Discussion:LLC General Opinion of this Form of Business
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Discussion Forum Index --> Tax Questions --> LLC General Opinion of this Form of Business
| 30 October 2006 | |
| I'd like to get a general feeling from the board about how your experiences have been with LLC's (1065). I seem to be "cursed" by them this year (ones that have had a prior accountant), and I'm pulling my hair out. It seems that partnership accounting can get really screwed up in a hurry. The clients have no appreciation of the fees that have to be charged to straigten things out, no comprehension of what the operating agreement provides for. I can see a lot of advantages to them, but it also seems theres not much in them for the practitioner but grief. Any fellow travelers? | |
Bottom Line (talk|edits) said: | 30 October 2006 |
| I'm getting several that want to be an LLC but when you ask them why, they can't tell you. It's the latest buzz word so they think it's got to be right for everyone. | |
| 31 October 2006 | |
| Partnerships in general are the most difficult tax laws and type of entity to understand. Add LLC on top of that and the issues mount. I try to avoid LLCs unless they are real estate or SMLLC. There are too many unresolved issues and getting into and out of an LLC/partnership is too difficult to make them worth it. That's my opinion only, but I've dealt with too many over the years to feel any differently. | |
Death&Taxes (talk|edits) said: | 31 October 2006 |
| Three years ago a Husband and wife architect team formed a LLC with her owning 55% to qualify for minority contracts; they have decided to terminate and form an S Corp with the same stock ratio. | |
| October 31, 2006 | |
| I do still aim for the S whenever I can. Except for one-man Sch. C's and rentals. I agree, the partnership law is a travesty. Riley, could you rewrite that for us? | |
| 31 October 2006 | |
| As I said, I took on some LLC's this year (mainly professional practices, the worst!!) I probably should not have taken on because I was just not prepared ahead of time. You wouldn't believe the costs I've incurred on books, research, CLE/CPE. They are flexible, there are some benefits to them, but that flexibility comes at a price. I didn't know to warn the clients ahead of time that they would have higher than average fees from me. | |
| 1 November 2006 | |
| From a personal opinion, I hate LLC's. LLC operating agreements protect the business itself and very often trample on an individual members rights to exit with a fair value given to the assets when a disagreement or mismanagement occur.
Example: LLC formed with 800 acres of land as asset valued at $6 million. 3 members. 2 original, 1 inherited. Original members retirement age have no need to maximize income or turn the land over, young inherited member wants to move forward and maximize income. Inherited member gets stonewalled on land sales/subdivision/profit maximizing ideas/etc. LLC generates a total income of $9,000 from cropland rentals. IM beats head against wall that he gets a $3,000 annual return on "his" $2 Million of assets. LLC agreement precludes inherited member from forcing a partition sale or finding a buyer for his interest. LLC agreement requires sale to other members at 60% of fair market value as determined by their representative. | |
| 1 November 2006 | |
| "Flexibility comes at a price." That is what I always tell my clients. Partnership accounting is the most flexible, but that flexibility makes it more complicated. If you need a Swiss Army knife with 6 blades, a can opener, fork, spoon, bottle opener, corkscrew, etc, by all means, buy it. But if you only need to cut a piece of string now and then, maybe a single bladed pocket knife will suffice.
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| 1 November 2006 | |
| Far easier to exit, partition, or force a sale in other forms. | |
Bottom Line (talk|edits) said: | 2 November 2006 |
| Glad to see I'm not the only one that doesn't like LLC's | |
