Name or LLC does it matter?

[Lavon Newborn]

Is it ok to you your own name to wholesale your first deal? And then set up a LLC with the funds. Is there any pros and cons to this?

[Barry Pekin]

@Lavon Newborn,

You can setup an LLC yourself simply by going to your State Corporation Commission (at least that's what it's called in Virginia) and filing all of the required forms. You can use yourself as the Registered Agent, and then be done with it.

By doing it properly, I mean going through a company that has experience setting up an LLC for real estate investors. You really should have a company that acts as a Registered Agent as part of their business. I've missed a couple of filings here and there over the years. They get the notifications and make sure I take care of them. It also makes it that much harder for someone to know who owns the LLC, and there's an extra little layer of protection when that's in place.

I would also talk to an accountant familiar with setting up businesses and their accounting.  You want to make sure you're doing the taxes not only properly, but with the best benefit to you.  For example, if you're self-employed, you have to pay self-employment taxes on all of your income.  If you have an entity, you can draw a salary or commission on part of the income, and the rest becomes a draw/distribution.  You don't pay self-employment taxes on the distributions.  You can also, if you do it legitimately, hire your children (if you have any).  They usually pay taxes at a much lower rate than you do.  You can then have them cover some of their own expenses (school supplies, clothing, etc.) from their salary, using money that was taxed at a lower rate.

This is all just off the top of my head, of course.  I have a few LLCs, and I make sure to do those things where I can - legitimately!  I also make sure to maximize my expenses where I can.  An example of that is to combine personal driving with business driving.  When you do that, it can become a write-off.

Of course, I'm neither an attorney or an accountant, so take this all as my opinion formed from personal experience.  PLEASE - consult your own professionals.