SMLLC Tax election with CPA

[Shawn H.]

I created a Single member LLC at the end of last year. I called my CPA to ask about any consequences transferring from husband/wife to SMLLC (myself as the sole member). He mentioned that I would have to choose partnership or S corp? I told him it is single member and I selected disregarded entity when applying for EIN. He said I still had to choose partnership or s Corp within a certain amount of time after creating the LLC. Am I missing something?

[Steven Hamilton II]

Originally posted by @Shawn H.:

Apparently I misunderstood some of the terminology in the discussion with my CPA this morning. He got back with me and agreed, I can do nothing and remain a disregarded entity, or elect to be treated as an S corp. He said he prefers to make the election and separate from personal tax return and file 1120s, to keep personal activity separate and avoid co-mingling. So does the SMLLC, as a disregarded entity, not limit liability, even if there is no co-mingling?

DO NOT MAKE THAT ELECTION IF YOU HAVE RENTAL PROPERTY IN THAT LLC. If he advises so that is malpractice. It will do nothing but cost you money.

You can keep things separate without doing that. You really should consider a consultation with someone here such as @Natalie Kolodij or @Linda Weygant.

You definitely need someone qualified, does not have to be a CPA, could be an Enrolled Agent or an attorney. Just make sure they specialize in tax and have significant experience dealing with real estate investors.

Here is a great list of questions to ask a potential accountant: http://www.biggerpockets.com/forums/51/topics/7044...

Also check out the www.NAEA.org page in your search. It should help you find someone local. If someone comes to me, I'll send them your way.

If you need help in your search or want to verify something don't hesitate to ask.

For example: I have clients worldwide and things are just as easy as I e-mail them, talking on the phone. I even use Skype and TeamViewer to communicate with clients so I'd highly recommend looking for one of the best with great references that interviews well with you.

So look for someone you can connect with that works out for your situation.

Feel free to ask here if you have questions