LLc or Incorporated ?

blueskyMD

blueskyMD

Pre-takeoff checklist
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Bigfoot297
Sold my beloved Lance last month. I am in the process to buy a R44 and planning to incorporate in DE. Whats the difference between LLC and corporation ? pros and cons ? Also if someone has done this before any tips will be appreciated.
 
Speaking from a business owner perspective, (I've never done the plane ownership as a corporation or LLC), the LLC is much less paperwork. Both help shield assets.
 
Why in Delaware? Why not Pennsylvania, if that is where the plane and you are? You are likely to find it cheaper and easier to do it in your own state.

It also depends on just what your motivations are and who the participants will be. Frankly, if you are a one man show, it's not going to do anything but cause you extra work.
 
blueskyMD said:
Whats the difference between LLC and corporation ?
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FWIW: Each state and individual financial status is unique so best to consult a local accountant and attorney. The main difference is how taxes are handled however there are other items that may be specific to your situation like business income, etc. I used a LLC for aircraft purchase and mx business which fit my particular situation.
 
What are you planning to achieve by holding the aircraft through an entity ?

Liability protection ?
'Saving taxes' ?
Flexibility to move the plane around without stirring up sales tax inquiries ?
Are you starting an aviation business, is this aircraft going to be used as a rental ?
 
as it has been said, if your doing it for liability, dont bother, it won't do much good. for tax purposes, ask your CPA.
 
Personal liability protection under the "corporate veil" is minimal at best for a closely held corporations...meaning it is made up of just you. That will not protect yourself against the negligence of yourself...that veil is easily breached. Umbrella policy is more valuable in protection for that aspect.

Business, partnership, tax liability, or transferability is the only advantage if you are setting up a personal plane in a LLC or Corp and solo owner.

I am not a lawyer and did not stay in a Holiday Inn Express last night.
 
Shawn said:
...Business, partnership, tax liability, or transferability is the only advantage....
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You forgot anonymity. Or should I say, "attempt at anonymity."

An LLC or Corp, for plane ownership, forces anyone trying to run your N number to take the extra step of looking up your entity for the agent(s). Its actually easy to do, so it isn't much, but its something.
 
Weekend Warrior said:
You forgot anonymity. I should I say, "attempt at anonymity."
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Depends on where you incorporate. I believe Nevada is the only state that you can have a blind corporation, records are pubic in almost every other state and that only takes a few more clicks beyond the FAA registry lookup.
 
blueskyMD said:
mostly for tax liability perspective
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Eh? What tax liability are you concerned with? An LLC is likely disregarded entity in your case, so it won't affect taxes at all. A corporation will likely cause you more tax issues than less (plus the overhead of having the corporation). Pennsylvania has very few aviation taxes other than sales tax (including that on fuel). There's no personal property tax or aircraft registration (and again, an LLC/Corp won't solve those anyhow).
 
flyingron said:
Eh? What tax liability are you concerned with? An LLC is likely disregarded entity in your case, so it won't affect taxes at all. A corporation will likely cause you more tax issues than less (plus the overhead of having the corporation). Pennsylvania has very few aviation taxes other than sales tax (including that on fuel). There's no personal property tax or aircraft registration (and again, an LLC/Corp won't solve those anyhow).
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Hi Ron
Please send me a PM
 
Get some quality legal and accounting advise from a qualified attorney and tax accountant in your state. I have formed hundreds of LLC’s, mainly for the corporations that I have worked for. While there is some similarity in state law between the states with respect to LLC’s, they are not all the same and some of the differences are significant. Same can be said for taxes. While the federal tax implications are the same no matter the state the LLC is either formed in or operates in, that is not true for states taxes including income, property, business excise and any other form of taxes. I work now as a volunteer attorney in a business law clinic at the law school I graduated from. And unfortunately I see a lot of the “do it yourselfers” come into the clinic with a mess of an LLC and expect my students (or myself) to fix the problems. Best analogy might be like the person that shows up at the ER after reading a few articles on WebMd about how to remove a near-surface tumor. He gave it a good try but not successful. Yah, you can form you own LLC in the internet but like self-surgery probably not the best of ideas. And the final point is, you will never know if the LLC is formed right until you need it the most. And it may well be too late to fix the problem.
 
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