Limited liability companies, also called LLCs, are an increasingly common form of business organization. They have many attributes in common with corporations but are often taxed as partnerships. Uniquely, if there is only one owner, they can be treated as a disregarded entity for tax purposes. The option to have an entity with its other organizational features without having to file a federal income tax return is enticing in order to minimize expenses. However, in recent years, creditors of various kinds have challenged the protective features of single member LLCs, especially those entities being used to merely hold investments such as stocks and bonds. The income tax consequences have not changed, but their attributes of limiting creditors to charging orders as the exclusive remedy is increasingly coming under attack.
As a result, if you have a single member LLC, especially one used to hold liquid investments, we would encourage you to call us or set up an appointment to discuss if establishing another member such as a spouse or child might be appropriate.