Should you put your airplane in an LLC?

Putting an airplane in an LLC is one of the oldest moves in general aviation — walk the tie-downs at Montgomery-Gibbs or Gillespie Field in San Diego, or the hangar rows at Fort Lauderdale Executive, and a big share of the N-numbers trace back to single-purpose LLCs. Done right, it’s a sensible liability and privacy structure. Done casually, it can accidentally turn your weekend flying into an illegal charter operation in the FAA’s eyes.

This guide covers both halves honestly. One thing up front, because aviation readers expect it and it’s true: this is general information, not legal or tax advice. Aircraft ownership sits at the intersection of FAA regulation, state tax law, and insurance — before you close on an airplane inside an entity, talk to an aviation attorney and a CPA who knows aircraft.

Why aircraft owners use LLCs

Liability separation. An airplane is a large, mobile source of potential liability. If a claim arises from the aircraft — a ground incident, a partner’s hard landing, a hangar fire — an LLC that properly owns the plane helps keep that claim contained to the LLC’s assets rather than automatically reaching your home, savings, and business. The honest caveat: an LLC never shields a pilot from liability for their own negligence. If you’re flying, you’re responsible for your flying. The LLC earns its keep when others fly the plane, and by keeping the aircraft walled off from your other assets (and your other assets walled off from the aircraft).

Privacy in the registry. The FAA aircraft registry is public — anyone can type an N-number into the FAA’s website and see the registered owner. Register in your own name and that’s your name (and address of record) on display for every flight tracked online. Register to an LLC and the public record shows the LLC. It’s a curtain, not a vault.

Co-ownership that doesn’t end friendships. Most flying partnerships are really co-ownership problems: who pays for the engine reserve, what happens when one partner wants out, what happens when one partner dies. An LLC with a real operating agreement answers those questions in writing — percentage interests, capital calls, scheduling, buy-sell terms — instead of leaving them to a handshake. FilingDesk generates the operating agreement as part of forming the LLC, so this document exists from day one instead of being the thing everyone means to get to eventually.

Cleaner transfers. When the plane is titled to the LLC, bringing a partner in or out can be done by transferring membership interests while the aircraft’s FAA registration stays put. (Interest transfers still have tax and FAA-citizenship implications — run them past counsel — but it’s often simpler than re-titling the aircraft itself.)

FAA registration mechanics: citizenship and the LLC statement

The FAA doesn’t register aircraft to just anyone. Under 14 CFR 47.3, a U.S.-registered aircraft must be owned by a citizen of the United States, a lawfully admitted permanent resident, a non-citizen U.S. corporation (if the aircraft is based and primarily used in the U.S.), or a government entity.

For entities, “citizen of the United States” has a specific definition in 14 CFR 47.2: an entity organized under U.S. or state law, whose president and at least two-thirds of the board of directors and other managing officers are U.S. citizens, which is under the actual control of U.S. citizens, and in which U.S. citizens own or control at least 75% of the voting interest.

Registration fee

$5

AC Form 8050-1

Renewal fee

$5

same amount

Certificate validity

7 years

14 CFR 47.40

US citizen voting interest

75%

min., if not all citizens

LLCs get extra scrutiny because their structures are so flexible. The FAA requires every LLC applicant to file an LLC statement in support of registration alongside the registration application. Per the FAA’s guidance, the statement must identify the LLC’s full name, state and date of organization, every member and each member’s entity type, and whether the company is member-managed or manager-managed — and it must show how the LLC qualifies as a U.S. citizen. If all members are U.S. citizens, the LLC qualifies on that basis. If not, the two-thirds-of-managers and 75%-voting-interest tests apply. And if one member is itself an LLC, the FAA wants a statement for that LLC too — the citizenship analysis goes all the way down.

Mechanically, registration itself is cheap and simple compared to everything else on this page: AC Form 8050-1 (Aircraft Registration Application) plus evidence of ownership and the $5 fee (14 CFR 47.17). Getting the LLC statement right the first time matters, though — a registration built on a deficient citizenship showing can be challenged later, which is a miserable conversation to have with your lender or insurer.

The flight department company trap

This is the section that separates aircraft LLCs from boat LLCs, and it’s the one to read twice.

Here’s the setup. You form “N123AB LLC,” the LLC buys the plane, and you and maybe a partner fly it, each chipping in money to cover fuel, hangar, insurance, and maintenance. Feels obviously private, right?

