Single Owner and LLC .. worth it?

WannFly

WannFly

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is it worth it to set up a LLC when i am a single owner of the aircraft? what kind of hoops do i have to jump through?
 
Not in my opinion. You would need to hire a corporate attorney to do your filing and set up your bylaws, then "sell" your aircraft to the LLC. You would also then need to deal with filing two sets of taxes from thereon. Not worth it unless you are using the plane for commercial ops.
 
Sac Arrow said:
Not in my opinion. You would need to hire a corporate attorney to do your filing and set up your bylaws, then "sell" your aircraft to the LLC. You would also then need to deal with filing two sets of taxes from thereon. Not worth it unless you are using the plane for commercial ops.
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Nitpick-attorney not needed to set up/file LLC.

Agree totally on saying there may be a tax burden associated with moving the asset to the LLC. Annual Federal and state income taxes for the LLC can be filed on the sole proprietor's return. Agree that the LLC does little or nothing for the owner/pilot. Even if there was a problem, say someone rented the plane from you for a flight and had an accident which injured someone, it would probably very easy to penetrate the LLC unless one is scrupulous about handling all financial matters.
 
I am thinking that when I buy, I'd have the LLC buy it on initial purchase, that way, if I do take on a partner, I can just sell them 1/2 of the LLC instead of transferring title to the aircraft.
 
WannFly said:
is it worth it to set up a LLC when i am a single owner of the aircraft?
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Are you the only person that will be flying it? If so, than no it's not necessary.

An LLC does NOT protect against your own negligence.
 
Depends, worth it for me, I use the plane for some business so I depreciate it that way, I also have registered some vehicles under it.

No atty needed, just used a online service, not that big of a deal.
 
Clark1961 said:
Nitpick-attorney not needed to set up/file LLC.

Agree totally on saying there may be a tax burden associated with moving the asset to the LLC. Annual Federal and state income taxes for the LLC can be filed on the sole proprietor's return. Agree that the LLC does little or nothing for the owner/pilot. Even if there was a problem, say someone rented the plane from you for a flight and had an accident which injured someone, it would probably very easy to penetrate the LLC unless one is scrupulous about handling all financial matters.
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Nitpick-Understood attorney not needed, but highly advisable unless you know what you are doing.
 
MIFlyer said:
I am thinking that when I buy, I'd have the LLC buy it on initial purchase, that way, if I do take on a partner, I can just sell them 1/2 of the LLC instead of transferring title to the aircraft.
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The LLC costs money to setup. And in some states there are annual fees to keep it going.
 
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James331 said:
Depends, worth it for me, I use the plane for some business so I depreciate it that way, I also have registered some vehicles under it.

No atty needed, just used a online service, not that big of a deal.
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Here in Colorado one can use the state's website to file. No third party and added fees required.
 
citizen5000 said:
The LLC costs money to setup. And in some states there are annual fees to keep it going. Why suffer those costs before you need to?
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Cost to set up? Maybe $125 total. Annual fee? $10. Big whoop.
 
well, i will be flying her alone, no commercial op, no renting out (its my baby and no one is riding..er flying her). from the discussion it sounds like the LLC will not protect me if i get sued by some farmer for buzzing his barn.. if so, i aint taking the hassle of more paperwork. my life is filled with manuals, AD, log books and gazillion other papers already
 
James331 said:
No atty needed, just used a online service, not that big of a deal.
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This varies greatly state by state. I wish all states made it that simple. Lucky you! (sincerely)

Clark1961 said:
Cost to set up? Maybe $125 total. Annual fee? $10. Big whoop.
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Careful. Your experience might have come from a single state. Not all 50 states use the same rules and set the same cost. You are lucky that your prices are this low. Others aren't.

citizen5000 said:
The LLC costs money to setup. And in some states there are annual fees to keep it going.
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Best answer so far.
In some states, hundreds of $$ for both. :(

Kind of like personalized license plates. In some states, you pay $15 for life. In others, you pay $150 every year.
 
You want an LLC if you plan to have partners or if you want a tax dodge for some income. Other than that it isn't really worth the funds and hassle to set it up.
 
Other than taxes/money, the other reason to use an LLC might be liability. That's fine - you can protect the owner, but the pilot will always be fair game.

Doesn't really seem to be a reason to do it.
 
bflynn said:
other reason to use an LLC might be liability.
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An LLC can be pierced in cases of negligence or a crime.

