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What You Need to Know About Investing in a Limited Liability Company (LLC)

By Brian Davis, Business Development Manager
bdavis@theentrustgroup.com

LLCs are one of the most popular investments I see self-directed IRA account holders participating in. An LLC is a legal company that limits liability for its members, while providing some tax advantages. Typically, LLCs are used as a vehicle for participants, or investors who have a specific set of investment objectives. A necessary element of the LLC is an operating agreement, which characterizes how the LLC is to conduct is affairs and investment goals. Some clients create their own LLC for the sole purpose of investing their IRA funds, while some pool their monies with others in an LLC to make investments. Further, there are others who are looking to invest in a private company that has been previously set up as an LLC. You should definitely meet with and discuss this option with your accountant, CPA, or other financial professionals to decide if this strategy is right for you.

How do you use funds from your Entrust self-directed IRA account to invest in an LLC? The answer to that question is simple: We need the LLC’s operating agreement, with the IRA being listed as the member; and the IRA holder’s signature with a written “read and approved,” to signify that the IRA holder has an understanding of their IRA’s investment. Entrust also requires a “Buy Direction Letter,” or BDL, to be filled out by the client. Once we have the signed operating agreement and BDL, Entrust can fund the investment within two business days.

Entrust makes it easy to use your self-directed retirement plan for alternative investments, like LLCs. We’re available to discuss you’re individual investment scenarios, and provide information on a variety of alternative investments. Please feel free to e-mail, call, or drop by our office.

By Brian Davis, Business Development Manager
bdavis@theentrustgroup.com

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This entry was posted in Beginner's Advice, Entreprenuership, Expert Advice, Financing, Market, Ryan's Blog, Tips & Standards, Uncategorized. Bookmark the permalink.

2 Responses to What You Need to Know About Investing in a Limited Liability Company (LLC)

  1. gordon says:

    my cpa said that state of ca will add a tax based on amount of sales. so if you sell 5 100k houses for only 50k profit, they will say you had 500k in sales and there is an extra tax for that . Have you heard of that?

  2. Ryan Moeller says:

    No, I have not heard of that but that would further cripple the real estate market.

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