I have my own PLLC, single member, that will do about $500k in revenue this year. I also have a regular W2 job (just a client who wanted me as an employee for the same work) that pays my bills at $200k. The self-employed income goes to savings/investment and major expenses. Can I form a sub of my PLLC to own rental real estate and push pre-tax money into operating that business? Anyone do this or non-legal things with a law practice (assuming that it’s ok for a prof. entity where you are).

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I can’t speak to the tax side but it should be fine if your law firm owns the rental entity. I’ve seen many law firms that own real estate (usually their office building) do that, obviously depends on your jurisdiction. You likely want to make it VERY clear that as a landlord you’re not providing any legal services. I represent solo and small law firms as outside General Counsel, DM me if you’d like to chat!

likesmart

Appreciate it. Yeah from a corporate perspective the law firm should be able to invest passively directly. I have a very low malpractice risk, but it’s probably worth isolating this to a sub anyway. The meat of the question is tax/accounting and how to book that transaction and accrue earnings in the sub in order to pay down payments on properties vs giving the govt 50% each quarter.

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Just curious what is your practice area? Your results are impressive

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More or less I was GC at a startup and when that went bust our competitors, parallel businesses and my coworkers all wanted to work with me, instant law firm

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Tax wise, I dont think it's advisable or necessary. Regarding necessity, if you run the rental as a separate entity and at a loss, the loss will net against your other income despite not being a under your other business. Regarding advisability, when you pull an EIN for a business you have to select what kind of business it is, and when you do the tax return you also have to select what kind of business it is. IRS uses those selections to track you expenses and make sure they make sense. (ie a rental may have a mortgage interest deduction but if you're deducting mortgage interest on a law firm you may get a red flag).

I can’t speak to your question, but would it be possible at all to reach out to you about career advice? At a crossing road in my career and could really use some sage advice 🙏🏻

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