And a court may pierce the veil in a debt proceeding. At that point the owners, shareholders, or members of a corporation or LLC can be held personally liable for debts. This means creditors can go after the owners' home, bank account, investments, and other assets to satisfy debt.
 
IMO, not worth it. Here in California, you get the honor of not only paying to setup the LLC, but $800 annually to maintain the LLC, plus filing of taxes for the LLC. Not sure if this is the same in your state or not, but probably best place to start is with your accountant.

Personally, I would either register the aircraft in your name or, if you've setup a trust for you and your family, put it in the trust's name. If you're worried about having your address publicized, then just rent a PO Box and register to that address.
 
steingar said:
You want an LLC if you plan to have partners or if you want a tax dodge for some income. Other than that it isn't really worth the funds and hassle to set it up.
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Partners, yes. Tax dodge? Talk to your accountant - as a pass-through entity it may be no different than a sole proprietor that is not a company, there are rules on personal use of vehicles that you need to consider.

Ryanb said:
LOL not even close. If only LLC's were that simple.
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As with everything else, it depends, and it depends on where. In my state it's about $100 to set up an LLC and about half that annually for the LLC registration. The State even sends a very simple operating agreement (if you have partners or anything other than a very simple LLC, you'll need to have a longer operating agreement drafted and then signed by the other partners). You'll need a federal tax ID (also online), and depending on jurisdiction you may need a local business license. As well as maintaining adequate books and records.

For a money-making business or with partners where liability needs to be isolated, it makes perfect sense for a number of reasons. To just acquire a sole-owned plane in the entity, probably not. If you have reason to keep the asset "hidden" from public view (i.e. you don't want it to show in the registration database under your name), an LLC may be desirable but probably ought to seek good legal advice away from the internet - such structures are used to acquire real estate in some jurisdictions to put a barrier up against easy public viewing of the underlying owner.
 
citizen5000 said:
An LLC can be pierced in cases of negligence or a crime.
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And if you are a one-man show, they likely don't have to "pierce" anything. You're liable for your own acts and they will just sue you directly.
 
flyingron said:
And if you are a one-man show, they likely don't have to "pierce" anything. You're liable for your own acts and they will just sue you directly.
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Exactly. An LLC provides some protection against liability from the acts of the other partners, but zero protection against your liability. And even with and LLC you may have to mount a defence against the acts of partners to prove that your liability is isolated.
 
BigBadLou said:
This varies greatly state by state. I wish all states made it that simple. Lucky you! (sincerely)


Careful. Your experience might have come from a single state. Not all 50 states use the same rules and set the same cost. You are lucky that your prices are this low. Others aren't.


Best answer so far.
In some states, hundreds of $$ for both. :(

Kind of like personalized license plates. In some states, you pay $15 for life. In others, you pay $150 every year.
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Nobody has to set up the corp in their home state.
 
Ryanb said:
LOL not even close. If only LLC's were that simple.
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They are. I set one up two years ago. Maybe you need to learn a bit before you deny.
 
wsuffa said:
Partners, yes. Tax dodge? Talk to your accountant - as a pass-through entity it may be no different than a sole proprietor that is not a company, there are rules on personal use of vehicles that you need to consider.
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I have seen it done in my state.
 
Clark1961 said:
Cost to set up? Maybe $125 total. Annual fee? $10. Big whoop.
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Yes, and I think it would avoid me having to pay 10% sales tax later. I'd pay it when acquiring the aircraft, but not on selling some LLC shares to the new partner. this would be a lot of $$
 
The LLC becomes the registered owner of the aircraft. In other words, if you live in California and you setup an LLC in Nevada for the plane the FAA will frown if you give a bogus address (like a PO Box) for the LLC.
 
citizen5000 said:
The LLC becomes the registered owner of the aircraft. In other words, if you live in California and you setup an LLC in Nevada for the plane the FAA will frown if you give a bogus address (like a PO Box) for the LLC.
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The FAA only cares about the address for the legal owner of the airplane. If the owner of the airplane is an LLC, the FAA wants the LLC's address, even if that's in Nevada (or any other state). The FAA does require that you provide a physical address, though. There's nothing "bogus" about living in one state and owning an LLC in another state with property registered to it.
 
