Advice on new building for business

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Kip18
Posts: 7
Joined: Sun Dec 11, 2016 11:55 am

Advice on new building for business

Post by Kip18 » Wed Dec 05, 2018 8:18 pm

Hello everyone! I work from out of my home and will be putting up a new building (around $75,000 when all is done). I'm wondering if I should have this listed as a personal asset or list it on my LLC. There are advantages and disadvantages to both:

Personal
I can rent it to the LLC for income. It is also protected if the LLC gets sued.

LLC
Write off taxes for the building, I believe it gets depreciated. If LLC gets sued they can come after it.

Any experience in dealing with this? This is my first rodeo doing something like this so learning as I go. Thank you!

bhsince87
Posts: 1903
Joined: Thu Oct 03, 2013 1:08 pm

Re: Advice on new building for business

Post by bhsince87 » Wed Dec 05, 2018 8:50 pm

I might face a similar situation soon. Good question!

Unfortunately, I have no answers, but will follow intently.
Retirement: When you reach a point where you have enough. Or when you've had enough.

6Pack
Posts: 29
Joined: Tue Oct 20, 2015 12:28 pm
Location: Rural Maryland

Re: Advice on new building for business

Post by 6Pack » Wed Dec 05, 2018 8:57 pm

There’s a lot more to consider: who owns the land upon which the building is built? If it’s personally owned land, you’ll need to transfer the building to the LLC in the event you sell the property. What is the nature of your business? Some businesses just have low liability exposure (such as professional organizers, seamstresses, and bakers). On the other hand, some professions are not protected by LLCs, so the individual is personally liable regardless of corporate protection (lawyers, doctors, accountants, architects). However, for these professions LLCs still offer protection against contract claims.

If you personally own the building and rent it to the LLC, all you’ll create is additional paperwork for yourself at tax time (all else being equal) because you’ll have personal income, which has to be accounted for, and a deduction from the LLC, which has to be accounted for.

You should talk to a lawyer about your specific circumstances. I know that in Maryland, we have business personal property taxes. However, if you are a sole proprietor who only has a home office, and business personal property less than $10,000, you are exempt from the business personal property taxes and tax filing.

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