Legacy Builders
29: Are LLC’s a Waste Of Your Money?
Are LLC’s a waste of your money and time to set them up? It Depends!
Let’s be honest - like any other tool and strategy, it depends on where you are as an investor or business owner. Let me ask you a few questions to determine if an LLC is right for you
Do you own a business?
Do you own rental real estate?
If the answer is no, then most of the time you do NOT need an LLC. I see some people setting up LLC’s for ZERO reason. Maybe they think they need an LLC for their car or because they think it will help for TAX purposes - hint: LLC’s don’t help you for tax purposes.
In fact, I regularly advise clients for asset protection and if they come to me and say they have neither rental real estate or a separate business, then I usually remind them it is a bit early in their journey to spending money on LLC’s.
BUT - if you do have a business, YOU DO Need to consider and LLC or other entity strategy
Why? Well, do you like the idea of signing all of your business contracts and arrangements in your personal name? What do you think will happen if you get into a contract dispute with a vendor or customer? They will be suing you PERSONALLY.
This is known as privity of contract - this is the risk you run, even in a low-risk business, that you can protect yourself from by setting up an LLC for your business. Additionally, depending upon the type of business and how much you are making, you could set up your LLC to be taxed as an S-Corp which could also provide you the benefit of paying less in self-employment tax.
Ok, what about rental real estate? What if you are renting out an Airbnb or a long-term rental or a duplex or apartment building? Here, you have much more risk because you stand to lose a LOT! First, if a lawyer sues you, they could force the sale of your property, take all of your equity and cash flow but they can also sue you personally for all of your other assets you own - which could be devastating!
Get a practical and effective plan to protect your investments: https://www.strlawguys.com/
Free Guides:
5 Best Protection Strategies: https://www.strlawguys.com/5-strategi...
Example of Asset Protection Plan: https://www.strlawguys.com/a-case-stu...
Ultimate Guide to Short-Term Rental Insurance: https://www.strlawguys.com/the
Are LLC’s a waste of your money and time to set them up? It Depends!
Let’s be honest - like any other tool and strategy, it depends on where you are as an investor or business owner. Let me ask you a few questions to determine if an LLC is right for you
Do you own a business?
Do you own rental real estate?
If the answer is no, then most of the time you do NOT need an LLC. I see some people setting up LLC’s for ZERO reason. Maybe they think they need an LLC for their car or because they think it will help for TAX purposes - hint: LLC’s don’t help you for tax purposes.
In fact, I regularly advise clients for asset protection and if they come to me and say they have neither rental real estate or a separate business, then I usually remind them it is a bit early in their journey to spending money on LLC’s.
BUT - if you do have a business, YOU DO Need to consider and LLC or other entity strategy
Why? Well, do you like the idea of signing all of your business contracts and arrangements in your personal name? What do you think will happen if you get into a contract dispute with a vendor or customer? They will be suing you PERSONALLY.
This is known as privity of contract - this is the risk you run, even in a low-risk business, that you can protect yourself from by setting up an LLC for your business. Additionally, depending upon the type of business and how much you are making, you could set up your LLC to be taxed as an S-Corp which could also provide you the benefit of paying less in self-employment tax.
Ok, what about rental real estate? What if you are renting out an Airbnb or a long-term rental or a duplex or apartment building? Here, you have much more risk because you stand to lose a LOT! First, if a lawyer sues you, they could force the sale of your property, take all of your equity and cash flow but they can also sue you personally for all of your other assets you own - which could be devastating!
Get a practical and effective plan to protect your investments: https://www.strlawguys.com/
Free Guides:
5 Best Protection Strategies: https://www.strlawguys.com/5-strategi...
Example of Asset Protection Plan: https://www.strlawguys.com/a-case-stu...
Ultimate Guide to Short-Term Rental Insurance: https://www.strlawguys.com/the