Re: S-corp Vs LLCs - Posted by Bud Branstetter
Posted by Bud Branstetter on April 11, 2000 at 21:32:48:
I have a friend that has an S corp he formed a number of years ago for his rental properties. The net income flows through to him personally. It would be no different with the LLC. What would be the difference is if he personally were sued and lost. His shares of the S corp could be attached and he would lose control. The properties would be sold to satisfy that creditor.
Not so in the LLC. The best that the creditor could do is get a charging order for his limited interest. The sale would not be forced and he would still be in control. The way he would be in control is that the general partner is his C corp. He would be chairman with voting rights irrevocablly assigned to him. He may not own the shares but he would still be in control.
Whether you think you will get sued personally is up to you. But the asset protection tool is to hold income producing assets in the limited liability entity. Charging orders would be better than forced sale. Don’t forget the liability insurance.