I don't think that is a factor at all, LLC are recognized very widely and especially by the IRS, which is what really matters, right.
As long as you form a s-corp you avoid the double taxation of a c-corp, since profits are passed through to the shareholder(s) and taxes are based on your personal tax rate. S-corps require more paperwork to keep current than a LLC.
I think the advantages of the s-corp come into play when you become more successful, it is much easier to raise money in a s-corp, you can sell shares. Ownership can be transfered easily and the corporation exists as an independent legal entity you it has continyous existence. Retirement funds, defined contribution plans and pensions are more easy to set up when you are a corporation.
[addsig]
LLC has been widely proven in courts, depends on where you are talking about. In fact, Delaware came under attack for this a while ago and stepped back up there level of security for all types of businesses. They all offer the same level of protection to some degree, it's just what you need in regards to taxes...pass through, double, etc.
Speak with someone who really knows about LLC's before you decide it's not for you.
The difference between the two has more to do with taxation than asset protection. Both offer asset protection and are widely used for different tax reasons. When I structure someone for asset protection I do not think twice about using and LLC unless the taxes will work for my client.
[addsig]
Keep in mind most lenders do not want to lend in the name of a corp or LLC for residential property (1-4 units). If you are doing flips there are tax advantages using a C-corp, but if you are holding longer term and are going to need to refinance the property you will probably be better off holding it in your own name. If you are worried about liability get insurance, LLC or corp will not necessarily protect you, insurance will.
In all due respect, insurance won't protect you for an instant once you top out of their coverage, then your personal assets get to be sold off to pay the judgement. Plus, Insurance companies have a large staff on hand whose only job is to find ways to deny claims and not protect you.
Also, don't forget how the whole game works. People with no assets don't get sued very often.
Lawyers like to get paid, so the first thing they do in a case is check to see what the potential payoff could be. If they do some research and find that you own 10 houses and have a net worth of 2.5 million they are going to start salivating like Homer Simpson over a jelly donut.
If they find out you don't have any assets worth going after, they will advise their client that they would love to take their case but you are going to have to pay me by the hour since the contingency doesn't look very good. The lawsuit won't even get off the ground at that point.
[addsig]
You have to look at your situation and define your goals. There are reasons why every entity was established and you have to define your goals, consult with a knowledgable CPA or Tax attorney, and chose the best vehicle for you. There are many ways to establish these entities and a good CPA will point you in the right direction.
I don't think that is a factor at all, LLC are recognized very widely and especially by the IRS, which is what really matters, right.
As long as you form a s-corp you avoid the double taxation of a c-corp, since profits are passed through to the shareholder(s) and taxes are based on your personal tax rate. S-corps require more paperwork to keep current than a LLC.
I think the advantages of the s-corp come into play when you become more successful, it is much easier to raise money in a s-corp, you can sell shares. Ownership can be transfered easily and the corporation exists as an independent legal entity you it has continyous existence. Retirement funds, defined contribution plans and pensions are more easy to set up when you are a corporation.
[addsig]
LLC has been widely proven in courts, depends on where you are talking about. In fact, Delaware came under attack for this a while ago and stepped back up there level of security for all types of businesses. They all offer the same level of protection to some degree, it's just what you need in regards to taxes...pass through, double, etc.
Speak with someone who really knows about LLC's before you decide it's not for you.
Christian "The Solutions Kid" Beebe
[addsig]
The difference between the two has more to do with taxation than asset protection. Both offer asset protection and are widely used for different tax reasons. When I structure someone for asset protection I do not think twice about using and LLC unless the taxes will work for my client.
[addsig]
Keep in mind most lenders do not want to lend in the name of a corp or LLC for residential property (1-4 units). If you are doing flips there are tax advantages using a C-corp, but if you are holding longer term and are going to need to refinance the property you will probably be better off holding it in your own name. If you are worried about liability get insurance, LLC or corp will not necessarily protect you, insurance will.
In all due respect, insurance won't protect you for an instant once you top out of their coverage, then your personal assets get to be sold off to pay the judgement. Plus, Insurance companies have a large staff on hand whose only job is to find ways to deny claims and not protect you.
Also, don't forget how the whole game works. People with no assets don't get sued very often.
Lawyers like to get paid, so the first thing they do in a case is check to see what the potential payoff could be. If they do some research and find that you own 10 houses and have a net worth of 2.5 million they are going to start salivating like Homer Simpson over a jelly donut.
If they find out you don't have any assets worth going after, they will advise their client that they would love to take their case but you are going to have to pay me by the hour since the contingency doesn't look very good. The lawsuit won't even get off the ground at that point.
[addsig]
You have to look at your situation and define your goals. There are reasons why every entity was established and you have to define your goals, consult with a knowledgable CPA or Tax attorney, and chose the best vehicle for you. There are many ways to establish these entities and a good CPA will point you in the right direction.
Put a team together and use the players.
And LLC's have withstood the test of time. They are old news in in other country's, just somewhat new to the states.
LLC's have been proven in the courts.