Understanding LLC and Key Legal Entities for Assisted Living Investing
Dec 12, 2024
Disclaimer: I am not an attorney, this blog is not legal advice and I suggest you consult with an attorney for your specific situation.
Starting an assisted living business is a big step! And choosing the right business structure—like an LLC, corporation, or partnership—is one of the most important choices you’ll make. Your structure affects things like taxes, legal protection, and even how you’re seen by others. Here’s a simple guide to help you understand some of the best options, especially the popular LLC.
Check out the video too:
Why Your Business Structure Matters
Think of your business structure like the foundation of your house. It gives your business a strong base, protecting you and setting up how your business will run. Picking the right one now will help your business run smoothly as you grow.
What is an LLC?
An LLC stands for Limited Liability Company. This type of business structure is super popular for assisted living businesses because it gives the business its own “legal identity.” That means if something goes wrong, your personal money and property are generally safe.
Why Choose an LLC?
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Protection from Liability: If your assisted living business is sued, your personal stuff—like your home or savings—usually won’t be at risk. This is a big deal in healthcare, where unexpected problems can pop up at anytime.
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Professional Image: Running an LLC can make your business look more official, which can be helpful for building trust with families, residents, and banks.
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Flexible Management: You can run an LLC on your own or with a team. You can even choose how you want to be taxed. Some LLCs choose to be taxed as S Corps (more on that next!), which can help save on taxes.
Understanding S Corporations (S Corps)
An S Corp is another business type, and some people choose it for its tax benefits. Here’s a quick overview:
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Tax Benefits: With an S Corp, you can be both an owner and an employee, which can help you save on taxes. You might even get to deduct things like health insurance.
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Split Income: S Corp owners can take a small salary and then get the rest of their income through profit distributions. This setup can help lower the amount of self-employment tax you pay.
Disclaimer: I am not an accountant and since S Corps come with some specific rules, I suggest you consult with a CPA or a attorney to see if it’s a good fit for you.
Where to Form Your Business Entity
You might wonder, “Where should I set up my business?” Here’s a quick look:
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Home State: Most people form their business in the state where they operate. It’s simpler, especially since you’d need to register in each state where you run your business anyway.
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Special States: Some people think about states like Delaware, Nevada, or Wyoming because they offer certain benefits. But unless you have special circumstances, setting up in your home state is usually easier and can possibly save you taxes in the long-run.
Costs of Setting Up Your Business
Setting up a business usually costs between $50 to $500, depending on your state. If you want to hire a professional to handle everything, you might pay a little more, but it can be worth it to make sure everything’s done right from the start.
Recommended Professionals
Working with experts can make setting up your business much easier. Here are two highly recommended professionals for assisted living businesses:
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Mark Kohler: Mark is well-known for helping people set up their business structures.
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Anderson Associates: They know a lot about assisted living and can help you make sure everything is done right.
Final Thoughts
Setting up your business structure doesn’t have to be complicated! Whether you choose an LLC, S Corp, or another type of entity, each has its own perks. Remember to always chat with a professional before deciding what’s best for your business.
If you’re ready to take the next step, download our Business Plan Checklist to ensure you have all the essentials covered as you set up your assisted living facility.
Need help figuring out where to start? Join the next Roadmap Challenge and build your launch plan with me.
Show full transcript 👇
Transcript
00:00:01
[Music] hey guys it's brandon gustafson welcome back to assisted living investing happy to have you on the channel today excited to get into a new conversation about a new topic that i'm i'm really passionate about but before we get started i just want to remind you about assisted living investing.net make sure you head over to the website i've got free resources over there subscribe to my newsletter for future content and i would love to see you over there also make sure you uh
00:00:41
like give me a big thumbs up comment subscribe to these videos and ring the bell over here ring the bell so that you can get notified when new content comes up and also make sure you follow me on all my other social media platforms i'd love to have you join the conversation in those areas where we can maybe get a little bit more and have a little bit more interaction on your questions and things like that the last couple of videos we got into what a facility license is and how you can obtain a license
00:01:09
and what that process is like today we're going to get into what is an llc and other types of entities that you can just kind of be aware of a lot of people have these types of questions and so i wanted to definitely get a video out there for you that kind of talks about these with the disclaimer that i'm not an attorney i'm not a professional so any advice that i provide here in this video should not be considered professional advice you should engage a professional for your specific situation so this is
00:01:39
just information um no recommendations here at all um please make sure you're talking to professionals as you're trying to get started but hopefully this will give you a little bit of a base of understanding of what types of entities there are and and how to structure your your facility so you can be successful so first let's start off with what is an llc an llc it stands for limited liability company first off llcs do not help you save any money on taxes an llc as as just like a basic llc doesn't help
00:02:14
you save anything on taxes what they are intended to do is help provide you with some protection in the event that there's a lawsuit or something like that we've had instances where we've had issues where our status as an llc has provided us some additional protection and it's something that i'm i'm happy that we spent the time and the money to get things in place so having an llc does provide you with with some extra um protection there uh liability protection hence the name
00:02:45
