Importance of getting an LLC

[Ian Thomas]

I just want to know if someone can explain to me the importance of creating the LLC so that I can fully understand the concept. For example, why can't a wholesaler or houseflipper get paid without the LLC? And what is the process in creating this LLC for your business? Will I need to get a copyright and trademark as well?

[Chris Reel]

REI Attorney Perspective**

A wholesaler or a flipper could absolutely get paid without an LLC, although I wouldn't suggest a flipper operating without some entity protecting them. I'd be interested to see the contents you found on why they wouldn't be able to.

LLC's limit the liability of its owner(s) and also can provide some great tax benefits, too. Pending they are set up correctly and treated with respect (i.e. you don't use the company account for personal expenses, or use personal funds to pay for company expenses).

Setting an LLC up happens by going to your state's Secretary of State website. You will file your Articles of Organization there and pay a filing fee. Once that is processed, you will proceed with getting an employer identification number (EIN) through the IRS. Once you have those documents back from the SOS and IRS (shouldn't take more than a week) you should get a resolution drafted up demonstrating that you are the sole owner of the LLC (or in the situation where there are multiple owners, get an operating agreement). You'll bring all three of these docs to the bank to set up your business bank account. After you've done these steps, voila! you have a fully functioning LLC.

Copyright won't apply to you and there is no need to file for a trademark. Although I suggest that, if you are naming your company something creative and not just 'Your Name, LLC' run a search via the United States Patent and Trademark Office (www.uspto.gov) to make sure the name isn't registered to a business with the same or similar business model or industry/market as yours. You can go even further to make sure there is no registered trademark in the state's you'll be operating by searching the state's SOS website, as well as a search via Google/Bing/Yahoo. If there is another business using the name you want and they are in the same business or industry as you, don't use it. 

Hope this helps! 

Chris 

Managing Attorney 

Helping entrepreneurs and real estate investors Make Things Happen.