Creating an LLC before you start investing?

[Janelle Niles]

Hello:

I am preparing to enter into Real Estate investing (wholesaling, flipping, tax liens etc.) Is it advised to create an LLC for my ventures before my first investment?

Many thanks,

Janelle

[Jason Marino]

Hi Janelle,

For the type of investing that you mentioned in your post, it is a good idea to have an LLC if you are risk averse. As stated in the post above, the strength of your LLC depends on how well it was created and how it is run. In addition to filing the LLC with the Secretary of State, you will need to create an Operating Agreement to control how the entity functions. Additionally, you should have an EIN, and the LLC should have its own bank account. In relation to running the LLC, keeping a book of business, maintaining the LLC in accord with the compliance that the Secretary of State requires (if applicable), and having an annual meeting are things that you should consider doing.