LLC Entity, TAX, Licenses and others

[Gary Li]

I am new here, and just start Housband and Wife two members LLC in CA to manage my own rental properties, I have 4 single family rental properties in CA, I want to long-term hold them, rental net income will not exceed $20K yearly, we will not take salaries from the LLC, from the TAX saving and personal asset protection points of view,
Is LLC the best Entity for us? any suggestions?

Other questions:
What kind of Taxes should I pay? (all types of Taxes)
What kind of business licnese should I have?
Do I need FEIN?
What else Do I need normally?

Thanks

[Mitch Kronowit]

Originally posted by Gary Li:

I am new here, and just start Housband and Wife two members LLC in CA to manage my own rental properties, I have 4 single family rental properties in CA, I want to long-term hold them, rental net income will not exceed $20K yearly, we will not take salaries from the LLC, from the TAX saving and personal asset protection points of view,
Is LLC the best Entity for us? any suggestions?

Other questions:
What kind of Taxes should I pay? (all types of Taxes)
What kind of business licnese should I have?
Do I need FEIN?
What else Do I need normally?

Hi Gary, and welcome.

We have a California LLC also for our California rental properties. It was suggested as the entity of choice by our attorney for a passive business such as ours.

For starters, you will have to pay the annual franchise tax of $800 for your LLC. There is also a biennial form you must submit, LLC-12 Statement of Information, every two years along with the fee, $25 I believe. Since your income is relatively low, you shouldn't owe any more state taxes on your LLC's earnings. Consult your CPA.

You'll need to check with the city and county where your rental properties are located and see if they require a license or fee. For example, our rentals in Riverside County are in cities that require a business license, but the county itself doesn't ask for anything. However, in San Diego, the county charges a Rental Unit Business Tax for landlords which is about $60-70/year.

We do have a Federal EIN. It will be asked for on several state forms.

Get a good accountant and attorney that understand real estate investing. It's amazing some of the garbage I hear from professionals who don't specialize in real estate.