LLC Setup & Maintenance
Chicago LLC Setup Attorneys
LLC Setup & Maintenance
A limited liability corporation (LLC) is an entity you can establish for tax and business reasons, with a healthy dose of creditor protection. Tax wise they are similar to an S Corporation rather than a C Corporation in that an LLC passes income directly through to its owners, thereby avoiding a separate tax return.
LLCs are very flexible, generally more so than a corporation. Rather than shareholders, LLCs have “members,” who divide profits according to percentage ownership. Once an LLC I formed, there is little formality other than paying the state its yearly fee, which is about twice the amount that corporations pay. Unlike a corporation, it is not necessary to keep annual minutes, though some advisors recommend doing so.
If the main purpose of the LLC is liability protection, it has a better chance of withstanding attack if there is more than one member. Over the past few years, the LLC has become the entity of choice for owners of rental buildings because of the liability protection they offer, even those that are owned by a single member. Still, if you own rental real estate, whether it is residential or commercial, your best liability protections remains liability insurance coupled with an umbrella policy.
If you own various pieces of real estate, a Series LLC may be your best bet. You can equate the primary LLC as a parent company that has various sections (“Series”) each owning a different parcel of real estate or involving different business ventures. Each individual series then has its own box that can be walled off to insulate liability.
Let us say that you own five different parcels of investment real estate and a catastrophe occurs on the premises of one of the properties. In most cases, good insurance will take care of the owner’s liability, but what if there are truly huge damages? With a properly established Series LLC, the liability can only go as far as the series/parcel responsible for the catastrophe. The rest of your holdings in the parent LLC are insulated. A benefit of using a Series LLC over separate LLCs is that only the parent LLC must file yearly reports with the State of Illinois instead of each separate LLC, saving administrative costs. Also each series passes income through to the parent LLC, so that only one annual tax filing is required, simplifying your tax reporting.
If you live in the Chicago or Lake County area, and need an experienced LLC setup attorney, please contact Matlin and Associates.
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