Putting Boat in Company Name

[db71]

I am planning on purchasing a boat in the next few months and was wondering If anyone does this.

I was mainly thinking of this for liabilty reasons. It would be in an LLC Would this make it impossible to insure or would it not be any different. Would the financing be any different or would it just be like my vehicles where I sign as a personal guarantor.

I do understand that even if the boat would be in a company name I could be held personally liable for certain situations but I feel this could help distance me if something accidental happened (like a drive break and have an accident).

ok now for the compilicated part which I know will come up. I am going to set up a part of my business that will do marine repair and engine building and other stuff like that I know this will not make me much money but I can take money that I make in other parts of my business and pay off the boat and its expenses I will say the boat is advertising for my repair business (which it would be where I live a 40ft boat sticks out like a sore thumb) Basically this would be so the boat would be a business write off which it would be used for business purpose (advertising) even when on land it would be somewhere where it would still be considered advertising.

Well acountants, insurance agents and finance guys what do you think?

[BRAD SCHOENWALD]

An independant LLC owns the boat. Insurance is usually not a problem but you will typically pay a larger preium on your liability. Financing may be more difficult I do not know. Call or message anytime with questions regarding insurarnce, risk and operation.

Good Luck on your purchase.

Brad

www.performanceboatschool.com

[Chris]

It may be very tough to obtain financing through a corporation. Not that it isn't hard enough already... Insurance will also be somewhat higher, especially if the purpose of the boat is integral to the business' operations. It will most likely push your business insurance up in the process. You'll most certainly need to be re-rated. If you are going to go into the boat repairing business, you essentially have to be able to show a legitimate business purpose for the boat expense. If you say "advertising use", an occsional boat ride probably won't meet the test. You'll probably have to show involvement in competitions and shows. Keep in mind that by saying "boat" on a tax return is about the same thing as requesting an audit. There isn't a guy out there that hasn't thought the same thing you have and many have tried. If the IRS looks at it and doesn't agree with your definition of "legitimate" you'll be liable for the back taxes, interest and penalties. That can be 2-3 times your original tax. Just because there's a business connection and revenue is flowing, if it's a part of a greater unrelated enterprise, they can declare it a hobby. You have to ask yourself if it's worth it.

[Loan Ranger]

Chris is correct, we currently have no lenders that will finance a boat to an active corporation. We can do a loan to a shell corp or an LLC but once there are revenues and expenses it really becomes a commercial loan rather than a personal loan and that is not what most marine lenders are set up for. Back when National City was still in the marine loan business they would allow the loan to be put in to an active corp but they have been out for 2 years now.

[insurancegoddess]

Would this make it impossible to insure or would it not be any different.

Well acountants, insurance agents and finance guys what do you think?

My answer is, it depends. It depends on what boat you are getting and where it would fall in the insurance market.

Some carriers don't surcharge and others if it is titled in a corporate (or LLC) name, will surcharge the rate about 20%. If the LLC is for an existing and operating business and not just a "cover" LLC then you could possibly add the boat to your existing business insurance without a problem. Again... it all depends on the boat and the carrier that is willing to insure the boat.

Good luck and let me know if you have any other questions for the insurance part of your question. :)

[JupiterSunsation]

My answer is, it depends. It depends on what boat you are getting and where it would fall in the insurance market.
:)

Yeah a Whaler for a dock and seawall contractor doesn't seem out of line but a Cigarette for a residential home builder seems a little out there!

[RollWithIt]

I own a boat marina and its easier to just have my Baja in my personal name. If it was a whaler or pontoon boat for doing dock repairs, supply runs and towing broke down boaters, it would be easier. But, there are alot of things you can play with when it comes to actual out of pocket costs.. You can play with the books and use company money to pay for gas, repairs and some other related costs. But, you and your accountant need to know what is what.

The only other thing I can think of off the top of my head would be to put the boat in your name. But then list yourself as a private sub-contractor and have the company pay you out an advertising expense. This money could then be used to pay for the payments, etc..