started a side business this year with my mom as a mainly silent partner. We have tools, truck, trailer, insurance etc for the equipment for the business and are currently finishing up a house flip that we purchased. Will hopefully be on the market in January. We are trying to decide how to structure our business finacially. I see LLC being used commonly for real estate but we are unsure if that will work or if we would be better with an LLP. How do we split the tax liability between us since we both have regular jobs? Do we need to move the equipment, truck, etc into the business name before the end of the year to be able to depreciate? Thank you for your responses in advance. I always find such useful information on here.

[Account Closed]

@Kyle Allen, I highly recommend interviewing an account / CPA or two to discuss tax differences between the two. As for legal differences, if you use an LLC I recommend a manager managed rather than member managed (if your State makes that distinction). An LLP would minimize her liability in a more truly silent partner style, increases yours as the general partner. Some States recognize a family limited partnership which has some transfer benefits.

Some of the members on this website use retirement funds. Does not appear you are doing so given your post above, but please keep in mind that parents and kids are disqualified persons when it comes to qualified funds.