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LIMITED LIABILITY COMPANY (LLC)
An LLC is much like a Toyota Prius.
What this means is that you get the limited liability protection of a
Corporation, while still being taxed as a partnership. It is considered a
flow-through entity in which there is no double taxation (much like an S
Corporation, but profits and losses do not have to be divided on a pro-rata
basis.
The advantages of an LLC are:
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Good liability
protection for members, managers, and employees
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No limitation
on number or type of owners
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No limitation
on classes of membership interests
The disadvantages
of an LLC are:
With LLCs, there
are two different types of management structures - Member Managed and Manager
Managed. Member Managed means that if you are a member of the LLC, you are
also entitled to manage the LLC based on yor proportionate interest in the LLC.
However, with Manager Managed LLCs, Managers can also be members (someone with
an interest in the LLC), but they do not need to be. It can be a family
member, a friend, etc.
Unfortunately, with
Member Managed LLCs, members are not entitled to self-employment tax breaks
corporations are entitled to because all members are managing the corporation -
basically, they are considered employees. However, if you can show to the
IRS that you are not heavily involved in the management of the LLC, you can
argue to to the IRS to minimize Self-Employment tax.
Typically, real
estate ventures are managed through LLCs rather than Corporations for various
reasons. Contact us to learn more!
We invite you to discuss your business
with us. We can help protect you and your family! Call now for
a free consultation. You may reach our office at (310)205-5529.
Remember...Failing to
Plan is Planning to Fail!







LAW OFFICES OF ALON DARVISH
9454 Wilshire Boulevard, Penthouse
Beverly Hills, CA 90212
Tel: (310)205-5529
SERVING LOS ANGELES COUNTY
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