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JerseyJeff

Writing checks through LLC.

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DaveT,

 

Thanks for the advice.

 

I fear that you may compromise the personal liability protections afforded by a Limited Liability Company. Why give the lawyers grounds for attaching your personal assets and successfully piercing your LLC's personal liability shield, when you can avoid this by having a separate bank account for your business? 

This was my biggest concern, and I agree.

 

One question though; one of the reasons to get an LLC, is that if the unfortunate occurs, and you get sued, they can't get to your personal assets. If I have a business, LLC bank account, I am assuming any money in that is fair game for lawyers should a suit arise. If this holds true, should I deposit the check from the T/b into the business account, and then withdraw the money out after the check clears to my personal, or another account for a single entity LLC, or disperse funds equally for a LLC partnership?

 

Thank you.

 

JerseyJeff

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JerseyJeff,

 

Didn't you start this discussion off by saying that you are doing sandwich lease options?

 

If so, then any money received from your tenant-buyer gets deposited into the business account. Next you make your disbursements from your business account to your creditors. Remember, if you are in a sandwich lease, you are still the master tenant and pay "rent" to the landlord-seller from your business account.

 

How much money are you really talking about here? If your "cash flow" is only a couple hundred dollars per month, I don't think a lawyer will get too excited about attacking your business assets.

 

Moreover, If you have a checking account that requires a minimum balance to defer monthly statement charges, why withdraw what little will be left in the account just because you are a little paranoid about asset protection?

 

If you really want to know if routinely stripping the business account of all its liquid assets will minimize your liability exposure, you will have to ask your attorney. Additionally, if your business is a disregarded entity, you will have to ask your CPA whether your activities dictate that you should be taking a reasonable salary and paying your self-employment income tax.

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what I would do....

 

deposit all income from properties into business account, then withdraw to pay yourself, that way you don't screw mr.taxman.

 

Anyways, I wouldn't worry about the OOPS in this business. If you are quick to fix them then don't worry about it. It will take a while and any lawyer would NOT want a court appearance unless you are being difficult and not compromising and fixing the mistakes.

 

Don't worry about the company assets! Get insurance to cover OOPS! That way the insurance company has you covered and not your assets. Plus, it puts another hurdle a lawyer needs to jump through. Plus get a good attorney (another hurdle) The more hurdles you throw at a potential suing lawyer, the more of a chance that they will back down and the more time you have to fix your mistake.

 

Always fix your mistakes, and always cooperate with lawyers.

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