Understanding LLC and Key Legal Entities for Assisted Living Investing

assisted living business business entity formation business structure forming an llc liability protection limited liability company llc benefits professional business setup s corp tax benefits s corporation 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?

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.
Professional Image: Running an LLC can make your business look more official, which can be helpful for building trust with families, residents, and banks.
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:

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.
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:

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.
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:

Mark Kohler: Mark is well-known for helping people set up their business structures.
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. In addition, consider applying to the Assisted Living Investing Mastermind program. This 12-month program includes customized coaching support, ensuring you have the resources and knowledge you need to thrive.

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