Consolidated Trusts – Limited Liability Companies
May 14, 2019 | Joe
A Limited Liability Company is a form of business entity that combines the “limited liability” feature of the corporation with the tax advantages of the partnership.
Generally, most people form corporations or limited liability companies in order to shield the shareholders or members and officers or managers from personal liability for the debts and obligations of the entity. There may also be various tax advantages to forming these entities which may not be available for sole proprietorships and general partnerships.
A limited liability company is taxed similarly to an Sub-S Corporation, because there is only single taxation. A basic difference is that, an LLC files a partnership tax return whereas an Sub-S Corporation must file a corporate tax return.
Using an LLC with Equipment Holding Trusts or Real Estate Holding Trusts have a similar function as Series Limited Liability Companies, in terms of isolating assets and liability. Additionally, using LLCs with Trusts reduces the complexities and annual operational costs when compared to Series Limited Liability Companies.
Trusts isolate assets from the business being performed, to protect both the asset and the company from legal liabilities occurring during the operation of business. However, it is recommended to avoid Business Trusts. Using LLCs with Trusts enables LLC pass through tax liability function to its members while keeping the assets separate from the business.