We have 3 LLCs, one of which is a Series LLC. One of the three is the managment company owning no assets. All rents and expenses go through this LLC. The remaining funds are then sent to the other LLCs that own the properties.
We are trying to decide the best way to setup 3 "bank" accounts to hold certain funds and accumulate interest on these funds until needed.
We have Property Tax, Insuruance and Capitlal Expenditures.
If we setup one account with the Managment LLC it would be very simple. I understand the funds sould be at risk if there were issues with the comapny or somthing like the IRS freezing assets.
We could setup an account at the "Parent level of the series LLC and have an intercompany loan agreement between it and the other LLCs in the series.
We are just trying to get some opinions and see how others do this as well. One of the main issues is how does the tax part of it work. If the managment company gets the 1099 and has to report all the capital gains or interest becuase it falls under its EIN , how do you account for this on the other LLCs books? Would you just have a loan agreemnt and the management company would pay the LLCs interest for borrowing the funds and then they would keep the interest or capital gains on their books?
In other words say If in 5 years we have 50 properties and we want to hold property taxes all in one account somewhere to earn interest unitl the end of the year what is the most effiecent and legal way of doing this?
It is all the same members on the the LLCs and the managment LLC as well. It all ends up at with each member at the top level but we want to do it in a manner to keep the assets protected and not appear to comingle funds. We have very detailed books and each LLC and property transactions are seperate along with bank accounts through Buildium. I know most companies do this while having perhaps 100s of LLCs, just not sure how they structure it. Any examples or thoughts on this would be appreciated.
