You may have heard about the self directed IRA before, (especially if you’ve read my blog!)
The self directed IRA offers many advantages, including asset protection, tax benefits, and freedom of choice. But if you live in California, you don’t want to get one.
California Investor: Don’t Get an LLC, Get A Business Trust
With an LLC you end up having to pay an $800 yearly franchise tax as a California resident. (That’s on top of the filing fees.) Instead of getting an LLC, you should get what’s known as a business trust.
Business trusts aren’t subject to the costly franchise tax laws in California. And with a business trust you’re able to do everything you can do with an LLC. You can direct your funds where you would like to and you can invest in anything you want. All without involving a custodian.
So yes, with a business trusts you will save money where fees are concerned. But there are some downsides.
The One Downside Of Using A Business Trust
Unfortunately business trusts lack the asset protection you would get with an LLC. However, they’re still partly anonymous, which can help you a little bit.
While a business trust won’t give you all the asset protection you need, you’ll still be able to invest in a cost and tax efficient manner. At the end of the day that’s always better than paying custodian fees and missing out on great investment opportunities.
I wish I could’ve given you better news, but on the bright side at least you know what you’re up against in California. If you have any questions feel free to ask me in the comment section, It’d be my pleasure to assist you.
Learn more about the exclusive benefits of having a self directed IRA.