How to Place Property in an LLC

By Joseph Nicholson

An LLC is a distinct legal entity from its owners, which is what affords protection from personal liability from the business's debts. But this also means that for the LLC to legally own property, it must be titled in the name of the company. Placing property in an LLC is a process of ensuring the LLC is the recognized owner of the asset, but the manner in which this is done can have tax consequences for both you personally and the business.

An LLC is a distinct legal entity from its owners, which is what affords protection from personal liability from the business's debts. But this also means that for the LLC to legally own property, it must be titled in the name of the company. Placing property in an LLC is a process of ensuring the LLC is the recognized owner of the asset, but the manner in which this is done can have tax consequences for both you personally and the business.

Step 1

Sell or donate tangible assets to the company. Draw up a bill of sale to confirm the sale. This works well for movable and household goods like computers or desks. As long as the LLC doesn't resell the goods, you don't have to worry about creating an abusive tax shelter by setting the sale price extraordinarily low. If the assets are donated for free, this is a capital contribution that still needs to be reflected in the company's ledger, with the carryover basis for depreciation purposes remaining that of the previous owner.

Ready to start your LLC? Start an LLC Online Now

Step 2

Record a deed to transfer real property. To place real property in the ownership of an LLC, the deed to the property should reflect the company as the title holder. This means drawing up a title deed and recording it at the county recorder's office. Note that if the property is subject to a mortgage, the transfer could trigger an acceleration clause in the mortgage, or may be prohibited outright.

Step 3

Transfer paper assets to the company's account. Cash, stocks, bonds and other paper assets can be transferred from one account to another. Open the appropriate type of bank or investment account in the name of the company and then request to transfer the property from your personal account to the business account. As with tangible, movable goods, these assets can be sold or contributed to the LLC.

Ready to start your LLC? Start an LLC Online Now
How to Transfer Ownership of a Sole Proprietorship

References

Resources

Related articles

Does a Beneficiary Need to Change the Title of a House Before Selling?

The legal transfer of real estate doesn’t happen magically in life, but strangely, it can in death. In some states, real estate vests in a beneficiary named in a will at the time of the property owner’s death There’s no legal reason to change the title. But if you want, or if your state requires, changing the title is usually a simple procedure accomplished in probate.

How to Add Assets to a Living Trust

A trust allows you to place your assets under the control of a trustee you select, for eventual distribution to the trust beneficiaries. A trust is useless, however, until you transfer assets to it in accordance with appropriate legal procedures. If your trust is irrevocable, its assets are no longer yours -- they belong to the beneficiaries under the terms of the trust deed, even though legal title is vested in the trustee.

How to Use an LLC for Vehicle Ownership

A limited liability company, or an LLC, is a business structure that protects the owners, or members, from liability for the business' debts, while avoiding some of the formalities and negative tax consequences of a corporation. Since LLCs and other businesses are considered legal entities, they can own vehicles in the same way that an individual owns a vehicle.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Transfer a Sole Proprietorship to an Employee

For several reasons, passing a business to an employee can be a challenging proposition when a business is operated as ...

Can a Startup LLC Assume Sole Propiertor Debts & Assets?

A sole proprietor who wants to transfer assets and debts to a newly-formed limited liability company, or LLC, can ...

The Procedure to Transfer a Business Proprietorship

A sole proprietorship is a business entity that functions as an alter ego of the owner. The proprietor holds business ...

Procedure for Change in the Ownership of a Sole Proprietorship

A sole proprietorship is owned and operated under the responsibility of a single owner. All of its business assets and ...

Browse by category
Ready to Begin? GET STARTED