LLC question

[Dan Miller]

I am set to begin wholesaling, and one of the first steps for me is to form an operating entity (LLC) which will serve several purposes: 1) the name on my business cards, website, etc. 2) be the name on my business banking account/credit card.

With wholesaling, I plan to form a different and new entity for any property I put under contract (i.e. 123 Main St, LLC). This enables me to simply assign the LLC to an end buyer rather than assigning a contract. My question is when I do this, should the member of 123 Main St, LLC be my operating LLC or should it be me? Remember that all the checks will be coming out of my business account which has my operating LLC name on it. Does it matter?

Thanks!

[Bill Exeter]

I do not think there is any black and white answer to your questions. It depends on how conservative or aggressive and/or how much exposure the investor or investor group is/has.

The property manager can certainly collect the rents and service all of the properties, but if they disburse the funds to the investor or group of investors and do not "respect" the legal entity structure an attorney could easily argue that the LLCs are not really managing the properties and go straight to the investor or investor group.

I think that each LLC at any level and for what ever purpose should have its own accounting records, bank account, etc. You do not want any attorney to be able to demonstrate that the LLC is really not the owner/operator.