Combine the features of a corporation with the tax benefits and flexibility of a partnership with an investment LLC. This retirement strategy allows you to truly diversify your portfolios while still maintaining control over your future.
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There are many benefits of an LLC as a legal entity, including personal asset protection for members of the LLC, limited compliance rules, limited liability protection, and less rigid management structures.
Additionally, LLCs offer significant tax benefits that make them an attractive option for business owners and investors. One of the key advantages is pass-through taxation, where the business entity itself does not pay income taxes. Instead, profits and losses are "passed through" to the individual tax returns of the owners, simplifying the tax process and potentially reducing the overall tax burden. It's of course important to review tax returns and the articles of incorporation to ensure your LLC is set up correctly for tax purposes, maximizing the benefits of this pass-through entity. Unlike a C-Corp, which is taxed at the corporate level, LLCs provide tax advantages by avoiding double taxation. This makes LLC formation ideal for those seeking a flexible business structure with favorable tax implications. Additionally, understanding the tax benefits of an LLC, especially in comparison to other entities like C-Corps, is crucial for anyone considering an LLC for investment purposes.
Many have heard about LLCs concerning a startup, small business or as a single-member LLC. However, family members can also create an LLC to protect the assets of a family business and personal liability against claims by creditors and assist in estate planning.Individual investors can also set up an investment account in LLCs as part of their retirement plan with a self-directed IRA (SDIRA).
With this option, LLCs can be used to truly diversify investments through a variety of investment avenues, including:
The IRS prohibits investing in collectibles, like artwork or jewelry, S-corporations, and life insurance.
Nevertheless, many people prefer investing in LLCs because it allows them to direct their money toward an industry, field, or entrepreneurs they are passionate about. This flexibility can be a real selling point for certain investors.
The books and records of the LLC, owned by an IRA, must be kept in accordance with IRS regulations for IRAs. Don't ignore the IRS' prohibited transaction rules for this business structure!
Once you have determined that an LLC is suitable for you, a brokerage account can be purchased with your Self-Directed IRA or another retirement account at Mainstar Trust. Filing fees may apply. Click below to find out how to meet with a Mainstar Trust team member to invest in an LLC today.