LLC Partnership Question

[Gallagher Wilson]

Planning to partner with a friend on a flip this fall, try it out and probably do more, assuming it doesn't eat us alive. Plan is to form an LLC with us as 50/50 partners under a partnership agreement. Our plan is to only take minimal disbursements from the LLC until its built up a healthy warchest. The LLC looks like the best choice due to passthru taxation and flexibility to operate as partnership. Anyone with thoughts on the topic? We'll be consulting a CPA before formation, but want to run the rough idea past experienced people to make sure I'm asking the right questions.

[Adam Giles]

This is how I am structured. It works great by providing that secondary layer of asset protection, and taxes are as simple as a 1065 and a pairof K1s. If you want to limit disbursement or any other cash distribution, you may want to spell that out I your operating agreement. who can do what, when, and in what about, with what permission from what % of members. It helps avoid confusion of anyone decides they do want to take money out. Owner draws make no difference tax wise. You taxed on the profits each year regardless of whether it stays as retained earnings or goes in your pocket.