Mark Kohler explains why most people use an LLC: to hold passive assets like rental properties or Bitcoin and shield them from lawsuits. You need to form it in the right state, get an EIN, open a separate bank account, put the asset on the LLC's title, and maintain it with annual meetings and fees. When done right, you can take distributions while the LLC protects what's inside.
Chapters
The number one reason for an LLC or where they're used primarily the most is a holding company. You're going to have an LLC to hold a rental property, or maybe some investments, maybe some Bitcoin, maybe a note, some sort of passive investment where you put money in and your money is doing the work, not you. Why do we do this is to create protection. Either there could be a lawsuit that could arise with that rental property and we don't want them getting at us, or we can design the right type of llc, depending on the situation, where if you get into a car accident, texting and driving, and we don't want some creditor to come after you, or your assets, if they do come after you, they can't get up into the LLC and what it's owned. Now, that can get a little complex on where we set up the llc, how we maintain it and what it owns. But the concept here is that we want this LLC as a holding company. This LLC is going to help us protect assets or protect us from operations in that holding company. Very common. And what you would typically do is once you form the LLC in the proper state, you would open a bank account with the ein. The LLC would be on title for the rental property, or the one opening up the wallet or the investment account. The LLC is the one holding the money or the asset, not you. And then as you make money, you can transfer that money down to yourself. It's called a draw or a distribution. But if you respect the llc, you do an annual meeting, you pay your annual fees to the state, you respect the bank account, and it's the LLC doing business, not you, this LLC can become unstoppable. And this is what the wealthy do.
