USA Angel Investor

[Jsherwood]

I live in Wisconsin and have an LLC for vacation rentals. I have an investor who is helping to purchase yurt kits. Is it better to have him buy the yurts directly, or transfer the money to me, and I make the purchases? What are the advantages/disadvantages of both?

 

[John Baker]

So, that's what those things are called... Yurk kits. Reminds me of a place my brother-in-law took my sister on their honeymoon, which explains a lot during their first year together.
In any event, title to the kits as to the purchaser is the key here. If the purchaser is your investor, the bill of sale will be in the investors name, then, all property rights in the beginning are transferred in a formal declaration in writing of that investment, is then passed on to the enterprise, totally or in part. Now here's the thing orbiting with being given assets purchased by someone else - you have no control of quality, composition, assembly required, damages in transit, and worse off, being purchased on credit and then stuck with a bill for none payment should something happen to your investor. And let's not forget if the venture goes belly up - who takes what property away based on the bills of sale, written agreements, and so on.
On the other hand, if you're given cash to purchase these things yourself, then a cash investment is made straight out by an investor, said and done. You have the bill of sale to the assets, and in the LLC enterprise it stays. You have complete control of the asset (Yurt kit) without the need for further qualifications, unless stated otherwise, formally.
Now I should point out that some LLC enterprises may have the complexation of a partnership. As such, the laws of your state will dictate the legal ramifications involved, and the dynamics that need qualification. Partnerships can get dicey sometimes.
Stop with the deal and consult your attorney(s). Get an understanding of who, what and why things are the way they are BEFORE this investment.

 

[Jsherwood]

So, that's what those things are called... Yurk kits. Reminds me of a place my brother-in-law took my sister on their honeymoon, which explains a lot during their first year together.
In any event, title to the kits as to the purchaser is the key here. If the purchaser is your investor, the bill of sale will be in the investors name, then, all property rights in the beginning are transferred in a formal declaration in writing of that investment, is then passed on to the enterprise, totally or in part. Now here's the thing orbiting with being given assets purchased by someone else - you have no control of quality, composition, assembly required, damages in transit, and worse off, being purchased on credit and then stuck with a bill for none payment should something happen to your investor. And let's not forget if the venture goes belly up - who takes what property away based on the bills of sale, written agreements, and so on.
On the other hand, if you're given cash to purchase these things yourself, then a cash investment is made straight out by an investor, said and done. You have the bill of sale to the assets, and in the LLC enterprise it stays. You have complete control of the asset (Yurt kit) without the need for further qualifications, unless stated otherwise, formally.
Now I should point out that some LLC enterprises may have the complexation of a partnership. As such, the laws of your state will dictate the legal ramifications involved, and the dynamics that need qualification. Partnerships can get dicey sometimes.
Stop with the deal and consult your attorney(s). Get an understanding of who, what and why things are the way they are BEFORE this investment.

Thanks for the explanation, and yes, as kits. Surprisingly people will pay to stay in them.

What would the tax implications be?

Thanks again for your time.

 

[John Baker]

With respect to your tax question, it's been some time since I addressed taxation. Your tax planning for both state and federal has certain stipulations based on your articles or organization for your LLC.
In my professional opinion, you're going to need a sit-down meeting with an accountant/tax specialist, to review your organizational framework and your personal tax plans.

 

[Jsherwood]

Sounds good

Thanks

 

[John Baker]

With respect to your question, in fact all questions asked on this site and on similar media, there are a lot of limitations. What may seem like a straight forward question, will invariably have background, things that can change the complexation of any question completely in the opinion of the person/persons fielding the question.
So just be aware of the suggestions here, all suggestions as answers to you question(s).