Ideal Circumstances For An LLC
- Real estate partnerships and consolidating real estate holdings.
- LLCs are excellent tools for estate planning purposes.
- Owners desiring to withdraw money from the company on some basis besides ownership percentage or salaries.
- Owners are personally guaranteeing the company’s debt.
- Different types of owners exist, such as trusts, aliens, estates, etc.
- When liquidating the company, the owner desires to retain the assets.
- Joint ventures or short-term ventures between companies or individuals.
- Holding passive investment assets such as stocks, bonds and raw land.
- Several operating businesses are owned by the same person(s) or company and management desires to utilize the benefits of a parent company structure.
- An LLC is a good entity of default when no single entity seems preferable.
Reasons Not To Operate As An LLC
- Earnings are often subject to self-employment taxes even though they are not distributed to the managers.
- When problems exist among owners and the formalities associated with a corporation have not been observed.
- Difficulty exists in keeping track of members’ and/or their addresses.
- You are a minority owner and distributions to pay for income taxes are not required.