When it comes to what type of structure to place your Individual Retirement Account into, you should first examine the options:
C Corporations are double-taxed entities. When a C Corporation gets a profit, it needs to be filed with the IRS and pay tax on that profit. The investors of a C Corporation will also receive taxed income as passive investors and are also required to give capital gains tax with their profits. Positioning an IRA into this kind of corporate structure would get rid of its tax advantage.
S Corporations don’t let retirement plans and other types of trusts to be members, so it isn’t really a choice for an IRA.
General Partnerships, Limited Partnerships and Limited Liability Partnerships have to have more than 1 member because they’re, in literal terms, “partnerships”. Using this sort of structure would call for your IRA to partner with another individual or entity, which will only attach extra restrictions to your possibilities and freedoms in your IRA.
DBA or Doing Business As won’t work since it isn’t technically a different entity, but rather a title that one does business under. This particular kind of structure would still require custodial assistance and offer no added protection.
Limited Liability Companies (LLCs) are considered “the new kid on the block” in the world of corporate structures. A Limited Liability Company is a crossbreed between protected corporations and pass-through partnerships. An LLC can be member-managed or manager-managed; it may be a single-member entity or it can be owned by multiple members. However you spin it, LLCs are required to be respected as separate entities from their members. LLCs may choose to get taxed like partnerships (flow-through to the members) or like corporations (double-taxed). All these combinations make the LLC structure the perfect vehicle to blend with an IRA.
