Is it better to invest into startups as an individual or as an LLC?
doesn't matter a single-member LLC is treated as if it does not exist for federal income tax purpose
I already have an LLC set up for another business my wife and I are thinking of starting up and thought I could use that LLC for this type of investment also. Wonder what the pros and cons are.
whether the investment is held personally or through the LLC the overall tax treatment is the same. you do not get a write-off for the investment. until it goes belly up or you sell. if the investment is in stocks, bonds or related securities you pay income taxes on dividends, interest, and report gain or loss upon disposition. for an S-Corp or partnership - you get a k-1 that gets entered on your return. whether there are any immediate tax benefits tax depends on many factors. see a tax pro to go over this. if a private C-corp there are no immediate benefits except if it pays dividends.
