12 LLC Strategies to Protect Your Assets and Financial Future

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The proper LLC strategies will help ensure your assets are really protected. Unfortunately, most will file a “simple LLC” online for the least amount of money and are later surprised when they are not protected.

First, let’s look at the history of the LLC. The Limited Liability Company (LLC) is a powerful entity that originally started in Wyoming in 1977 and became more popular in the late 1990s. It is a hybrid between a partnership and a corporation. Most are unaware that an LLC can be taxed in four different ways: disregarded, partnership and S or C corporation.

The IRS established federal default rules to simplify this determination in 1997. A one-member LLC by default will be taxed as a disregarded entity for tax purposes and a two-member LLC will be taxed as a partnership for tax purposes.

Which LLC is Best?

Which LLC is Best?

Now let me share with you 12 LLC secrets that will not only keep you up out of tax trouble but help you better avoid pitfalls down the road.

  1. Can an IRA invest in an LLC? Yes, but…This is a popular strategy when looking for different investment options for retirement funds. Many are looking to take advantage of the real estate market to invest in and find they do not have the money personally to invest, but their IRA does. This strategy involves moving your IRA to a self-directed IRA and the IRA becomes the member of an LLC. In other words, the investment is in the membership interest of the LLC.

    There are a couple of major issues with this strategy that could create problems with the IRS. First, if you are the manager of the LLC and you are on the LLC checking account that has IRA funds, that means you have “checkbook control”. There are prohibited transactions in where you cannot use that money, but more importantly, is that the signer on the account may use the LLC money for personal use which is a big problem and could create serious IRS issues. The second issue centers around who can be the manager of the LLC. Can it be you also? Is that self-dealing?

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