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Updated about 4 years ago on . Most recent reply
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Entity structure for flip houses
I've been reading through tons of past articles and I understand the mechanics of this, save one thing.
I created an LLC (A), will tax as an S-Corp, for all of the business activities associated with house flips. My branding and checks and business credit will live here.
I am putting an offer in tomorrow on a property and plan to deed it to a land trust so that I can figure this other stuff out. I've read that it is important to have a bank account for each LLC, but, the money I use to purchase and rehab this property is in the bank account of LLC-A. If I create LLC-B to hold title with LLC-A as its sole member, do I need to create a bank account for that and run all funds through it in order to rehab this house? LLC-B will be a disregarded entity, so everything will flow up to LLC-A and taxed accordingly. If I need to, I can open an online business checking account for the holding LLC-B.
I was told by an attorney that I should create a new LLC for each flip, that way if someone 3-4 years down the road tried to file a claim against it, that LLC would have no assets and likely already have been closed. I didn't think of this question until after the conversation and have been trying like heck to find an answer without posting...