The FAA can see it very differently. Under 14 CFR Part 119, carrying persons or property for compensation or hire generally requires an air carrier or commercial operator certificate. And the FAA defines “compensation” extremely broadly — it doesn’t require profit, and it doesn’t even require cash for a specific flight. In FAA legal interpretations, members’ capital contributions and cost reimbursements to an aircraft-owning LLC can count as compensation for their own transportation. If the LLC’s only business is owning and operating the airplane, then — unlike a widget company flying its executives around — the LLC has no business the flights could be “incidental to.” Its business is transportation by air.

Legitimate structures exist, and it’s worth knowing their names even though the design work belongs with an aviation attorney:

• Dry lease — the LLC leases the aircraft alone (no crew) to the person or company actually operating each flight, who takes operational control and provides the pilot. Properly built and actually followed, this keeps operations under Part 91. Sham dry leases are an FAA enforcement priority, so “properly built and actually followed” is doing real work in that sentence.
• 14 CFR 91.501 arrangements — for large and turbojet multiengine airplanes, Subpart F allows limited cost reimbursement through defined structures: time-sharing, interchange, and joint-ownership agreements, plus carriage of a company’s officials and guests when flying is incidental to a real non-aviation business and no more than cost is charged. By its terms 91.501 doesn’t cover typical piston airplanes — the NBAA Small Aircraft Exemption extends several of these options to small aircraft for NBAA members who file the required notice.

We are deliberately not giving you a recipe here, because the difference between a compliant dry-lease structure and a Part 134½ bust lives in details — operational control, who hires the pilot, how the money flows — that depend on your facts. If your plan involves an LLC that owns a plane and people paying anything toward flights, spend the money on an hour with an aviation attorney before you fly. It’s the best-value insurance in this whole article.

Insurance: tell your carrier the truth about the structure

Whatever entity structure you land on, your insurance must match it. The LLC should be the named insured on the hull and liability policy (it owns the aircraft), with you — and anyone else who flies — properly listed as pilots and, typically, as additional named insureds.

Sales and use tax: the state where the plane lives wins

Just like boats, aircraft are taxed by the state where they’re based and used — not the state where the owning LLC is registered. Buy a plane and hangar it at Gillespie Field and California’s use tax rules apply; base it at Opa-locka or Tampa Executive and Florida’s 6% applies. Most states tax aircraft purchases, many tax them annually, and their tax agencies are very good at reading hangar leases and flight-tracking data.

That’s why the honest framing on Wyoming and Delaware holding LLCs is: they’re popular for real reasons — low formation and annual costs, strong LLC statutes, no state-level entity income tax, and privacy (Wyoming doesn’t put members on the public formation record) — and they change nothing about where your aircraft owes use tax and property tax. Form the LLC where it makes structural sense; pay the aircraft taxes where the plane lives. We walk through the two big examples in the state guides: California (use tax + annual property tax) and Florida (sales tax + the fly-away exemption).

Where FilingDesk fits

FilingDesk forms the LLC layer of this structure — fast, correctly, and without upsells. Describe what you’re doing in plain English; we run the name check, prepare and file the formation documents (a human specialist reviews every filing before it goes to the state), then handle the EIN and generate an operating agreement so your co-ownership terms are on paper from day one. One flat $99 plus the state fee — Wyoming $199, Delaware $209, Florida $224 all-in, everything included.

What we don’t do is aviation law: dry leases, 91.501 agreements, FAA citizenship opinions, and use-tax planning belong with an aviation attorney and CPA. The right order of operations is usually: talk to counsel about the operating structure, then form the entity — in minutes, not weeks.

Frequently asked questions

Sources

• eCFR — 14 CFR Part 47, Aircraft Registration (citizenship, application, duration)
• FAA Aircraft Registry — Limited Liability Companies info sheet (LLC statement requirements)
• eCFR — 14 CFR 91.501 (operations of large and turbojet airplanes; time sharing, interchange, joint ownership)
• eCFR — 14 CFR 119.1 (when an air carrier / commercial operator certificate is required)
• FAA — Request to Withhold Aircraft Ownership Data (registry privacy, from March 2025)
• NBAA — Small Aircraft Exemption (extends 91.501 cost-sharing options to small aircraft)

This guide is general information, not legal advice. FilingDesk is not a law firm.