If you own rental property, you should consider if you need to establish an LLC for your business. An LLC is a limited liability company that protects owners from the debts or liability of the company. The limitation of liability is the top reason for property owners to form an LLC for their Charleston property company, but there are many other reasons as well.
Pass-Through Taxation – Business and property owners may have heard about pass-through taxation, which is a unique benefit to LLCs. This means that all profits earned from the business “pass-through” directly to the owner of the LLC who will file the business taxes. This means that earnings are not taxed before being distributed. When starting a Charleston property company, this can free up a lot of cash to invest back into your business or pay for expenses. However, many LLCs are responsible for paying a large sum of taxes after filing.
Multiple Ownership – Sometimes, there are multiple people involved in purchasing investment homes, and an LLC enables businesses to have 75+ owners all listed as members. Nonresident aliens can also be owners as well as corporations, and ownership is allowed to be disproportionate between owners and can be determined outside of investment percentage. Membership is anonymous for LLCs and can be beneficial if you don’t want your neighbors to know what business you own.
Losses Over Profits – An LLC allows the business to claim losses above each individual’s owner’s investment, which can relieve individual tax burdens. Owners are also able to be active in managing their Charleston property company without losing the benefits of limited personal liability.
If your property investment company or Charleston property company doesn’t have multiple owners, make over $100,000 per year in profits, or are not looking for anonymity, you might not need an LLC for your business.
Scott Properties in Charleston can help you manage your rental properties so you can focus on your business. Call us today at 843-790-4929 to discuss your properties.