How do you respond?

[ILLMAS]

TP:  I created an LLC and I don't know if I should report it on my individual or corporate tax return?

 

 

Most of these calls are from individuals that bought investment properties and setup their own LLC's.

[kcjenkins]

Well, that's when you offer them an appointment [billable, of course] to sit down and discuss their options and their plans and goals.  Briefly you can skim over the options on the phone, but only vaguely.  Your knowledge is worth getting paid for, and if they don't understand and respect that, they will never be good clients.  So most of your response, Marco, should be  general questions to him, such as "did you elect to make the LLC a corp?" "Have you elected Sub S status", if they say yes.  Then questions about their current personal return.  The point is not to give them a simple answer, but to make them realize that it's a complex question with no easy answer but lots of potential benefits if the right choice is made.  

[ILLMAS]

Thanks KC, just one thing that has always puzzled me, not that many people who create an LLC really put the property in the LLC, the title is under the owners name and so is the mortgage loan, and to make things worst they mostly do all the work themselves to rehab the property, now what type of protection can they get.

[kcjenkins]

Yeah, they do find lots of ways to screw up their own situation.  On the other hand, that is why they need us!

[Lee B]

Even the answers to simple questions can be deceptive. The new client will say yes or say, "Yeah I did that,"

when they really didn't understand your question.

[Jack from Ohio]

I very rarely ask yes or no questions to clients, especially new clients.

[kcjenkins]

Even the answers to simple questions can be deceptive. The new client will say yes or say, "Yeah I did that,"

when they really didn't understand your question.

That's why you need an appointment, where you don't ask 'yes or no' questions, mostly.  You ask for specifics, dates, documentation, etc.  And most of us are pretty good at spotting the evasions, don't you think?  Like when they find their answer on the ceiling?