Do any of you incorporated llc to avail the new tax benefits? Especially the 20% pass through taxation. If so, what kind of business are you incorporating for? Rentals / Stocks / interest income? I know rental income can be covered and applicable as a business. How about stocks and bank interest? And moreover how about your company stocks? Which state are you incorporating?
Check your state laws. In some states if your offices are in the state, you need to be registered as an LLC in that state.
Of course, free money plus liability protection. Massive tax cut this year as well.
Ca is annoying and require you to register California LLC
Can you have duplexes in CA and register the LLC (i.e. cheaper fees) in another state?
Yes. But you also need a California one unless you can somehow get around the whole “doing business in California” part, and get an out of state address for the company.
LLCs have always been awesome. Liability protection Ownership opaqueness Property transfers “Goodwill” write downs Yum.
Setting up and keeping LLC costs money (annual state registration fee, franchise tax, lawyer fee, etc.) each year. If you are running real estate property (landlord), filing schedule E, you really don't have to need to set up LLC. Protection from lawsuit also is not guaranteed if it was the owner's intentional negligence case.
Your business needs to clear 100K a year to be worth it.
Why so? Let’s say I make 5k profit after all expenses. Today I pay close to 45%tax fed and state included. The Corp tax would be close to 30% with 8.5% ca state included. Or if I avail the pass through it will be 20% less. Even with 1200 yearly llc cost, it would still be beneficial. Right? I am trying to understand this myself so my calculations could be wrong.
There's additional costs (quarterly filing, accounting) that come with incorporating, so the 100k is the approximate theshold where the tax rate difference will overcome those expenses.