Corporation or LLC

[Davit Gharibyan]

Hi, 

I have an LLC that holds the real estate and the other LLC is handling the management (getting rents, sending payments, etc.).

As I was preparing my taxes, my tax professional advised me that management LLC is redundancy and it doesn't make sense to have, it's like moving my money from one pocket to the other. The reason is since I am the owner of the LLC, it's income is reported in my personal taxes.

I was advised that if I want to separate the management from the property, the managing entity should be an incorporated. I was told if I want to have employees I need to operate an incorporation. 

Do LLC's not have employees?

This issue is coming every year, and a few tax pros I have talked to are not doing a good job explaining it.

Can someone shed some light on this?

[Stuart Udis]

@Davit Gharibyan They advised correctly, this adds no additional value and no additional liability protection, only additional expenses. I would drop the management entity and collect and operate your business through the deed holder LLC. The way you describe this is as a pass through entity which is sufficient and simplifies everything. In order to comment on the employee status, its helpful to understand more about your business, will send a direct message.