Tax Guru-Ker$tetter Letter

Friday, November 11, 2005

LLC In Corp Or Personal Name?

From a client:

Subject: LLC Partnership question

Hi Kerry,

I've been a partner of a start-up business which now is going to be formally incorporated as LLC taxed as a partnership. My question is whether I should become partner of this company myself or rather make my existing C corporation a partner? How can you compare advantages/disadvantages of the two approaches?

thanks

My Reply:

Having your corp as the LLC member has all of the advantages as running your other income through the corp.

You can manipulate tax year timing with the corp's fiscal year. LLCs and individuals must use tax year ending 12/31/0X.

You can avoid 15.3% SE tax.

You also have more liability protection with the extra layer between the LLC and you.

Kerry

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/11/2005 11:36:00 AM Send this post: