Can I transfer my existing LLC to a holding company I am starting? If so how do I do it?: I currently have a LLC and I want to put it into a holding company because I plan on starting another business under itnas well.
H’s answer: Unless the transfer is prohibited by the LLC's Articles of Organization or Operating Agreement the owner of one LLC can transfer ownership to a parent LLC or a parent LLC can form a 100% owned subsidiary. When the parent owns 100% of the subsidiary LLC the subsidiary is a disregarded entity (unless it files an IRS form 8832 and elects to be taxed as a C corporation or files an IRS form 2553 and elects to be taxed as an S corporation), which means the subsidiary does not file a federal income tax return. All of the subsidiary's income and deductions are included on the parent LLC's tax return.
Any reasons to use or not to use a Business Trust?:
While I have no plans for a trust anytime soon, during some of my research a couple of months ago on a specific Delaware LLC statute, I came across a Delaware Business Trust. I did find it interesting that states allow a trust to operate a business (and also made sense since I have seen some businesses named as a trust and thought of it being just a normal trust), which been on my mind for a bit. Due to me being curious about it I decided to dig around to get more info on it, however while trying to get more information, use cases, etc., the majority of the info points to a normal Trust.
What reasons would anyone have to form and use a Business Trust over something simple as an LLC? Would there be any reasons not to use a Business Trust or would there be any risk in doing so? To my knowledge, the main risk I see would depending on if its revocable that the trustor would be liable for anything that goes on within the trust while if its irrevocable, the trustor wont be liable, but other than that and any complexity of forming one, it seems to be inexpensive way to run a business, however it still raise many questions when comparing it to an LLC.
H’s answer:
The type of entity to form is dependent on the activity of the entity after it is formed and the state or states where the entity will do business. To learn about the pros and cons of a DE business trust you need to find an experienced DE business trust lawyer.
I've been an Arizona business lawyer for 39 years and never encountered a business trust in my practice. For many years I represented the sixth largest bank in the U.S. in connection with its Arizona real estate secured loans. Not once did I ever represent the bank when the borrower was a business trust.
What to cheese: PC or S-Corp? Do I need Lawyer to do it, or I do it on-line or ask my CPA?:
Have 2 businesses: fitness studio, and I am a realtor @ a RE agency.
started making $ this year and I need to inc both ASAP.
Do I do Personal Corporation or S-C? I see some realtors S-C some PC? I need to shield from next year taxes.
I think that since the fitness business became an LLC in 2017, the tax benefits of this inc can only start as of January 2020?
But in case of the real e, as it is not LLC or anything, I can start the tax benefits as soon as we inc now, this year?
I would prefer not to wait till 01/01/2020 to rip the tax benefits...
I was also told that my medical expenses would make a difference in how I want to inc - last year, I spent 23K on medical. No employees.
So, should I do PC or S-C? The cost? Can my CPA do that or I do that on-line or I need attorney? (they take appointments in October, when I started asking around, and I need to do it ASAP)? THANKS!!!
H’s answer: You should contact an Arizona business/LLC attorney because your text tells me that you have a lot of misconceptions that need to be cleared up. The corporation is obsolete in Arizona. Arizona LLCs are formed 12 times more often that Arizona corporations. Also, the PC (professional corporation) and PLLC (professional LLC) are not needed in Arizona unless you are a realtor who wants to get commissions from your broker.