an llc can also help you look a little more professional and more credible to customers and and lenders um you know you're an official business it just makes it look a little bit more professional and llc's can be structured very flexibly um so you can have just the way that they're managed you can have multiple people be members of of the llc there's a lot of flexibility in the way that that you can structure your llc for example you could have an llc as just an individual you could have it with uh other people and
00:03:19
you can also do corporations out of those they're kind of like tax statuses that you elect as an llc depending on certain criteria and i'm not going to get too deep into that today but the next topic that i have for you is an s-corp an s-corp is is another type of an entity that you might hear about as you're kind of doing your research and trying to determine what kind of entity you want to set up so an s-corporation is actually a tax status that you can elect for your llc an s-corp can allow
00:03:53
you as a business owner to be treated as an employee for of the business for tax purposes so for example you might be able to deduct certain expenses like health insurance premiums if you have an elect if you have elected to be an s corp there are certain thresholds and i'm not going to get into those i don't fully understand them myself but there are certain thresholds that you have to hit in order to elect that status as an escort so make sure that you are talking with your your attorney
00:04:22
uh with your cpa making sure that you understand everything that kind of goes into that process of being an s corp before you just willy-nilly go and say yeah i want to be an s corp make sure that you understand what is going into that decision so that you are protecting yourself but also taking advantage of of tax law as it's out there it's it's very wise for you to understand the different tax laws have conversations with attorneys and make sure you understand what you need to do so you can be successful
00:04:57
as you're setting up your entity structure another big question that comes out of that that i see often is where should you form your entity um right and a lot of people want to know that and if you go to some of these big conferences they might tell you oh yeah you got to set up a nevada or a delaware or a wyoming llc that's where you got to do it my conversations again with my attorney is the best spot for you to set up your entity is the place where you are doing business you're still going to have to
00:05:27
file in those states because that's where you're performing business so um like there's really no advantage again talk to a professional make sure that that's the case for you but in almost all cases it's going to be best for you to form the entity in the state where you're performing the business there might be certain cases where it's advantageous for you to set up an entity in a different state one of those that i've mentioned previously but those should only be
00:05:52
done if you've talked to a professional attorney and you've had that conversation about your specific situation so that you make sure you're not creating a mess for yourself that that you don't need to to make after you've done this once or twice you'll probably have a good idea of what it takes and you may not need to use that professional attorney anymore to set up those entities but in the beginning i think it's it's advantage just to spend a little bit of money make sure you have things done
00:06:17
correctly and and move forward with it from that point another question that i see is how much does it cost to form an entity and really that's going to depend on the type of entity that you're you're setting up uh the state that you're in so make sure you talk to a professional there are resources on each state like each state's going to have information on on their specific kind of websites and things like that so that's another great resource that you can look at just
00:06:43
perform research for your specific state i would say it's going to be anywhere between five or fifty and five hundred dollars um is probably going to be typical for setting up an entity in a state if you're having a professional do it for you there's gonna be some costs associated with that so it might be a little bit more expensive but that's kind of the budget that you could set for yourself as far as setting up the correct type of entity plus the consult with a professional attorney to to get things done now as a
00:07:11
bonus people have also asked me who i i have used to set up my entities so i have used uh kkos lawyers uh which mark kohler is who i've used but i've also seen a lot of great resources from i think it's anderson associates um and have watched a lot of their videos as well and so i i while i've not worked with them i have worked with kkos i really have enjoyed kkos um anderson associates from everything that i can tell is is quite familiar actually with the assisted living space give you a lot of great assistance there
00:07:44
so those would be two that i would recommend having a conversation with to see which one you're comfortable with before you get started so to recap today we went over what is an llc and some other types of entities specifically an llc an s corp and then we got into a little bit about where you should form that entity how much it might cost and a couple resources recommendations for you to kind of reach out to and and have conversations with with a couple of people next time i'm going to get into the
00:08:11
legal structure for my assisted living just kind of give you a view of of how we set ours up especially because we're out of state right and so i'm in utah and i've got facilities in different states and so i'm gonna kind of share our strategy for how we went through and set up our facilities and give you a little bit of information there as well and just kind of what we did in our situation um again you know with the caveat that i'm not a professional so please seek out your own
00:08:38
professional help uh as you're working through the process to set up your entities uh make sure you like uh the videos give me a big thumbs up comment uh subscribe i'd love to see comments i love interacting with you guys uh so i would love to see any comments that you have make sure you ring that bell so that we can get some information out to you every time that we have new content you're getting notified of that it also helps other people find the channel and and learn some of this really what i hope is
00:09:09
extremely helpful information for you as you're on your journey to to get started in assisted living make sure you visit assistedlivinginvesting.net would love to see you over there have free resources and enjoy my mailing list for future content and thanks for watching everybody i'm happy you are here today and i just wanted to put something out there on you know something that i kind of live by obviously i've got my sign over here dreams demand hustle but something else that i kind of try to
00:09:36
live by is to just remember that it doesn't take a lot just doing a little bit of progress is is good enough and so uh just remember it's not a lot but it is a little keep going you can make it thanks have a good day [Music]
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