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efete1

separation of LLC's?

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Hi all

 

Hope everyone is having a great summer!

 

Quick question for any resident legal experts:

 

I have an LLC for CA's. I started it as a general entity for investing 2 years ago but mainly use it for CA's.

 

If I wanted to buy and hold property would it cause a problem using this entity or should I have one for CA's/wholesaling, and one for buy and holds or does it really matter? I have read both sides of this argument and just wanted to see if anyone had a great answer from an attorney (I am in OH BTW) or other expert, etc.

 

Thanks and take care everyone!

 

Eric

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If you are going to buy and hold, I would suggest a separate LLC if you are actually holding title to properties.

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I am not a legal expert; my understanding is that an LLC protects your personal assets, so if someone goes after the LLC, everything in that specific LLC is up for grabs.

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I am not a legal expert; my understanding is that an LLC protects your personal assets, so if someone goes after the LLC, everything in that specific LLC is up for grabs.

That's my understanding, also, but keep in mind I flunked geometry in high school. . .twice. :D

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Not only would you want separate LLC's for liability purposes, but for tax purposes as well. The income from your CAs and wholesaling is considered "dealer" (earned) income for tax purposes and is subject to self-employment tax. Your buy and holds generate rental (passive) income that is not subject to self-employment tax. There are capital gains concerns as well. You don't want to mix the two. Separate LLC's is the way to go.

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