I know, I should consult a CPA or tax specialist. But I bet this is pretty straightforward for the pros on here.

If I was going to invest money in a business, is there any advantage to investing in it as an LLC vs simply as an individual?

The business has other investors, as well as full-time employees. I would simply be a passive investor receiving an annual return.

I guess I'm wondering if doing it as an LLC somehow allows me to deduct some business expenses against those annual distributions that I otherwise might not be able to as an individual.

Thanks for any help or advice.

If you died, divorced, were subject to a lawsuit, it could alleviate some potential administrative effort for the business. You may not care about the business and saving them effort, but the costs of a potential registration could be borne by you, depending on the agreement you signed. An LLC may reduce the need to reregister, thus reducing a low likelihood cost/headache.

There isn't much benefit beyond that, IMO.

Some level of anonymity might be another.

If you are truly passive, it may be worth looking into a self-directed IRA along with investing through an LLC for reasons mentioned. Believe there is also an option for the IRA to be a Roth IRA as well.

It's been several years since I looked into this area and it may not make sense. But it these solutions have become increasingly popular for wealthy investors by deferring taxes on investment in startups and other businesses.

Involving real money or potential for real money, then check with an experienced CPA / tax specialist who deals in this area.

Best of luck!

An LLC for tax purposes is no different than investing individually. A single member LLC is reported on the Form 1040 schedule. you might get some limited liability protection from a "legal" perspective but i can't opine on that as I'm not a lawyer.

Single-member limited liability company (LLC).

"Generally, a single-member domestic LLC is not treated as a separate entity for federal income tax purposes. If you are the sole member of a domestic LLC, file Schedule C (or Schedule E or F, if applicable) unless you have elected to treat the domestic LLC as a corporation. See Form 8832 for details on making this election and for information about the tax treatment of a foreign LLC."

https://www.irs.gov/instructions/i1040sc


an LLC vs an individual has no impact on whether or not you have valid business deductions/expenses. If you want to make an LLC you have to contemplate the registration fees, the annual fees, the maintenance etc.

Maybe an LLC gives you some anonymity as stat monitor stated but i am not sure. i think texas still has ownership reporting that unless you have a registered agent handle for you i think your info would still be available. I've read that Wyoming has some of the least invasive LLc registration rules. idk.

<not a CPA, ask your CPA>

But a LLC can be structured/taxed as an S-Corp, which allows for a larger tax-deferred contributions via cashbalance/profit-sharing plans and the like. Those plans can then invest in other businesses depending on how they are structured.