Single-Member LLC’s offer significant benefits to their owners’; whether such an entity is beneficial for your business depends on the details of your own personal situation.
As the name implies, a Single-Member LLC is a limited liability company with only one owner.
Single-Member LLCs protect personal assets from the liabilities associated with the business conducted by the LLC. If you use an LLC to hold rental property, and a tenant sues that plaintiff will be required to sue the LLC, not you personally. If the plaintiff wins the lawsuit, they will only be able to come after the assets owned by the LLC, not the owner.
Single-Member LLCs are treated as disregarded entities for federal income tax and its profit or loss will be reported on an individual member’s Schedule C as if it were a sole proprietorship. This will save the member time and money for tax preparation of tax returns, since the separate LLC is not required to file an additional tax return.
A Single-Member LLC is beneficial if you own one or only a few rental properties. As the number of your rental properties grow, it is easy and cost effective to establish a Multi-Member LLC or Multi-Entity Structure from this original structure.
Single-Member LLCs are beneficial for operational businesses that are just beginning or recently established. As the business grows the Single-Member LLC can convert to an S-Corporation when your income reaches a level to justify the cost/benefit analysis: https://www.camusocpa.com/tax/is-s-corporation-structure-right-for-your-business/#/
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Contact us today for Charlotte business finance and tax planning, and get your company in order: https://www.camusocpa.com/contact/#/