Intro and Beginner LLC questions

[Shane Sitzman]

Hi, great forum! I'm excited to be here and excited about REI. I live in and am investing in Las Vegas. I am partnering with my sister and we are creating an LLC. My sister and I are both married. Should I include all four of us as members. I was thinking to include my wife so we can document and claim the days worked for the tax benefits.

Do I need a business license for the LLC? I was under the impression that i don't, however, I was told differently.
Also, Because I'm going in with family, we are drafting an agreement concerning shares and compensation. Does this have to be filed with the LLC paperwork, or is it something between us?

I'm going to employ a property manager for the rentals I'm buying. Do you see any issue with using the same person as property manager and buyers agent?

Finally, Banking. I understand that I need to establish a trust with the property manager to have funds available for repairs and such, however, for the business, do I need any type of special account at the bank. I see business checking and all that, but what is the difference between these accounts and a regular account in the business' name at a credit union (I talked to the credit union and was told they don't have business accounts, but they can put the business' name on the account)

I hope I'm asking decent questions. I've been looking for these answers and this is my first time using a social site.. hopefully you can help because I'm having difficulty figuring it out myself.

Shane

[Matt R.]

Hi Shane,
welcome to BP. Take the time to search and browse, there is an incredible amount of useful, practical knowledge in place that will greatly help you get up to speed. Most of your questions have likely been answered several times and it's well worth reading discusion threads and clicking on related articles.

To address some of your questions :

There's no need to have all your family listed in the LLC, only those who are working members.

Note that "days worked for tax benefit" means that the individual needs to spend at least 750 hours per year AND it must be the prime work that the person does. For me, working a real job, I'd have to clock up 40 hours per week to be classed as a Real Estate (RE) professional.

Business license is not needed for an LLC - the specific business you're in may need a license (eg hairdressing). But there's no additional licensing requirements just because you're running an LLC.

LLC paperwork should be drafted by a lawyer to get it right - skimping on this could cost you later on. This should clearly state who the members are; what their share of the ownership is; and how the compensation will be defined.

Definitely set up a separate bank account (and a credit card if you can). This will clearly demonstrate that you are running a professional business and (most important) it's a separate entity from your private life and finances. It doesn't have to be any specific type of account, but it does need to be clearly your business account - and clearly separate from your own personal accounts.

Also be careful about the 'keeping good records' requirement for an LLC. Again, this demonstrates that your running a real business. It's not too hard, just make sure to have a notebook or electronic files that show you had regular meetings of your LLC. These 'board meetings' could be just you and your sister regularly meeting at Starbucks to discuss the business.