Clark1961 said:
They are. I set one up two years ago. Maybe you need to learn a bit before you deny.
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Im aware of how an LLC works. It's not as simple as just slapping down 125$. A significant amount of legal documentation is required for the issuance as well as the ongoing complicance to keep it active. I don't want any wandering minds assuming the process is quick and easy.
 
bradg33 said:
FWIW, that article has virtually no application to an owner-pilot registering an airplane to an LLC. It's a mishmash of issue relating mostly to "flight department companies," which are in fact a regulatory problem.
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The article has general applicablity for LLC and aircraft owner(s). Sole owners have no reason to have one. Partnerships not generating income have no reason for one either.
The FAA and IRS do not want to see anyone setting up arms length entites where the principals are nowhere near where the entity exists. The same applies to paying property taxes on the plane. If you pretend to hangar the plane in one state/county to get lower taxes but live in another you will run into a wall eventually.
 
citizen5000 said:
The article has general applicablity for LLC and aircraft owner(s). Sole owners have no reason to have one. Partnerships not generating income have no reason for one either.
The FAA and IRS do not want to see anyone setting up arms length entites where the principals are nowhere near where the entity exists. The same applies to paying property taxes on the plane. If you pretend to hangar the plane in one state/county to get lower taxes but live in another you will run into a wall eventually.
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Privacy is one reason to have an LLC as a sole owner. For a co-ownership situation, liability protection is a perfect reason to have an LLC.

Neither the FAA nor the IRS care about where the entity is registered so long as the necessary formalities are followed and (for the IRS) taxes are paid. Property taxes are another matter entirely, and rarely depend on where the property is legally registered, but on where it's kept/used. Again, noting per se improper about registering a plane in saw Delaware and keeping it in New Mexico.
 
Ryanb said:
Im aware of how an LLC works. It's not as simple as just slapping down 125$. A significant amount of legal documentation is required for the issuance as well as the ongoing complicance to keep it active. I don't want any wandering minds assuming the process is quick and easy.
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It depends entirely on the state. I recently setup an LLC to own my new-to-me airplane (really just for privacy). The state the LLC is formed in doesn't require a written operating agreement, and has a "form" Articles of Organization. Took maybe 15 minutes to complete the online paperwork and cost $160 to file. The annual fee is $50, the state annual report takes about 5 minutes to fill out, and the tax paperwork is inconsequential because the LLC generates no income. It's a bit more work if the LLC has multiple members, as there are a few more formalities that need to be followed to avoid veil piercing.
 
Ryanb said:
Im aware of how an LLC works. It's not as simple as just slapping down 125$. A significant amount of legal documentation is required for the issuance as well as the ongoing complicance to keep it active. I don't want any wandering minds assuming the process is quick and easy.
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Is that as opposed to illegal documentation? Anyway all you really need is a credit card and the ability to fill out some forms. Nothing stressful. Plenty of educational material available.

Ongoing compliance is paying the state $10/yr via a website. Taxes are filed on my return.

Why do you want to mislead wandering minds about the process? It is quick and easy.
 
citizen5000 said:
An LLC can be pierced in cases of negligence or a crime.
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Yes, of course it can. But a pilot can be sued directly, so trying to shield yourself with an LLC is pointless.
 
See it like this. Your LLC owns the plane. You are in your car and you kill someone. They sue. They win. If properly structured they cant take the plane as its not owned by you.

We use several layers of LLC and trusts to protect my family's assets. Go through one bad law suit and trust me, you'll wish you had.

Take care of this when the financial waters are calm.

It must be done correctly or yes it can be pierced.
 
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EminiTrader said:
See it like this. Your LLC owns the plane. You are in your car and you kill someone. They sue. They win. If properly structured they cant take the plane as its not owned by you.

We use several layers of LLC and trusts to protect my family's assets. Go through one bad law suit and trust me, you'll wish you had.

Take care of this when the financial waters are calm.

It must be done correctly or yes it can be pierced.
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good point. on a totally non related event, in last 2 months I have been threatened by 2 different individuals that they will sue me for something stupid, in both cases my reply to them was here is the local court house address, take $35 and knock yourself out. nothing happened because they were just empty threats, but I see your point. I am gonna have to talk to my attorney and see what she thinks
 
Yes. Listen to your attorney. Not a bunch of pilots.

For me there is no other way. My properry is all owned under Florida Land Trust with out of state LLC as trustee

Everything else i have has at least two layers. My personal bank account has maybe 200 bucks. Its my early-warning system. Thats what the lawyer calls it. Everything else is in multi-member llcs and trusts.

Yes i pay about 1000 per year in fees but i am as close to bulletproof as one can get. Nothing is perfect though and you need a lawyer that specializes in this sort of thing.

Well worth it. You only need to lose everything once to learn to protect it from the onset. Good luck!!
 
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