Real estate LLCs open up numerous doors for investors. When investors like yourself form LLCs for their real estate ventures, they avoid personal liability. After all, any claims made against them are actually against their businesses. Moreover, investors have the opportunity to start an LLC for each, individual property that they own. In turn, you can separate your profits from each property. If a claim is made revolving around one property, your profits from the others remain safe, in your possession. For these reasons, read on and learn how to form a real estate LLC successfully.
Understanding An LLC
Before getting started, you should have a clear understanding of the meaning of LLC. Officially, “LLC” stands for a “limited liability company.” It is a business entity that owners use for liability protection to keep your personal and business assets separated. Overall, an LLC becomes a completely separate entity to conduct your real estate business. While operating under a real estate LLC, you will receive liability protection, tax benefits and simple administration.
Determine A Profitable Location
To begin starting a real estate LLC, determine a profitable location. While you may have experience choosing properties in rewarding areas for investing, choosing a location for a real estate business is a little different. You no longer need to worry about factors associated with living. Instead, you need to pay attention to each state’s formation requirements. Some demand higher taxes while others require more recordkeeping. Keep these business-oriented factors in mind when choosing a location to form a real estate LLC.
Choose A Business Name
Once you decide on a location for your real estate LLC, choose a business name. The best names revolve around relevant real estate terms. Create a list of potential business names that are both memorable and simple. Then, look up each option you came up with online using your state’s business name search website. If you find that one of your names is already taken, cross that one off of your list. Additionally, eliminate the ones that sound similar to other companies. While it may not be illegal to register with similar names, it does not encourage good business. Select a wise, profitable business name to form a real estate LLC successfully.
Apply For An EIN Number
After you register your business name, apply for an EIN number. You need an EIN number in order to legally finance your business. For optimal convenience, apply for an EIN number online. Simply visit the IRS’s website and fill out the appropriate form. The IRS allows you to apply for an EIN number online and file taxes in a variety of ways. Since you usually get your EIN number right after you apply, filling out the form online expedites your overall formation process. Thus, it is a good route to take when starting up a real estate LLC.
File Articles Of Organization
Furthermore, you need to file articles of organization to form a real estate LLC. Each state has different requirements for forming an LLC. For this reason, many have different articles. Some states refer to the documents as “certificate of organization”. Others call them “certificate of formation”. Regardless of what your state calls it, you need to fill out the appropriate forms in order to conduct business legally. You need to fill out these forms for each property that you form an LLC around. Then, you will be able to boost your investment income through your real estate LLC.
Keep Your LLC In Good Standing
In addition, profitable investors also form their real estate LLCs in ways that keep them in good standing. The top way to do so is to have a registered agent in every state that you form an LLC. If you form an LLC for a property in Georgia and another one in Florida, you need to have a registered agent in both states. Then, you can rely on a person at each location to manage relevant legal papers when you are not there. They will take care of legal summons and document filings for you. Choose agents who are residents in the states in which your LLCs are located in. In doing so, you will establish a real estate LLC properly and set yourself up for good returns. If you want to increase your potential earnings even more, consider taking advantage of the top real estate franchise opportunities.
If you want to increase your real estate investment opportunities, form an LLC for each property. Begin by choosing the best location for your LLC, taking factors such as taxes and recordkeeping into account. Then, choose a business name that has not yet been registered. Apply for an EIN number online using the IRS’s website. File articles of organization in your state to conduct business legally. Finally, keep your LLC in good standing by selecting a registered agent to take care of your legal papers on your behalf. Take these steps to form a real estate LLC and yield better returns on your investments.
- What is Incorporation?
- How to Form LLC as Parent Company with other Separate LLCs
- Finding the Right Location for Your Small Business
- What is a Limited Liability Company (LLC)?
- How to Form LLC or LLP for a Start-Up Home Business